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Fellow Shareholders:

Thanks to Kroger’s 400,000 associates – who strive to provide friendly service and the freshest products to every customer, every shopping trip – 2014 was a record-breaking year.

●	Our revenue reached $108.5 billion – an all-time high;
●	Our stock price rose 91%, making Kroger one of the top 10 performing stocks in the S&P 500;
●	Our positive identical store sales grew for an unprecedented 45 consecutive quarters; and
●	Our market share expanded for the 10th year running.

In short, 2014 was a blockbuster year. We added nearly 25,000 new jobs, creating opportunity for our current and future associates. And we have confidence there is more growth and opportunity ahead for our company.

Since becoming CEO last year, the two most common questions I hear from shareholders are “Why is Kroger doing so well?” and “Can you keep it up?” It is my great honor to try and provide answers in this letter.

*           *           *

Answering “why is Kroger doing so well?” is like trying to answer “what makes a meal great?”

What makes a meal memorable and enjoyable? It is the combination of food and drink, your companions and the atmosphere, surprise and delight. It is not any one thing, but the sum of its parts.

Like a great meal, there is no single characteristic – no one person or thing – that makes Kroger great. Rather, it is a unique and powerful combination of factors that helps explain Kroger’s success.

It all starts with our friendly associates executing our powerful Customer 1^st Strategy, which we launched 12 years ago. We put the customer first in every decision we make.

Our store managers successfully manage multi-million-dollar businesses. But first and foremost, they are focused on our customers and associates. Our goal is to extend our friendly hospitality to each one of the eight million customers who shop in our stores daily.

Our merchandisers are the best in the industry. Their depth of experience, combined with our world-class customer science and data analytics, creates a powerful blend of art and science that is the hallmark of Kroger’s fresh and relevant merchandising. We are focused on bringing to each customer what is most relevant to them – to their tastes, budget and lifestyle – and delivering unique offers through personalized coupons, our popular fuel rewards program, and exclusive digital offers.

Our strong Corporate Brands portfolio continues to gain market share, reaching its highest level of penetration in seven years during the fourth quarter of 2014, when it represented 28.2% of total units sold in our stores. These great products, which can only be found in our family of stores, set us apart.

We continue to invest in price every year. Today, we are saving our customers more than $3.5 billion annually through every day lower prices. Our productivity improvements fuel these price investments.

We continue to improve the customer shopping experience. And, as I will outline below, we are accelerating our entry into eCommerce through our recent mergers with Harris Teeter and Vitacost.com, and by growing our digital capabilities.

It is the combination of these strengths – and many more not mentioned here – that together delivered our strong financial results in fiscal 2014.

*           *           *

Fiscal 2014 Results – An Outstanding Year

Kroger’s consistently remarkable performance delivered for shareholders in 2014. The growth plan we first outlined in October 2012 includes four key performance measures: positive identical supermarket sales growth, slightly expanding non-fuel FIFO operating margin, growing return on invested capital and annual market share growth. In 2014, we met or exceeded each of these metrics.

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At the end of the year, we:

●	Achieved an industry-leading 45th consecutive quarter of positive identical supermarket sales growth, without fuel;
●	Exceeded our goal to slightly expand FIFO operating margin, without fuel and excluding adjustment items noted in our annual report, on a rolling four quarters basis;
●	Improved return on invested capital even as we increased capital investment; and
●	Captured incremental market share for the 10th consecutive year.

As a result, we exceeded our long-term, net earnings per diluted share growth rate of 8-11% in fiscal 2014, and we increased our dividend for the eighth consecutive year. In fact, Kroger has delivered double-digit compound growth in our dividend since we reinstated it in 2006.

Net earnings for 2014 totaled $1.73 billion, or $3.44 per diluted share. Excluding adjustment items – the benefit of certain tax items and adjustments for pension plan agreements – Kroger’s adjusted net earnings for 2014 totaled $1.77 billion, or $3.52 per diluted share.

Our strong results during 2014 allowed us to make a strategic and significant contribution to The Kroger Co. Foundation. We use our foundation dollars to support causes that our customers and associates consistently tell us they care about, enhancing our reputation as a locally-connected retailer. We are very proud that Forbes magazine previously recognized our work by naming us the “most generous company in America.” This investment works to support the communities that we serve.

*          *          *

Which brings us to the second question: “Can you keep it up?”

My answer is an unequivocal YES. Because, as I like to say, our “to-do” list is longer than our “done” list. We are not done growing and differentiating. We are not done innovating to make our customers’ lives better. And we are not done investing to grow for today and the future.

Innovating to Grow

We are expanding our use of technology. In February 2014, Kroger acquired You Technology, LLC, the Silicon Valley-based leader in digital coupons and promotions. Several months later, our merger with Vitacost.com accelerated our entry into the eCommerce space by several years. Vitacost connects us to an amazingly talented team of associates who have created a substantial platform that includes advanced technology and ship-to-home fulfillment centers. We are currently testing Harris Teeter’s successful ExpressLane concept – an order online, pickup at the store model – in Cincinnati, and we plan to expand to other stores and markets in the coming year. Together, the learnings from our Vitacost and Harris Teeter mergers are helping us give our customers the ability to interact with us when, where and how they want. More customers than ever before are engaging with our digital properties. More than 15 million customers have digital accounts with Kroger, through which they receive unique benefits and offers on our suite of digital platforms, including our mobile app, website and social media sites.

We are entering a new era in customer engagement with the introduction of 84.51°. Early in 2015, Kroger and our data analytics partner dunnhumby Ltd announced a new chapter in our relationship to accelerate innovation in customer science. We replaced our existing exclusive joint venture called dunnhumbyUSA with a more flexible arrangement and the acquisition of certain assets from dunnhumbyUSA. Operating with those acquired assets as its foundation, our new, wholly-owned subsidiary, 84.51°, is starting with 500 talented associates from the former JV and the technology to continue developing our leading customer loyalty program. In addition, the ability to combine what we already know with other partners is exciting and will speed up innovation.

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We are quickly becoming a top destination for customers looking for affordable, accessible organic and natural foods. Natural Foods continues to be the fastest-growing department in our stores on a percentage basis. Our leading natural and organics store brand, Simple Truth, reached a milestone $1.2 billion in annual sales in 2014. And this within two years of launching the brand exclusively in our stores! During the year, more than 20 million households bought one of our more than 2,600 Simple Truth or Simple Truth Organic items.

Investing to Grow

Our mergers with Harris Teeter and Vitacost have also opened new markets that present meaningful growth opportunities for Kroger. In fact, Vitacost today sells direct to consumers in all U.S. states and territories, and more than 160 countries worldwide.

We are currently pursuing our fill-in markets strategy, as outlined in 2012, and are making good progress. Fill-in markets are existing markets where we are investing capital to grow square footage, primarily through new and expanded stores and remodels, in order to increase our market share.

*          *          *

The Kroger Difference

Increasingly, shoppers care about price, product selection and quality, the store experience and how well companies take care of their associates, communities and the planet.

Taking Care of Our Associates

I am proud to say that Kroger is in the food business and the people business. Our people are our greatest asset.

We want our workforce to be the healthiest in America. To improve workplace wellness, we give associates a variety of tools, including an incentive program with measurable outcomes. Over the last four years, we have seen a demonstrated improvement in the health of our workforce through lower cholesterol, blood pressure and blood glucose scores. And, our workplace well-being program received a ‘Best Employers for Healthy Lifestyles’ award from the National Business Group on Health, and the company’s commitment to employee health and wellness was recognized by the American Heart Association.

Our goal is to provide our associates a total compensation package that includes solid wages, good quality, affordable health care, and retirement benefits. In 2014, Kroger invested $1.8 billion in our associates’ health care.

Kroger is also one of the safest companies in our industry. Associate engagement in innovative safety programs has reduced accident rates in our stores and manufacturing plants by 77 percent since 1995. In 2014, 649 retail locations and three manufacturing plants went the entire year without a recordable injury.

We continue to do our part to create jobs and opportunity. We employ 25,000 more associates today than we did last year. More than 90 percent of these new jobs are in our supermarket divisions, ranging from full-time department heads and assistant store managers to part-time courtesy clerks and cashiers. Over the last seven years, Kroger has created more than 65,000 new jobs in our local communities. We are particularly proud that we hired more than 6,000 veterans in 2014 and more than 29,000 veterans since 2009.

We pride ourselves on our opportunity culture, where all associates have an opportunity to grow, build new skills and turn a job into a career. More than two-thirds of our store managers started their Kroger careers as part-time clerks. I began my own career at Kroger as a part-time stock clerk while earning my degree at the University of Kentucky, so I know first-hand the opportunities that are available to our associates.

One of the things that makes Kroger so special is how we extend our opportunity culture to everyone. We have a long tradition of hiring people with disabilities, especially on our front lines serving customers. Last year, Kroger was recognized by the Marriott Foundation for People with Disabilities and separately by the Ohio Governor’s Council on People with Disabilities for significantly contributing to employment opportunities for the disability community.

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Taking Care of Our Communities

We are a locally-connected retailer that is embedded in the community. When you combine the food and funds we donate, working together our Company, foundation, customers, associates and suppliers contributed more than $280 million to our local communities in 2014.

We strive to be connected to and responsive to the local communities we serve by:

●	Delivering the equivalent of more than 270 million meals to more than 100 local Feeding America food banks in 2014.
●	Donating more than $6 million in 2014 in support of women’s health and breast cancer awareness programs. Fully half of it was contributed by customers and associates.
●	Contributing $3.3 million to the USO in 2014 to help support the military and their families. Since 2010, Kroger has donated $11.9 million to the USO – the largest cumulative gift to the USO in that organization’s history.
●	Supporting more than 30,000 schools and local organizations with $51 million donated in 2014 through our Community Rewards program that delivers customer-driven donations based on purchases in our stores.

We make all of these strategic investments because they strengthen the communities we call home and also improve our connection with our customers, who have identified these causes as the priorities that are most important to them. We see our community connection – the Kroger difference – as an important competitive advantage for our company and as a point of pride for our associates.

We also see engagement with local farmers and producers as part of our efforts to make a difference in our communities. We work closely with growers to buy local and market their seasonally-fresh products in our stores, and we participate in established programs such as Colorado Proud, Kentucky Proud and Go Texan to meet the growing demand for fresh, locally-sourced foods.

Kroger is a leader in supplier diversity, spending more than $2 billion annually with women- and minority-owned businesses. We proudly remain a member of the Billion Dollar Roundtable and the United States Hispanic Chamber of Commerce Million Dollar Club, received a Top Organization for Multicultural Business Opportunities award from Diversity Business, and was named one of America’s Top Corporations for Women Business Enterprises by the Women’s Business Enterprise National Council.

Taking Care of the Planet

In 2014, we continued our 12-year journey to reduce our energy consumption while expanding square footage and sales. We have reduced energy consumption by 35% since 2000. Kroger was recently honored as a 2015 ENERGY STAR Partner of the Year for our work in energy management.

One of Kroger’s key sustainability priorities is moving our retail stores and facilities toward “zero waste”. Our stores are sending less waste to landfills and incinerators through a variety of efforts, including composting and our innovative Perishable Donations Program – a process to rescue safe, edible fresh products and donate them quickly to local food banks. This system has been replicated by many retailers and today fresh products make up more than half of the food distributed nationwide by Feeding America. Our manufacturing facilities continue to lead waste reduction. Today, 26 of our 37 manufacturing plants are designated as “zero waste” facilities.

Another important area is sustainable seafood. Our goal is to source 100% of our fresh and frozen seafood from sustainable sources. We continue to make strong progress toward this goal, reaching 86% in 2014 and placing Kroger among market-leaders.

You can learn more about our sustainability initiatives by reading our annual sustainability report, available on our website sustainability.kroger.com.

*          *          *

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Retirements

Dave Dillon, who as I said in last year’s letter has been called “the grocers’ grocer”, retired as Chairman of the Board in December. We thank him for his ten incredible years as Chairman and CEO, and wish him, his wife Dee, and his family much happiness as they turn to the next chapter in their lives.

We also extend our appreciation to Reuben Anderson, who retired from Kroger’s Board of Directors in 2014 after 23 years of service; Steven Rogel, who retired from Kroger’s Board of Directors in 2014 after 15 years of service; Bruce Macaulay, president of Kroger’s Columbus division, who retired in March after 42 years of service with the Company; and Katy Barclay, senior vice president of human resources, who retires in the fall after five years developing Kroger’s human resources capabilities. On behalf of the entire Kroger family, we thank each of these individuals for their service and leadership.

It is my great honor to continue working with one of the strongest management teams in the retail industry.

*          *          *

We are a company inspired by purpose: To lift up our customers and each other, to make someone’s day brighter, whether through a smile, making dinner easier, or extending a hand to a friend. Our purpose extends well beyond our store walls, and we strive to be good stewards for our customers and associates, planet and communities.

I am pleased to say we fulfilled our commitments to our shareholders, customers and associates in 2014. While we are proud of the strong year behind us, we are looking ahead. We intend to continue growing market share and share of loyalty, and growing our top and bottom lines. There is much more to come.

On behalf of our entire team, thank you for your continued confidence in Kroger.

W. Rodney McMullen
Chairman and Chief Executive Officer

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Congratulations to the winners of The Kroger Co. Community Service Award for 2014:

2014 Community Service Award Winners

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Notice of Annual Meeting of Shareholders

Thursday, June 25, 2015
11:00 a.m., eastern time

To All Shareholders of The Kroger Co.:

You are invited to the Annual Meeting of Shareholders of The Kroger Co. which will be held at the Music Hall Ballroom, Music Hall, 1241 Elm Street, Cincinnati, Ohio 45202, on June 25, 2015, at 11:00 a.m., eastern time, for the following purposes:

	1.		To elect eleven directors for the ensuing year;
	2.		To approve, on an advisory basis, our executive compensation;
	3.		To ratify the selection of our independent auditor for fiscal year 2015;
	4.		To vote on three shareholder proposals, if properly presented at the meeting; and
	5.		To transact such other business as may properly be brought before the meeting.

Holders of common shares of record at the close of business on April 30, 2015, will be entitled to notice of and to vote at the meeting.

Attendance

Only shareholders holding shares at the close of business on the record date, or their duly appointed proxies, may attend the meeting. If you plan to attend the meeting, you must bring the notice of the meeting that was separately mailed to you or the top portion of your proxy card, either of which will serve as your admission ticket.

YOUR MANAGEMENT DESIRES TO HAVE A LARGE NUMBER OF SHAREHOLDERS REPRESENTED AT THE MEETING, IN PERSON OR BY PROXY. PLEASE VOTE YOUR PROXY ELECTRONICALLY VIA THE INTERNET OR BY TELEPHONE. IF YOU HAVE ELECTED TO RECEIVE PRINTED MATERIALS, YOU MAY SIGN AND DATE THE PROXY AND MAIL IT IN THE SELF-ADDRESSED ENVELOPE PROVIDED. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.

If you are unable to attend the annual meeting, you may listen to a live webcast of the meeting, which will be accessible through our website, ir.kroger.com, at 11:00 a.m., eastern time.

	By the order of the Board of Directors,
	Christine S. Wheatley, Secretary

May 13, 2015
Cincinnati, OH

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Proxy Statement

May 13, 2015

This Combined Notice, Proxy Statement and Annual Report is being furnished to the shareholders of The Kroger Co. in connection with the solicitation of proxies by the Board of Directors for use at the Annual Meeting of Shareholders to be held on June 25, 2015, at 11:00 a.m., eastern time, at the Music Hall Ballroom, Music Hall, 1241 Elm Street, Cincinnati, Ohio 45202 and at any adjournments thereof.

Our principal executive offices are located at 1014 Vine Street, Cincinnati, Ohio 45202-1100. Our telephone number is 513-762-4000. This Proxy Statement and Annual Report, and the accompanying proxy card were first furnished to shareholders on May 13, 2015.

Your proxy is being solicited by the Board of Directors of The Kroger Co., and the cost of solicitation will be borne by Kroger. Kroger will reimburse banks, brokers, nominees, and other fiduciaries for postage and reasonable expenses incurred by them in forwarding the proxy material to their principals. Kroger has retained D.F. King & Co., Inc., 48 Wall Street, New York, New York, to assist in the solicitation of proxies and will pay that firm a fee estimated at present not to exceed $15,000. Proxies may be solicited personally, by telephone, electronically via the Internet, or by mail.

Robert D. Beyer, W. Rodney McMullen, and Ronald L. Sargent, all of whom are Kroger directors, have been named members of the Proxy Committee for the 2015 Annual Meeting.

As of the close of business on April 30, 2015, the record date, our outstanding voting securities consisted of 490,201,501 common shares, the holders of which will be entitled to one vote per share at the annual meeting. The shares represented by each proxy will be voted in the manner specified unless the proxy is revoked before it is exercised. You may change or revoke your proxy by giving us notice in writing sent to Kroger’s Secretary, or in person at the meeting, or by executing and sending us a subsequent proxy. Shareholders may not cumulate votes in the election of directors.

If you are a registered shareholder and return your proxy card without instructions, the Proxy Committee will vote in accordance with the recommendations of the Board of Directors. If you hold shares in street name and do not provide your broker with specific voting instructions on proposals 1, 2, 4, 5 and 6, your broker does not have the authority to vote on those proposals. This is generally referred to as a “broker non-vote.” Proposal 3 is 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.

Item No. 1, Election of Directors – An affirmative vote of the majority of the total number of votes cast “for” or “against” a director nominee is required for the election of a director in an uncontested election. Accordingly, broker non-votes and abstentions will have no effect on this proposal. A majority of votes cast means that the number of shares voted “for” a director nominee must exceed the number of votes “against” such director.

Item No. 2, Advisory Vote to Approve Executive Compensation – Advisory approval by shareholders of executive compensation requires the affirmative vote of the majority of shares participating in the voting. Accordingly, broker non-votes and abstentions will have no effect on this proposal.

Item No. 3, Ratification of Independent Auditors – Ratification by shareholders of the selection of independent public accountants requires the affirmative vote of the majority of shares participating in the voting. Accordingly, abstentions will have no effect on this proposal.

Item Nos. 4, 5, and 6, Shareholder Proposals – The affirmative vote of the majority of shares participating in the voting on a shareholder proposal is required for its adoption. Accordingly, broker non-votes and abstentions will have no effect on these proposals. Proxies will be voted AGAINST these proposals unless the Proxy Committee is otherwise instructed on a proxy properly executed and returned.

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Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on June 25, 2015.

Under the rules adopted by the SEC, we are furnishing proxy materials to our shareholders primarily on the Internet. We believe that this process should expedite shareholders’ receipt of proxy materials, lower the cost of our annual meeting and help to conserve natural resources. On or about May 13, 2015, we mailed to each of our shareholders (other than those who previously requested electronic or paper delivery), a Notice of Availability of Proxy Materials containing instructions on how to access and review the proxy materials on the Internet and instructions on how to vote your shares. The Notice of Availability of Proxy Materials also contains instructions on how to receive a paper or e-mail copy of the proxy materials. If you receive a Notice of Availability of Proxy Materials, you will not receive a printed copy of the proxy materials unless you request one. If you receive paper copies of our proxy materials, you may also view these materials at www.proxyvote.com. If you receive paper copies of our proxy materials and wish to receive them by electronic delivery in the future, please request electronic delivery at www.proxyvote.com.

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Proposals to Shareholders

Election of Directors
(Item no. 1)

Kroger’s Board of Directors, as now authorized, consists of eleven members. All members are to be elected at the annual meeting to serve until the annual meeting in 2016, or until their successors have been elected by the shareholders or by the Board pursuant to Kroger’s Regulations, and qualified. 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, will be 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 committee memberships stated below are those in effect as of the date of this proxy statement. It is intended that, except to the extent that authority is withheld, proxies by the Proxy Committee will be voted for the election of the following nominees:

Nominees for Director for Terms of Office
Continuing Until 2016

		Professional				Director
Name		Occupation(1)		Age		Since
Nora A. Aufreiter		Ms. Aufreiter is a Director Emeritus of McKinsey & Company, a global management consulting firm. She retired in June 2014 after more than 30 years as a director and senior partner. During this 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 Nieman Marcus Group. Ms. Aufreiter also serves on the boards of St. Michael’s Hospital and the Canadian Opera Company, and is a member of the Dean’s Advisory Board for the Ivey Business School in Ontario, Canada. She is a member of the Financial Policy Committee and the Public Responsibilities Committee. Ms. Aufreiter has over 30 years of broad business experience in a variety of retail sectors. She brings to Kroger’s Board her expertise gained while earning her MBA from the Harvard Business School. 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.		55		2014

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		Professional				Director
Name		Occupation(1)		Age		Since
Robert D. Beyer		Mr. Beyer is Chairman of Chaparal Investments LLC, a private investment firm and holding company that he founded in 2009. From 2005 to 2009, Mr. Beyer served as Chief Executive Officer of The TCW Group, Inc., a global investment management firm. From 2000 to 2005, he served as President and Chief Investment Officer of Trust Company of the West, the principal operating subsidiary of TCW. Mr. Beyer is a member of the Board of Directors of The Allstate Corporation and Leucadia National Corporation. He is chair of the Corporate Governance Committee, a member of the Financial Policy Committee, and our Lead Director. Mr. Beyer brings to Kroger his experience as CEO of TCW, a global investment management firm serving many of the largest institutional investors in the U.S. He has exceptional insight into Kroger’s financial strategy, and his experience qualifies him to serve as a member of the Board. While at TCW, he also conceived and developed the firm’s risk management infrastructure, an experience that is useful to Kroger’s Board in performing its risk management oversight functions. His abilities and service as a director were recognized by his peers, who selected Mr. Beyer as an Outstanding Director in 2008 as part of the Outstanding Directors Program of the Financial Times. His strong insights into corporate governance form the foundation of his leadership role as Lead Director on the Board.		55		1999
Susan J. Kropf		Ms. Kropf was President and Chief Operating Officer of Avon Products Inc., a manufacturer and marketer of beauty care products, from 2001 until her retirement in January 2007. She joined Avon in 1970. Prior to her most recent assignment, Ms. Kropf had been Executive Vice President and Chief Operating Officer, Avon North America and Global Business Operations from 1998 to 2000. From 1997 to 1998 she was President, Avon U.S. Ms. Kropf was a member of Avon’s Board of Directors from 1998 to 2006. She currently is a member of the Board of Directors of Coach, Inc., MeadWestvaco Corporation, and Sherwin Williams Company. She is a member of the Audit and Financial Policy Committees. Ms. Kropf has gained a unique consumer insight, having led a major beauty care company. She has extensive experience in manufacturing, marketing, supply chain operations, customer service, and product development, all of which assist her in her role as a member of Kroger’s Board. Ms. Kropf has a strong financial background, and has served on compensation, audit, and corporate governance committees of other boards. She was inducted into the YWCA Academy of Women Achievers.		66		2007

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		Professional				Director
Name		Occupation(1)		Age		Since
David B. Lewis		Mr. Lewis is Of Counsel to and a former shareholder and director of Lewis & Munday, a Detroit based law firm with offices in Washington, D.C. and New York City. He is a director of H&R Block, Inc. and STERIS Corporation. Mr. Lewis is a member of the Corporate Governance and Financial Policy Committees. In addition to his background as a practicing attorney and expertise in bond financing, Mr. Lewis brings to Kroger’s Board his financial expertise gained while earning his MBA in Finance as well as his service and leadership on Kroger’s audit committee and the board committees of other publicly traded companies. Mr. Lewis has served on the Board of Directors of Conrail, Inc., LG&E Energy Corp., M.A. Hanna, TRW, Inc., and Comerica, Inc. He is a former chairman of the National Association of Securities Professionals.		70		2002
W. Rodney McMullen		Mr. McMullen was elected Chief Executive Officer of Kroger in January 2014 and Chairman of the Board, effective January 1, 2015. Prior to this, he served as President and Chief Operating Officer from August 2009 to December 2013. Prior to that, Mr. McMullen was elected Vice Chairman in 2003, Executive Vice President in 1999, and Senior Vice President in 1997. Mr. McMullen is a director of Cincinnati Financial Corporation. Mr. McMullen has broad experience in the supermarket business, having spent his career spanning over 35 years with Kroger. He has a strong financial background, having served as our CFO, and played a major role as architect of Kroger’s strategic plan. His service on the compensation, executive, and investment committees of Cincinnati Financial Corporation adds depth to his extensive retail experience.		54		2003
Jorge P. Montoya		Mr. Montoya was President of The Procter & Gamble Company’s Global Snacks & Beverage division, and President of Procter & Gamble Latin America, from 1999 until his retirement in 2004. Prior to that, he was an Executive Vice President of Procter & Gamble, a provider of branded consumer packaged goods, from 1995 to 1999. Mr. Montoya is a director of The Gap, Inc. He is chair of the Public Responsibilities Committee and a member of the Compensation Committee. Mr. Montoya brings to Kroger’s Board over 30 years of leadership experience at a premier consumer products company. He has a deep knowledge of the Hispanic market, as well as consumer products and retail operations. Mr. Montoya has vast experience in marketing and general management, including international business. He was named among the 50 most important Hispanics in Business & Technology, in Hispanic Engineer & Information Technology Magazine.		68		2007

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		Professional				Director
Name		Occupation(1)		Age		Since
Clyde R. Moore		Mr. Moore is the Chairman of First Service Networks, a national provider of facility and maintenance repair services. Prior to that he was Chairman and Chief Executive Officer of First Service Networks from 2000 to 2014. Mr. Moore is chair of the Compensation Committee and a member of the Corporate Governance Committee. Mr. Moore has over 30 years of general management experience in public and private companies. He has sound experience as a corporate leader overseeing all aspects of a facilities management firm and a manufacturing concern. Mr. Moore’s expertise broadens the scope of the Board’s experience to provide oversight to Kroger’s facilities and manufacturing businesses.		61		1997
Susan M. Phillips		Dr. Phillips is Professor Emeritus of Finance at The George Washington University School of Business. She joined that university as a Professor and Dean in 1998. She retired as Dean of the School of Business in 2010 and as Professor the following year. She was a member of the Board of Governors of the Federal Reserve System from December 1991 through June 1998. Before her Federal Reserve appointment, Dr. Phillips served as Vice President for Finance and University Services and Professor of Finance in The College of Business Administration at the University of Iowa from 1987 through 1991. She is a director of CBOE Holdings, Inc., State Farm Mutual Automobile Insurance Company, State Farm Life Insurance Company, State Farm Companies Foundation, National Futures Association, the Chicago Board Options Exchange, and Agnes Scott College. Dr. Phillips also was a trustee of the Financial Accounting Foundation until the end of 2010. She is a member of the Audit and Compensation Committees. Dr. Phillips brings to the Board strong financial acumen, along with a deep understanding of, and involvement with, the relationship between corporations and the government. Her experience in academia brings a unique and diverse viewpoint to the deliberations of the Board. Dr. Phillips has been designated an Audit Committee financial expert.		70		2003
James A. Runde		Mr. Runde is a special advisor and a former Vice Chairman of Morgan Stanley, a financial services provider, where he has been employed since 1974. He was a member of the Board of Directors of Burlington Resources Inc. prior to its acquisition by ConocoPhillips in 2006. Mr. Runde serves as a Trustee Emeritus of Marquette University and the Pierpont Morgan Library. He is a member of the Compensation Committee and chair of the Financial Policy Committee. Mr. Runde brings to Kroger’s Board a strong financial background, having led a major financial services provider. He has served on the compensation committee of a major corporation.		68		2006

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		Professional				Director
Name		Occupation(1)		Age		Since
Ronald L. Sargent		Mr. Sargent is Chairman and Chief Executive Officer of Staples, Inc., a consumer products retailer, where he has been employed since 1989. Prior to joining Staples, Mr. Sargent spent 10 years with Kroger in various positions. In addition to serving as a director of Staples, Mr. Sargent is a director of Five Below, Inc. During the past five years, he was a director of Mattel, Inc. and The Home Depot, Inc. Mr. Sargent is chair of the Audit Committee and a member of the Public Responsibilities Committee. 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 that he leads. His understanding of retail operations and consumer insights are of particular value to the Board. Mr. Sargent has been designated an Audit Committee financial expert.		59		2006
Bobby S. Shackouls		Until the merger of Burlington Resources Inc. and ConocoPhillips, which became effective in 2006, Mr. Shackouls was Chairman of the Board of Burlington Resources Inc., a natural resources business, since July 1997 and its President and Chief Executive Officer since December 1995. He had been a director of that company since 1995 and President and Chief Executive Officer of Burlington Resources Oil and Gas Company (formerly known as Meridian Oil Inc.), a wholly-owned subsidiary of Burlington Resources, since 1994. Mr. Shackouls is a director of Plains GP Holdings, L.P. and Oasis Petroleum Inc. During the past five years, Mr. Shackouls was a director of ConocoPhillips and PNGS GP LLC, the general partner of PAA Natural Gas Storage, L.P. Mr. Shackouls is a member of the Audit and Corporate Governance Committees. Mr. Shackouls previously served as Kroger’s Lead Director. Mr. Shackouls brings to the Board the critical thinking that comes with a chemical engineering background, as well as his experience leading a major natural resources company, coupled with his corporate governance expertise.		64		1999

 

(1)	Except as noted, each of the directors has been employed by his or her present employer (or a subsidiary) in an executive capacity for at least five years.

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Information Concerning the Board of Directors

Committees of the Board

The Board has five standing committees including Audit, Compensation and Corporate Governance. All standing committees are composed exclusively of independent directors. The current charter of each Board committee is available on our website at ir.kroger.com under Corporate Governance – Committee Composition.

The table below provides the current membership of our independent directors on each of the standing Board committees.

						Corporate		Financial		Public
		Audit		Compensation		Governance		Policy		Responsibilities
Name		Committee		Committee		Committee		Committee		Committee
Nora A. Aufreiter								x		x
Robert D. Beyer						Chair		x
Susan J. Kropf		x						x
David B. Lewis						x		x
Jorge P. Montoya				x						Chair
Clyde R. Moore				Chair		x
Susan M. Phillips		x		x
James A. Runde				x				Chair
Ronald L. Sargent		Chair								x
Bobby S. Shackouls		x				x

During 2014, the Audit Committee met five times, the Compensation Committee met four times, and the Corporate Governance Committee met two times. The Audit Committee reviews financial reporting and accounting matters pursuant to its charter and selects our independent accountants. The Compensation Committee recommends for determination by the independent members of the Board the compensation of the CEO, determines the compensation of our other senior management, and administers some of our incentive programs. Additional information on the Compensation Committee’s processes and procedures for consideration of executive compensation are addressed in the Compensation Discussion and Analysis section of this proxy statement. The Corporate Governance Committee develops criteria for selecting and retaining members of the Board, seeks out qualified candidates for the Board, and reviews the performance of the Board and, along with the other independent board members, the CEO.

Director Nominations

The Corporate Governance Committee will consider shareholder recommendations for nominees for membership on the Board of Directors. If shareholders wish to nominate a person or persons for election to the Board at our 2016 annual meeting, written notice must be submitted to Kroger’s Secretary, and received at our executive offices not later than January 13, 2016. 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 Committee will use the same criteria in evaluating candidates submitted by shareholders as it uses in evaluating candidates identified by the Committee. These criteria are:

●	Demonstrated ability in fields considered to be of value in the deliberations of the Board, including business management, public service, education, science, law, and government;
●	Highest standards of personal character and conduct;

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●	Willingness to fulfill 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.

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. The Committee considers director candidates that help the Board reflect the diversity of our shareholders, associates, customers and the communities in which we operate. Some consideration also is given to the geographic location of director candidates in order to provide a reasonable distribution of members from Kroger’s operating areas.

The Corporate Governance Committee recruits candidates for Board membership through its own efforts and through suggestions from other directors and shareholders. In addition, the Committee has retained an independent search firm to assist in identifying and recruiting director candidates who meet the criteria established by the Committee.

Corporate Governance

The Board has adopted Guidelines on Issues of Corporate Governance. These Guidelines, which include copies of the current charters for the Audit, Compensation, and Corporate Governance Committees, and the other committees of the Board, are available on our corporate website at ir.kroger.com. Shareholders may obtain a copy of the Guidelines by making a written request to Kroger’s Secretary at our executive offices.

Independence

The Board has determined that all of the non-employee directors have no material relationships with Kroger and, therefore, are independent for purposes of the New York Stock Exchange listing standards. The Board made its determination based on information furnished by all members regarding their relationships with Kroger and its management, and other relevant information. After reviewing the information, the Board determined that all of the non-employee directors were independent because (a) they all satisfied the criteria for independence set forth in Rule 303A.02 of the NYSE Listed Company Manual, (b) any business transactions between Kroger and entities with which the directors are affiliated, the value of which falls below the thresholds identified by the NYSE listing standards, and (c) none had any material relationships with Kroger except for those arising directly from their performance of services as a director for Kroger.

Audit Committee Expertise

The Board has determined that Susan M. Phillips and Ronald L. Sargent, independent directors who are members of the Audit Committee, are “audit committee financial experts” as defined by applicable 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, employees and directors, including Kroger’s principal executive, financial, and accounting officers. The Policy is available on our corporate website at ir.kroger.com. Shareholders may also obtain a copy of the Policy by making a written request to Kroger’s Secretary at our executive offices. We intend to satisfy the disclosure requirement regarding any amendment to, or a waiver from, a provision of the Policy for our principal executive, financial and accounting officers by posting that information on our website at ir.kroger.com.

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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 email address (helpline@kroger.com) established by the Board’s Audit Committee. The concerns are investigated by Kroger’s Vice President of Auditing and reported to the Audit Committee as deemed appropriate by the Vice President of Auditing.

Shareholders or interested parties also may communicate with the Board in writing directed to Kroger’s Secretary at our executive offices. The Secretary will consider the nature of the communication and determine whether to forward the communication to the chair of the Corporate Governance Committee. Communications relating to personnel issues or our ordinary business operations, or seeking to do business with us, will be forwarded to the business unit of Kroger that the Secretary deems appropriate. All 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 Committee or the entire Board.

Attendance

The Board held five meetings in fiscal year 2014. During fiscal year 2014, 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 Board are expected to use their best efforts to attend all annual meetings of shareholders. All thirteen members then serving on the Board attended last year’s annual meeting.

Compensation Consultants

The Compensation Committee directly engages a compensation consultant from Mercer Human Resource Consulting to advise the Committee in the design of compensation for our executive officers. In 2014, Kroger paid that consultant $294,868 for work performed for the Committee. Kroger, on management’s recommendation, retained the parent and affiliated companies of Mercer Human Resource Consulting to provide other services for Kroger in 2014, for which Kroger paid $4,425,282. These other services primarily related to insurance claims (for which Kroger was reimbursed by insurance carriers as claims were adjusted), insurance brokerage and bonding commissions, and pension consulting. Kroger also made payments to affiliated companies for insurance premiums that were collected by the affiliated companies on behalf of insurance carriers, but these amounts are not included in the totals referenced above, as the amounts were paid over to insurance carriers for services provided by those carriers. Although neither the Committee nor the Board expressly approved the other services, after taking into consideration the NYSE’s independence standards and the SEC rules, the Committee determined that the consultant is independent and his work has not raised any conflict of interest because (a) the consultant was first engaged by the Committee before he became associated with Mercer; (b) the consultant works exclusively for the Committee and not for our management; (c) the consultant does not benefit from the other work that Mercer’s parent and affiliated companies perform for Kroger; and (d) neither the consultant nor the consultant’s team perform any other services for Kroger. The 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 employee of Kroger during fiscal year 2014, and no member of the Compensation Committee is a former officer of the Company or was a party to any disclosable related person transaction involving the Company. During fiscal year 2014, 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 the Board of Directors or Compensation Committee of the Company.

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Board Oversight of Enterprise Risk

While risk management is primarily the responsibility of Kroger’s management team, the Board is responsible for the 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.

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 that exposure. The Audit Committee also discusses with management its policies with respect to risk assessment and risk management.

Management, including our Chief Ethics and Compliance Officer, provides regular updates throughout the year to the respective Board committees regarding the management of the risks they oversee, and each of these committees reports on risk to the full Board at each regular meeting of the Board.

In addition to the reports from the committees, the Board receives presentations throughout the year from various department and business unit leaders that include discussion of significant risks as necessary. At each Board meeting, the Chairman and CEO addresses matters of particular importance or concern, including any significant areas of risk 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 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.

We believe that our approach to risk oversight, as described above, optimizes our ability to assess interrelationships 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 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, led by Mr. McMullen as Chairman of the Board and CEO, in identifying risks and implementing effective risk management policies and controls.

Board Leadership Structure and Lead Director

The Board is composed of ten independent non-employee directors and one management director, Mr. McMullen, the Chairman and CEO. The Board has established five standing committees — audit, compensation, corporate governance, financial policy, and public responsibilities. Each committee is composed solely of independent directors, each with a different independent director serving as committee chair.

In addition, as provided in the Guidelines on Issues of Corporate Governance, the Board has designated one of the independent directors as Lead Director. The Lead Director serves a variety of roles, including reviewing and approving Board meeting agendas, materials and schedules to confirm the appropriate topics are reviewed and sufficient time is allocated to each; serving as liaison between the Chairman, management, and the non-management 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 an executive session 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. Unless otherwise determined by the Board, the chair of the Corporate Governance Committee is designated as the Lead Director. Robert Beyer, an independent director and the chair of the Corporate Governance Committee, is currently the Lead Director. Mr. Beyer is an effective Lead Director for Kroger due to, among other things, his independence, his deep strategic and operational understanding of Kroger obtained while serving as a Kroger director, his insight into corporate governance and his experience on other boards.

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With respect to the roles of Chairman and CEO, the Guidelines provide that the Board will determine when it is in the best interests of Kroger and our shareholders for the roles to be separated or combined, and the Board exercises its discretion as it deems appropriate in light of prevailing circumstances. Upon retirement of our former Chairman, David B. Dillon, on December 31, 2014, the Board determined that it is in the best interests of Kroger and our shareholders for one person to serve as the Chairman and CEO, as was the case from 2004 through 2013. 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 interests of shareholders. Additionally, this structure provides an effective balance between strong Company leadership and appropriate safeguards and oversight by independent directors. The Board believes that the combination or separation of these positions should continue to be considered as part of the succession planning process, as was the case in 2003 and 2014 when the roles were separated.

The Board and each of its committees conduct an annual self-evaluation to determine whether they are functioning effectively. As part of this annual self-evaluation, the Board assesses whether the current leadership structure continues to be appropriate for Kroger and its shareholders. The Guidelines provide the flexibility for the Board to modify our leadership structure in the future as appropriate. We believe that Kroger, like many U.S. companies, has been well-served by this flexible leadership structure.

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Executive Compensation – Overview

As one of the largest retailers in the world, our executive compensation philosophy remains to attract and retain the best management talent and to motivate these employees to achieve our business and financial goals. We believe our strategy creates value for shareholders in a manner consistent with our focus on our core values: honesty, integrity, respect, inclusion, diversity, and safety.

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:

●	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, equity ownership; and
●	Components of compensation should be tied to an evaluation of business and individual performance measured against metrics that align with our business strategy.

This Compensation Discussion and Analysis provides a discussion and analysis of our compensation program for the executive officers. For the fiscal year ended January 31, 2015, the named executive officers were:

	Name		Title
	W. Rodney McMullen		Chairman and Chief Executive Officer
	J. Michael Schlotman		Senior Vice President and Chief Financial Officer
	Michael L. Ellis		President and Chief Operating Officer
	Kathleen S. Barclay		Senior Vice President of Human Resources
	Michael J. Donnelly		Senior Vice President of Merchandising
	David B. Dillon		Former Chairman

The compensation of our named executive officers in fiscal year 2014 reflects the above principles. Total compensation for the year is an indicator of how well Kroger performed compared to our business plan, reflecting how our compensation program responds to business challenges and the marketplace. We continue to deliver sales growth and positive earnings results.

●	A key metric, identical supermarket sales, excluding supermarket fuel, increased 5.2% from 2013. Through fiscal 2014, we have achieved 45 consecutive quarters of positive identical sales growth.
●	Net earnings per diluted share were $3.44 which exceeded our guidance range.
●	In September 2014, the Board raised the quarterly cash dividend by 12%, to $0.185 per share.

The Committee believes our management produced outstanding results in 2014, measured against increasingly aggressive business plan objectives for sales, net earnings, operating costs and our strategic plan. The compensation paid to our named executive officers reflected this fact as the annual performance-based cash bonus paid out at 121.5% of bonus potentials. The strong link between pay and performance is illustrated by a comparison of past years’ annual cash bonus, such as 2012, 2010 and 2009 with payouts of less than 100%. In those years, we did not achieve all of our business plan objectives. In 2014, all of our business plan goals were exceeded (with the exception of a set of measures under our strategic plan goal, which fell short), resulting in an annual bonus payout that exceeded 100% of potentials.

In keeping with our overall compensation philosophy, we endeavor to ensure that our executive compensation practices conform to best practices. In particular, over the past several years we have:

●	established significant stock ownership guideline levels to reinforce the link between the interests of our named executive officers and those of our shareholders;

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●	adopted claw-back policies under which the repayment of bonuses may be required in certain circumstances;
●	eliminated tax gross-ups;
●	adopted the recommendation of shareholders that they be permitted annually, on an advisory basis, to vote on executive compensation; and

●	adopted a policy prohibiting hedging and short sales, and restricting pledging of Kroger common shares by our officers and directors.

In addition, fifty percent of the equity awards granted to the named executive officers are in the form of performance units that are earned only to the extent that performance objectives are achieved. Equity compensation awards continue to play an important role in rewarding named executive officers for the achievement of long-term business objectives and providing incentives for the creation of shareholder value.

The following discussion and analysis addresses the compensation of the named executive officers and the factors considered by the Committee in setting compensation for the named executive officers and making recommendations to the independent directors in the case of the CEO’s compensation. Additional detail is provided in the compensation tables and the accompanying narrative disclosures that follow this discussion and analysis.

Results of 2014 Advisory Vote to Approve Executive Compensation

At the 2014 Annual Meeting of Shareholders, we held our fourth annual advisory vote on executive compensation. Over 96% of the votes cast were in favor of the advisory proposal in 2014. The Committee considers this to be an overwhelmingly favorable outcome and believes it conveys our shareholders’ support of the Committee’s decisions and the existing executive compensation programs. As a result, the Committee made no material changes in the structure of our compensation programs or pay for performance philosophy. At the 2015 Annual Meeting of Shareholders, in keeping with our shareholders’ request for an annual advisory vote, we will again hold an advisory vote to approve executive compensation (see page 55). The Committee will continue to consider the results from this year’s and future advisory votes on executive compensation.

Executive Compensation – Objectives

The Committee has several related objectives regarding compensation. First, the Committee believes that compensation must be designed to attract and retain those best suited to fulfill the challenging roles that executive officers play at Kroger. Second, some elements of compensation should help align the interests of our officers with the interests of our shareholders. Third, compensation should create strong incentives for the officers (a) to achieve the annual business plan targets established by the Board, and (b) to achieve Kroger’s long-term strategic objectives. In developing compensation programs and amounts to meet these objectives, the Committee exercises judgment to ensure that executive officer compensation is appropriate and competitive in light of Kroger’s performance and the needs of the business.

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 non-employee directors, officers and some other key executives to acquire and hold a minimum dollar value of Kroger common shares as set forth below:

Position		Multiple of Base Salary
Chief Executive Officer		5 times
Chief Operating Officer		4 times
Executive Vice Presidents and Senior Vice Presidents		3 times
Other Officers and Key Executives		2 times
Non-employee Directors		3 times annual base cash retainer

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Covered individuals are expected to achieve the target level within five years of appointment to their position. If the requirements have not been met, directors, officers and key executives, including the named executive officers, must hold 100% of shares received upon the exercise of stock options or 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 shares unless the disposition is approved in advance by the CEO, or by the Board or Compensation Committee for the CEO.

Role of Compensation Committee

The Compensation Committee of the Board has the primary responsibility for establishing the compensation of our executive officers, including the named executive officers, with the exception of the Chief Executive Officer. The 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.

Establishing Executive Compensation

The independent members of the Board have the exclusive authority to determine the amount of the CEO’s salary, the bonus potential for the CEO, the nature and amount of any equity awards made to the CEO, and any other compensation decisions related to the CEO. In setting the annual bonus potential for the CEO, the independent directors determine the dollar amount that will be multiplied by the percentage payout under the annual bonus plan generally applicable to all corporate management, including the named executive officers. The independent directors retain discretion to reduce the percentage payout the CEO would otherwise receive. The independent directors thus make a separate determination annually concerning both the CEO’s bonus potential and the percentage of bonus paid.

The Committee performs the same function and exercises the same authority as to the other named executive officers. The Committee’s annual review of compensation for the named executive officers includes the following:

●	Conducts an annual review of all components of compensation, quantifying total compensation for the named executive officers on tally sheets. The review includes a summary for each named executive officer of salary; annual performance-based cash bonus; long-term performance-based cash and performance unit compensation; equity; accumulated realized and unrealized stock option gains and restricted stock and performance unit values; the value of any perquisites; retirement benefits; company paid health and welfare benefits; banked vacation; severance benefits available under The Kroger Co. Employee Protection Plan; and earnings and payouts available under Kroger’s nonqualified deferred compensation program.
●	Considers internal pay equity at Kroger to ensure that the CEO is not compensated disproportionately. The Committee has determined that the compensation of the CEO and that of the other named executive officers 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 Committee’s compensation consultants (described below) comparing named executive officer and other senior executive compensation with that of other companies, primarily our competitors, to ensure that the Committee’s objectives of competitiveness are met.

●

Takes into account a recommendation from the CEO (except in the case of his own compensation) for salary, bonus potential, and equity awards for each of the senior officers including the other named executive officers. The CEO’s recommendation takes into consideration the objectives established by and the reports received by the Committee as well as his assessment of individual job performance and contribution to our management team.

●

Reviews of historical information regarding salary, bonus, and equity compensation for a three year period.

In considering each of the factors above, the Committee does not make use of a formula, but rather subjectively reviews each in setting compensation.

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Compensation Policies as They Relate to Risk Management

As part of the Compensation Committee’s review of our compensation practices, the Committee considers and analyzes the extent to which risks arise from such practices and their impact on Kroger’s business. As discussed above in the Compensation Discussion and Analysis, our policies and practices for compensating employees are designed to, among other things, attract and retain high quality and engaged employees. In this process, the Committee also focuses on minimizing risk through the implementation of certain practices and policies, such as the executive compensation recoupment policy, which is described in more detail on page 30. 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.

The Committee’s Compensation Consultants and Benchmarking

As referenced earlier in this Compensation Discussion and Analysis, the Committee directly engages a compensation consultant from Mercer Human Resource Consulting to advise the Committee in the design of compensation for executive officers.

The Mercer consultant conducts an annual competitive assessment of executive positions at Kroger for the Committee. The assessment is one of several bases, as described above, on which the Committee determines compensation. The consultant assesses:

●	Base salary;
●	Target annual performance-based bonus;
●	Target annual cash compensation (the sum of salary and annual bonus);

●	Annualized long-term incentive awards, such as stock options, restricted stock, and performance-based long-term cash bonuses and performance-based equity awards; and
●	Total direct compensation (the sum of all these elements).

The consultant compares these elements against those of other companies in a group of publicly-traded food and drug retailers. For 2014, our peer group consisted of:

This peer group is the same group as was used in 2013. The make-up of the compensation peer group is reviewed annually and modified as circumstances warrant. Industry consolidation and other competitive forces will change the peer group used over time. The consultant also provides the Committee data from companies in “general industry,” a representation of major publicly-traded companies of similar size and scope. These data serve as reference points, particularly for senior staff positions where competition for talent extends beyond the retail sector.

From time to time, the Committee will engage an additional compensation consultant to conduct an additional review of Kroger’s executive compensation, as it deems advisable.

Considering the size of Kroger in relation to other peer group companies, the Committee believes that salaries paid to our named executive officers should be at or above the median paid by competitors for comparable positions. The Committee also aims to provide an annual bonus potential to our named executive officers that, if the increasingly more challenging annual business plan objectives are achieved, would cause total cash compensation to be meaningfully above the median.

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Components of Executive Compensation at Kroger

Compensation for our named executive officers is comprised of the following:

●	Salary;
●	Performance-Based Annual Cash Bonus (annual, non-equity incentive pay);
●	Performance-Based Long-Term Compensation (long-term, cash and performance unit incentive compensation);

●	Other Equity (non-qualified stock options and restricted stock);
●	Retirement and other benefits; and
●	Perquisites.

Salary

We provide our named executive officer’s and other employees a fixed amount of cash compensation, salary, for their work. Salaries for the named executive officers (with the exception of the CEO) are established each year by the Committee, in consultation with the CEO. The CEO’s salary is established by the independent directors. Salaries for the named executive officers were reviewed in June 2014.

The amount of each named executive officer’s salary is influenced by numerous factors including:

●	An assessment of individual contribution in the judgment of the CEO and the Committee (or, in the case of the CEO, of the Committee and the rest of the independent directors);
●	Benchmarking with comparable positions at peer group companies;
●	Tenure; and

●	Relationship with the salaries of other executives at Kroger.

The assessment of individual contribution is based on a subjective determination, without the use of performance targets, in the following areas:

●	Leadership;
●	Contribution to the officer group;
●	Achievement of established objectives, to the extent applicable;

●	Decision-making abilities;
●	Performance of the areas or groups directly reporting to the officer;
●	Increased responsibilities;

●	Strategic thinking; and
●	Furtherance of Kroger’s core values.

The amounts shown below reflect the salaries of the named executive officers effective August 1, following the annual review of their compensation in June.

		Salaries
		2012			2013			2014
W. Rodney McMullen*		$	939,600		$	968,600		$	1,144,000
J. Michael Schlotman		$	671,100		$	704,655		$	760,000
Michael L. Ellis**			—		$	527,360		$	800,000
Kathleen S. Barclay		$	677,300		$	700,000		$	721,000
Mike Donnelly		$	550,500		$	567,015		$	662,900
David B. Dillon		$	1,330,000		$	1,370,000		$	1,370,000

*	Mr. McMullen’s salary increased to $1,200,000 effective upon his appointment as Chairman of the Board on January 1, 2015.
**	Mr. Ellis first became a named executive officer in 2013.

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Performance-Based Annual Cash Bonus

A large percentage of our employees at all levels, including the named executive officers, are eligible to receive a performance-based annual cash bonus based on the performance of Kroger (in the case of the named executive officers) or business unit (in the case of employees in our business units). The Committee establishes bonus potentials for each named executive officer, other than the CEO, whose bonus potential is established by the independent directors. Actual payouts, which can exceed 100% of the potential amounts but may not exceed 200% of the potential amounts, represent the extent to which performance meets or exceeds the thresholds established by the Committee. Actual payouts may be as low as zero if performance does not meet the thresholds established by the Committee.

The Committee considers several factors in making its determination or recommendation as to bonus potentials. First, the individual’s level within the organization is a factor in that the Committee believes that more senior executives should have a substantial part of their compensation dependent upon Kroger’s performance. Second, the individual’s salary is a factor so that a substantial portion of a named executive officer’s total cash compensation is dependent upon Kroger’s performance. Finally, the Committee considers the report of its compensation consultant to assess the bonus potential of the named executive officers in light of total compensation paid to comparable executive positions in the industry.

The annual cash bonus potential in effect following the annual review of compensation in June for each named executive officer is shown below. Actual bonus payouts are prorated to reflect changes, if any, to bonus potentials during the year.

		Annual Bonus Potential
		2012			2013			2014
W. Rodney McMullen*		$	1,000,000		$	1,000,000		$	1,500,000
J. Michael Schlotman		$	550,000		$	550,000		$	550,000
Michael L. Ellis**			—		$	375,000		$	800,000
Kathleen S. Barclay		$	550,000		$	550,000		$	550,000
Mike Donnelly		$	425,000		$	425,000		$	550,000
David B. Dillon		$	1,500,000		$	1,500,000		$	1,230,000

*	Mr. McMullen’s annual bonus potential increased to $1,600,000 effective upon his appointment as Chairman of the Board on January 1, 2015.
**	Mr. Ellis first became a named executive officer in 2013.

Over time the Committee and our independent directors have placed an increased emphasis on our strategic plan by making the targets more difficult to achieve. The bonus plan allows for minimal or zero bonus to be earned at relatively low levels of performance to provide incentive for achieving even higher levels of performance.

The amount of bonus that the named executive officers earn each year is based upon Kroger’s performance compared to targets established by the Committee and the independent directors based on the business plan adopted by the Board of Directors. In 2014, 30% of the bonus was based on a target for identical sales without supermarket fuel; 30% was based on a target for EBITDA without supermarket fuel; 30% was based on implementation and results of a set of measures under our strategic plan, and 10% was based on a target for total operating costs as a percentage of sales, excluding fuel. An additional 5% would be earned if Kroger achieved three goals with respect to its supermarket fuel operations: achievement of the targeted fuel EBITDA of $208.25 million, an increase in total gallons sold of 3%, and achievement of 1,325 fuel centers placed in service. The fuel bonus of 5% is only available if all three measures are met. If any of the three fuel goals are not met, there is no payout under the fuel measurement. Kroger exceeded the three goals and, as a result, received the 5% fuel bonus.

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The 2014 targets established by the Committee, the actual fiscal 2014 results, and the bonus percentage earned in each of the components of annual cash bonus were as follows:

Actual

Performance

Targets

Actual

Compared to

Component

Minimum

100%

Performance

100% Target

Amount Earned

Identical Sales without supermarket

fuel (30%)

1.00%

3.00%

5.17%

172.33%

49.01

%

EBITDA without supermarket

fuel (30%)

$4.0004 Billion

$4.7064 Billion

$4.7719 Billion

101.39%

39.59

%

Strategic Plan (30%)

**

**

**

**

8.40

%

Total Operating Costs as percentage        of sales, excluding fuel (10%)*

Over budget by 25 basis points

Over budget by 5 basis points

Under budget by 14 basis points

19 basis points under target

19.50

%

Fuel Bonus (5%)

[As described in the text above]

5.00

%

Total Earned

121.50

%

*	Total Operating Costs were budgeted at 26.48% as a percentage of sales for fiscal year 2014.
**	The Strategic Plan component also was established by the Committee at the beginning of the year, but is not disclosed as it is competitively sensitive.

Following the close of the year, the Committee reviewed Kroger’s performance against the identical sales without supermarket fuel, EBITDA without supermarket fuel, strategic plan objectives, and total operating costs as a percent of sales, excluding fuel, and determined the extent to which Kroger achieved those objectives. Due to our performance when compared to the targets established by the Committee, and based on the business plan adopted by the Board, the named executive officers earned 121.5% of their bonus potentials. This is the same bonus percentage payout received by all other participants in the corporate annual bonus plan.

In 2014, as in all years, the Committee retained discretion to reduce the bonus payout for all executive officers, including the named executive officers, if the Committee determined for any reason that the bonus payouts were not appropriate given their assessment of Company performance. The independent directors retained that discretion for the CEO’s bonus. Those bodies also retained discretion to adjust the targets under the plan should unanticipated developments arise during the year. No adjustments were made to the targets in 2014. The Committee, and the independent directors in the case of the CEO, determined that the bonus payouts for the named executive officers, that were earned based on 2014 performance, should not be adjusted.

The percentage paid for 2014 represented excellent performance that exceeded our business plan objectives. A comparison of bonus percentages for the named executive officers in prior years demonstrates the variability of annual cash bonus incentive compensation and its strong links to our performance:

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The actual amounts of annual performance-based cash bonuses paid to the named executive officers for 2014 are reported in the Summary Compensation Table in the “Non-Equity Incentive Plan Compensation” column and footnote 4 to that table. These amounts represent the bonus potentials for each named executive officer multiplied by the 121.5% payout percentage earned in 2014. In no event can any participant receive a performance-based annual cash bonus in excess of $5,000,000. The maximum amount that a participant, including each named executive officer, can earn is further limited to 200% of the participant’s bonus potential amount.

Long-Term Incentives

The Committee believes in the importance of providing an incentive to the named executive officers to achieve the long-term goals established by the Board by conditioning a significant portion of compensation on the achievement of those goals.

In 2006, the Committee adopted the first in a series of long-term performance based compensation plans designed to reward participants for their contribution to the long-term performance of Kroger. These earlier plans provided for overlapping four year performance periods that allowed for the earning of a long-term cash bonus. In 2010, Kroger’s long-term incentive program was redesigned to combine the total value of our long-term cash bonus and equity programs into a cohesive, strategic reward for eligible executives at the Vice President level and above. Approximately fifty percent of the plan value is performance-based, delivered in cash and performance units, contingent on the achievement of certain strategic performance measures. The other fifty percent of the value is time-based and delivered in stock options and restricted stock. Each component is described in more detail below.

Performance Based Long-Term Compensation

The long-term incentive plan originally adopted in 2010 provides the model for our combined plan structure. Each year we adopt a similar plan with the following characteristics:

●	Performance is measured over a three year period.
●	Between 130 and 170 executives, including the named executive officers, participate in each plan.
●	Awards include both cash and performance units.

➢	The cash bonus base equals the executive’s salary at the end of the fiscal year preceding the plan adoption date (or for those participants entering the plan after the commencement date, as of the date of commencing participation in the plan). These cash awards are separate from awards under our performance-based annual cash bonus plan.
➢	A fixed number of performance units is awarded to each participant. The awards are paid out in Kroger common shares, along with a cash amount equal to the dividends paid during the performance period on the number of issued common shares.

●	Compensation under the plan is earned based on our performance against metrics established by the Committee (or the independent directors) at the beginning of the performance period.
●	The payout percentage, based on the extent to which the performance metrics are achieved, is applied to both the cash bonus base and the number of performance units awarded.
●	Actual payouts cannot exceed 100% of the cash bonus base or 100% of the number of performance units awarded.
●	In no event can a cash bonus award exceed $5,000,000.

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The following table summarizes each of the long-term performance based plans for the years shown:

		2012 Plan		2013 Plan		2014 Plan		2015 Plan
Performance Period		2012 to 2014		2013 to 2015		2014 to 2016		2015 to 2017
Payout Date		March 2015		March 2016		March 2017		March 2018
Cash Bonus Base		Salary at end of		Salary at end of		Salary at end of fiscal		Salary at end of fiscal
		fiscal year 2011*		fiscal year 2012*		year 2013*		year 2014*
Performance Metrics
Strategic Plan		2% payout per unit		2% payout per unit		2% payout per unit		4% payout per unit
		improvement		improvement		improvement		improvement
Reduction in		0.50% payout per		0.50% payout per		0.50% payout per		0.50% payout per
Operating Cost as a		0.01% reduction		0.01% reduction		0.01% reduction		0.01% reduction
Percentage of Sales,		in operating costs		in operating costs		in operating costs		in operating costs
Excluding Fuel		Baseline: 27.09%		Baseline: 26.69%		Baseline: 26.68%		Baseline: 26.41%
Improvement in		4% payout per unit		4% payout per unit		4% payout per unit		4% payout per unit
Associate Engagement		improvement		improvement		improvement		improvement
Return on Invested		N/A		1% payout		1% payout per 0.01%		1% payout per 0.01%
Capital				per 0.01%		improvement in ROIC		improvement in ROIC
				improvement		Baseline: 13.27%		Baseline: 13.74%
				in ROIC
				Baseline: 13.25%

*	Or date of plan entry, if later.

The Committee anticipates adopting a new plan each year, measuring improvement over successive three-year periods.

The long-term performance based plan adopted in 2012, which measured improvements through fiscal year 2014, paid out in March 2015 and was calculated as follows:

										Percentage
Component		Baseline		Result		Improvement		Multiplier		Earned
Strategic Plan		*		*		9 units of improvement		2.00%		18.00%
Associate Engagement		*		*		4 units of improvement		4.00%		16.00%
Total Operating Costs, as a Percentage
of Sales, Excluding Fuel		27.09%		26.43%		66 basis point improvement		0.50%		33.00%
Total Earned										67.00%

*	The Strategic Plan and Associate Engagement components were established by the Committee at the beginning of the performance period, but are not disclosed as they are competitively sensitive.

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During 2014, Kroger awarded 446,288 performance units to approximately 178 employees, including the named executive officers. The Committee considers several factors in determining the amount of performance units awarded to the named executive officers or, in the case of the CEO, recommending to the independent directors the amount awarded. These factors are described in the Equity Awards section below.

Equity Awards

Awards based on Kroger’s common shares are granted periodically to the named executive officers and a large number of other employees. Equity participation aligns the interests of employees with your interest as shareholders, and Kroger historically has distributed equity awards widely. The plans include both stock options and restricted stock. In 2014, Kroger granted 4,226,855 stock options to approximately 8,514 employees, including the named executive officers. 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 Committee meetings conducted after Kroger’s public release of its quarterly earnings results. During 2014, Kroger awarded 3,023,711 shares of restricted stock to approximately 21,299 employees, including the named executive officers. Under Kroger’s long-term incentive plans, the Committee determines the vesting schedule for stock options and restricted stock. During 2014, the Committee granted to the named executive officers: (a) stock options with a five year vesting schedule; and (b) restricted stock with a three or five year vesting schedule (with the exception of one award, which has a one year vesting schedule).

As discussed earlier under Stock Ownership Guidelines, covered individuals, including the named executive officers, must hold 100% of the shares received upon the exercise of stock options or upon the vesting of restricted stock, except those necessary to pay the exercise price of the options and/or applicable taxes, until applicable stock ownership guidelines are met, unless the disposition is approved in advance by the CEO, or by the Board or Compensation Committee for the CEO.

The Committee considers several factors in determining the amount of options, restricted stock, and performance units awarded to the named executive officers or, in the case of the CEO, recommending to the independent directors the amount awarded. These factors include:

●	The compensation consultant’s benchmarking report regarding equity-based and other long-term compensation awarded by our competitors;
●	The officer’s level in the organization and the internal relationship of equity-based awards within Kroger;
●	Individual performance; and

●	The recommendation of the CEO, for all named executive officers other than the CEO.

The Committee has long recognized that the amount of compensation provided to the named executive officers through equity-based pay is often below the amount paid by our competitors. Relatively lower equity-based awards for the named executive officers and other senior management permit a broader base of Kroger employees to participate in equity awards and further emphasizes the pay for performance philosophy.

Amounts of equity awards issued and outstanding for the named executive officers are set forth in the tables that follow this discussion and analysis.

Retirement and Other Benefits

Kroger maintains a defined benefit and several defined contribution retirement plans for its employees. The named executive officers 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 on benefits to highly compensated individuals under qualified plans. Additional details regarding retirement benefits available to the named executive officers can be found in the 2014 Pension Benefits table and the accompanying narrative description that follows this discussion and analysis.

Kroger also maintains an executive deferred compensation plan in which some of the named executive officers participate. This plan is a nonqualified plan under which participants can elect to defer up to 100% of their cash compensation each year. Compensation deferred bears interest, until paid out, at the rate

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representing Kroger’s cost of ten-year debt in the year the rate is set, as determined by the CEO, and reviewed with the Committee, prior to the beginning of each deferral year. In 2014, that rate was 3.25%. Deferred amounts are paid out only in cash, in accordance with a deferral option selected by the participant at the time the deferral election is made.

Kroger also maintains The Kroger Co. Employee Protection Plan, or KEPP, in which all of our management employees and administrative support personnel whose employment is not covered by a collective bargaining agreement, with at least one year of service, are covered. KEPP 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 employee is actually or constructively terminated without cause within two years following a change in control of Kroger (as defined in the plan). Participants are entitled to severance pay of up to 24 months’ salary and bonus. 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, restricted stock and performance unit agreements with participants in Kroger’s long-term incentive plans provide that those awards “vest,” with options becoming immediately exercisable, restrictions on restricted stock lapsing, and common shares equal to 50% of the performance units being awarded, upon a change in control as described in the agreements.

Upon Mr. Dillon’s retirement, the Board of Directors determined that it was in the best interests of Kroger to amend certain of Mr. Dillon’s restricted stock agreements to permit the restrictions on the restricted stock awards to lapse in accordance with the original vesting schedule, provided Mr. Dillon executed a non-compete agreement, which he did. If Mr. Dillon were to breach the terms of his non-compete agreement, the unvested restricted stock would be forfeited.

None of the named executive officers is party to an employment agreement.

PERQUISITES

The Committee does not believe that it is necessary for the attraction or retention of management talent to provide the named executive officers a substantial amount of compensation in the form of perquisites. In 2014, the only perquisites available to our named executive officers were:

●	premiums paid on life insurance policies;
●	premiums paid on accidental death and dismemberment insurance; and
●	premiums paid on long-term disability insurance policies.

Currently, 154 active executives, including the named executive officers, and 98 retired executives, are eligible for these perquisites.

In addition, the named executive officers are entitled to the personal use of Kroger aircraft, which officers may lease from Kroger, making officers more available and allowing for a more efficient use of their time. This is not considered a perquisite as we are reimbursed by the executives for the average variable cost of such use.

The total amount of perquisites furnished to the named executive officers is shown in the Summary Compensation Table and described in more detail in footnote 6 to that table.

Executive Compensation Recoupment Policy

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 bonus or a long-term bonus in an amount higher than otherwise would have been paid, as determined by the Committee, then the officer, upon demand from the 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. In enforcing the policy, the Committee will take into consideration all factors that it deems appropriate, including:

●	The materiality of the amount of payment involved;

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●	The extent to which other benefits were reduced in other years as a result of the achievement of performance levels based on the error;
●	Individual officer culpability, if any; and
●	Other factors that should offset the amount of overpayment.

Hedging Policy

After considering best practices related to ownership of company shares, the Board adopted a policy regarding hedging, pledging, and short sales of Kroger securities. Kroger directors and officers are prohibited from engaging, directly or indirectly, in hedging transactions in, or short sales of, Kroger securities. In addition, they are precluded from pledging Kroger securities as collateral for a loan, except to the extent that shares so pledged are in excess of the number of shares the individual is required to maintain in accordance with Kroger’s share ownership guidelines more particularly described earlier in this Compensation Discussion and Analysis.

Section 162(m) of the Internal Revenue Code 

Tax laws place a deductibility limit of $1,000,000 on some types of compensation for the CEO and the next four most highly compensated officers reported in this proxy because they are among the four highest compensated officers (“covered employees”). In Kroger’s case, this group of individuals is not identical to the group of named executive officers. Compensation that is deemed to be “performance-based” is excluded for purposes of the calculation and is tax deductible. Awards under Kroger’s long-term incentive plans, when payable upon achievement of stated performance criteria, should be considered performance-based and the compensation paid under those plans should be tax deductible. Generally, compensation expense related to stock options awarded to the CEO and the next four most highly compensated officers should be deductible. On the other hand, Kroger’s awards of restricted stock that vest solely upon the passage of time are not performance-based. As a result, compensation expense for those awards to the covered employees is not deductible, to the extent that the related compensation expense, plus any other expense for compensation that is not performance-based, exceeds $1,000,000.

Kroger’s bonus plans rely on performance criteria, which have been approved by shareholders. As a result, bonuses paid under the plans to the covered employees should be deductible by Kroger.

Kroger’s policy is, primarily, to design and administer compensation plans that support the achievement of long-term strategic objectives and enhance shareholder value. Where it is material and supports Kroger’s compensation philosophy, the Committee also will attempt to maximize the amount of compensation expense that is deductible by Kroger.

Compensation Committee Report

The Compensation Committee has reviewed and discussed with management of the Company 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 Company’s Board that the Compensation Discussion and Analysis be included in the Company’s proxy statement and incorporated by reference into its Annual Report on Form 10-K.

Compensation Committee:

Clyde R. Moore, Chair
Jorge P. Montoya
Susan M. Phillips
James A. Runde

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Executive Compensation

Summary Compensation Table

The following table and footnotes provide information regarding the compensation of the named executive officers for the fiscal years presented.

																		Change in
																		Pension
																		Value and
																		Nonqualified
													Non-Equity					Deferred
Name and Principal		Fiscal					Stock			Option			Incentive Plan					Compensation					All Other
Position		Year		Salary			Awards			Awards			Compensation					Earnings					Compensation					Total
(1)							(2)			(3)			(4)					(5)					(6)
W. Rodney McMullen		2014		$	1,123,393		$	3,740,251		$	1,951,394			$	2,441,546				$	3,498,396				$	232,602			$	12,987,582
Chairman and		2013		$	962,731		$	5,062,435		$	907,862			$	1,722,946				$	63,518				$	166,329			$	8,885,821
Chief Executive Officer		2012		$	937,732		$	1,087,655		$	437,983			$	1,079,085				$	1,415,003				$	124,998			$	5,082,456
J. Michael Schlotman		2014		$	745,313		$	1,490,700		$	520,372			$	1,103,750				$	1,922,821				$	113,922			$	5,896,878
Senior Vice President		2013		$	688,599		$	1,564,689		$	509,088			$	1,004,220					—				$	85,176			$	3,851,772
and Chief Financial		2012		$	669,787		$	609,908		$	245,602			$	602,146				$	822,669				$	60,137			$	3,010,249
Officer
Michael L. Ellis		2014		$	785,194		$	1,615,375		$	585,418			$	1,259,301				$	27,377				$	117,305			$	4,389,970
President and		2013		$	539,576		$	1,484,681		$	236,283			$	755,571				$	1,944				$	75,120			$	3,093,175
Chief Operating Officer
Kathleen S. Barclay		2014		$	708,417		$	866,559		$	455,325			$	1,107,770					—				$	119,694			$	3,257,765
Senior Vice President		2013		$	686,702		$	1,436,930		$	307,838			$	1,026,620					—				$	156,169			$	3,614,259
of Human Resources		2012		$	675,972		$	491,998		$	148,512			$	628,271					—				$	107,167			$	2,051,920
Michael J. Donnelly		2014		$	651,315		$	748,051		$	390,279			$	1,024,261				$	341,775				$	100,305			$	3,255,986
Senior Vice President		2013		$	565,136		$	1,099,201		$	236,283			$	803,052				$	3,744				$	81,557			$	2,778,973
of Merchandising		2012		$	540,930		$	417,576		$	113,991			$	483,794				$	856,477				$	83,715			$	2,496,483
David B. Dillon		2014		$	1,365,923		$	3,121,392		$	1,951,394			$	2,358,750				$	17,071				$	529,018			$	9,343,548
Former Chairman		2013		$	1,346,161		$	5,709,429		$	2,781,910			$	2,456,235				$	15,376				$	459,584			$	12,768,695
		2012		$	1,328,320		$	3,332,852		$	1,342,088			$	1,600,065				$	3,380,527				$	301,985			$	11,285,837

(1)	Mr. McMullen was promoted to Chief Executive Officer on January 1, 2014 and was appointed Chairman of the Board on January 1, 2015. Mr. Ellis first became a named executive officer in 2013 and became President and Chief Operating Officer on January 1, 2014. Mr. Dillon retired from his position as Chairman of the Board on December 31, 2014. On January 1, 2015, Mr. Dillon began receiving the payout of his accrued and banked vacation, which will continue through August 15, 2015. During this time, he will continue to be eligible for certain benefits, which are described further in this proxy statement where applicable.
(2)	The stock awards reflected in the table consist of both time-based awards and performance-based awards granted under the Company’s long-term incentive plans. With respect to time-based awards, or restricted stock, the aggregate grant date fair value, computed in accordance with FASB ASC Topic 718 and reflected in the table, is as follows: Mr. McMullen: $2,774,813; Mr. Schlotman: $1,233,250; Mr. Ellis: $1,325,744; Ms. Barclay: $641,290; Mr. Donnelly: $554,963; and Mr. Dillon: $2,774,813.

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	The value of the performance-based awards, or performance units, reflected in the table is as follows: Mr. McMullen: $965,438; Mr. Schlotman: $257,450; Mr. Ellis: $289,631; Ms. Barclay: $225,269; Mr. Donnelly: $193,088; and Mr. Dillon: $346,579. These amounts reflect the aggregate fair value at the grant date based on the probable outcome of the performance conditions. These amounts are 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. Due to his retirement, Mr. Dillon’s performance units will be prorated with service credited through February 28, 2015 and that prorated amount is reported in the table. Prior to prorating, the aggregate fair value at the grant date of his performance units was $965,438.
	Assuming that the highest level of performance conditions is achieved, the aggregate fair value of the performance unit awards at the grant date is as follows: Mr. McMullen: $1,930,875; Mr. Schlotman: $514,900; Mr. Ellis: $579,263; Ms. Barclay: $450,538; Mr. Donnelly: $386,175; and Mr. Dillon: $693,158. These amounts are required to be reported in a footnote and are not reflected in the table. Due to his retirement, Mr. Dillon’s performance units will be prorated with service credited through February 28, 2015. Prior to prorating, the aggregate fair value of his performance units assuming the highest level of performance conditions is achieved was $1,930,875.
	The assumptions used in calculating the valuations are set forth in Note 12 to the consolidated financial statements in Kroger’s 10-K for fiscal year 2014 ended January 31, 2015.
(3)	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 12 to the consolidated financial statements in Kroger’s 10-K for fiscal year 2014 ended January 31, 2015.
(4)	Non-equity incentive plan compensation earned for 2014 consists of amounts earned under the 2014 performance-based annual cash bonus program and the 2012 performance-based long-term cash bonus plan.
	In accordance with the terms of the 2014 performance-based annual cash bonus program, Kroger paid 121.5% of bonus potentials for the executive officers, including the named executive officers. Payments were made in the following amounts: Mr. McMullen: $1,831,846; Mr. Schlotman: $668,250; Mr. Ellis: $942,793; Ms. Barclay: $668,250; Mr. Donnelly: $668,250; and Mr. Dillon: $1,494,450. These amounts were earned with respect to performance in 2014 and paid in March 2015.
	The 2012 Long-Term Cash Bonus Plan is a performance-based bonus plan designed to reward participants for improving the long-term performance of the Company. The plan covered performance during fiscal years 2012, 2013 and 2014 and amounts earned under the plan were paid in March 2015. The cash bonus potential amount equaled the executive’s salary in effect on the last day of fiscal 2011. The following amounts represent payouts at 67% of the bonus potentials that were earned under the plan: Mr. McMullen: $609,700; Mr. Schlotman: $435,500; Mr. Ellis: $316,508; Ms. Barclay: $439,520; Mr. Donnelly: $356,011; and Mr. Dillon: $864,300.
(5)	Amounts reported for 2014 and 2012 include the change in the actuarial present value of accumulated pension benefits and preferential earnings on nonqualified deferred compensation. Amounts reported for 2013 include only preferential earnings on nonqualified deferred compensation because the changes in pension value were negative, which are not required to be reported in the table in accordance with SEC rules. Ms. Barclay does not participate in a defined benefit pension plan or nonqualified deferred compensation plan. Pension values may fluctuate significantly from year to year depending on a number of factors, including age, years of service, average annual earnings and the assumptions used to determine the present value, such as the discount rate. The change in the actuarial present value of accumulated pension benefits for 2014 was significantly greater than 2013 and 2012 primarily due to a lower discount rate and revised mortality assumptions for 2014. Please see the Pension Benefits section for further information regarding the assumptions used in calculating pension benefits.
	Under the Company’s nonqualified deferred compensation plan, deferred compensation earns interest at a rate representing Kroger’s cost of ten-year debt, as determined by the CEO and reviewed by the Compensation Committee prior to the beginning of each deferral year. For each participant, a separate

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	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 the Company 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. In thirteen of the twenty-one years in which at least one named executive officer deferred compensation, the rate set under the plan for that year exceeds 120% of the corresponding federal rate. For each of the deferral accounts in which the plan rate is deemed to be above-market, the Company 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 preferential earnings. Amounts deferred in 2014 earn interest at a rate higher than 120% of the corresponding federal rate, accordingly there are preferential earnings on these amounts.
	The amount reported for Mr. McMullen includes a change in pension value in the amount of $3,426,477 and preferential earnings on nonqualified deferred compensation in the amount of $71,919. The amount reported for Mr. Schlotman includes only a change in pension value. The amount reported for Mr. Ellis includes a change in pension value in the amount of $23,444 and preferential earnings on nonqualified deferred compensation in the amount of $3,933. The amount reported for Mr. Donnelly includes a change in pension value in the amount of $337,634 and preferential earnings on nonqualified deferred compensation in the amount of $4,141. The amount reported for Mr. Dillon includes only preferential earnings on nonqualified deferred compensation because the actuarial present value of accumulated pension benefits under his pension plans decreased by $264,282.
(6)	The following table provides the items and amounts included in the “All Other Compensation” column for 2014.

																		Payment of					Dividends
													Long-Term					Dividend					Paid on
								Accidental Death					Disability					Equivalents					Unvested
			Life Insurance					and Dismemberment					Insurance					on Earned					Restricted
			Premium					Insurance Premium					Premium					Performance Units					Stock			Other
	Mr. McMullen			$	55,221				$	228				$	3,489				$	29,215			$	144,449			—
	Mr. Schlotman			$	49,172				$	228					—				$	16,382			$	48,140			—
	Mr. Ellis			$	43,002				$	228				$	3,489				$	6,596			$	45,615		$	18,375
	Ms. Barclay			$	67,581				$	228					—				$	9,906			$	31,082		$	10,897
	Mr. Donnelly			$	55,879				$	228				$	3,481				$	7,604			$	33,113			—
	Mr. Dillon			$	242,691				$	228					—				$	89,521			$	196,253		$	325

The amounts reported in “Other” column for Mr. Ellis and Ms. Barclay represent the Company’s matching contribution to the their 401(k) savings plan accounts. The amount reported in the “Other” column for Mr. Dillon represents the value of a retirement gift.

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2014 Grants of Plan-Based Awards

The following table provides information about equity and non-equity incentive awards granted to the named executive officers in fiscal 2014.

				Estimated Future 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				All Other Option Awards: Number of Securities Underlying				Exercise or Base Price of Option					Grant Date Fair Value of Stock and
		Grant		Target				Maximum				Target					Maximum					Units				Options				Awards					Option
Name		Date		($)				($)				(#)					(#)					(#)				(#)				($/Sh)					Awards
																						(4)				(5)
W. Rodney McMullen				$	1,507,692	(1)		$	3,015,384	(1)
				$	687,500	(2)		$	1,100,000	(2)
		7/15/2014																					56,250													$	2,774,813
		7/15/2014																									150,000				$	49.33				$	1,951,394
		7/15/2014											23,438	(3)				37,500	(3)																	$	965,438
J. Michael Schlotman				$	550,000	(1)		$	1,100,000	(1)
				$	459,375	(2)		$	735,000	(2)
		7/15/2014																					15,000													$	739,950
		7/15/2014																					10,000													$	493,300
		7/15/2014																									40,000				$	49.33				$	520,372
		7/15/2014											6,250	(3)				10,000	(3)																	$	257,450
Michael L. Ellis				$	775,962	(1)		$	1,551,924	(1)
				$	484,375	(2)		$	775,000	(2)
		7/15/2014																					16,875													$	832,444
		7/15/2014																					10,000													$	493,300
		7/15/2014																									45,000				$	49.33				$	585,418
		7/15/2014											7,031	(3)				11,250	(3)																	$	289,631
Kathleen S. Barclay				$	550,000	(1)		$	1,100,000	(1)
				$	437,500	(2)		$	700,000	(2)
		7/15/2014																					13,000													$	641,290
		7/15/2014																									35,000				$	49.33				$	455,325
		7/15/2014											5,469	(3)				8,750	(3)																	$	225,269
Michael J. Donnelly				$	550,000	(1)		$	1,100,000	(1)
				$	402,225	(2)		$	643,560	(2)
		7/15/2014																					11,250													$	554,963
		7/15/2014																									30,000				$	49.33				$	390,279
		7/15/2014											4,688	(3)				7,500	(3)																	$	193,088
David B. Dillon				$	1,230,000	(1)		$	2,460,000	(1)
				$	307,368	(2)		$	491,789	(2)
		7/15/2014																					56,250													$	2,774,813
		7/15/2014																									150,000				$	49.33				$	1,951,394
		7/15/2014											8,414	(3)				13,462	(3)																	$	346,579

(1)

These amounts relate to the 2014 performance-based annual cash bonus plan. The amount listed under “Target” represents the bonus potential of the named executive officer. By the terms of the plan, payouts are limited to no more than 200% of a participant’s bonus potential; accordingly, the amount listed under “Maximum” equals two times that officer’s bonus potential amount. In the event that a participant’s bonus potential is increased during the year following the annual compensation review, the target and

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	maximum amounts are prorated to reflect the increase. Accordingly, the amounts reported for Messrs. McMullen and Ellis reflect the prorated targets and maximums. The amounts actually earned under this plan were paid in March 2015 and are included in the Summary Compensation Table for 2014 in the “Non-Equity Incentive Plan Compensation” column and are described in footnote 4 to that table.
(2)	These amounts relate to the 2014 Long-Term Cash Bonus Plan, which covers performance during fiscal years 2014, 2015 and 2016. The cash bonus potential amount equals the annual base salary of the named executive officers as of the last day of fiscal 2013. By the terms of the plan, payouts are limited to no more than 100% of a participant’s bonus potential; accordingly, the amount listed under “Maximum” equals the participant’s bonus potential. Because the actual payout is based on the level of performance achieved, the target amount is not determinable and therefore the amount listed under “Target” is a representative amount based on the probable outcome of the performance conditions. Due to his retirement, Mr. Dillon’s award was prorated with service accruing through February 28, 2015.
(3)	These amounts represent performance units awarded under the Company’s 2014 Long-Term Incentive Plan, which covers performance during fiscal years 2014, 2015 and 2016. The amount listed under “Maximum” represents the maximum number of common shares that can be earned by the named executive officer under the award. Because the actual payout is based on the level of performance achieved, the target amount is not determinable and therefore the amount listed under “Target” reflects a representative amount based on the probable outcome of the performance conditions. 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. 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. Due to his retirement, Mr. Dillon’s award was prorated with service accruing through February 28, 2015. The aggregate grant date fair value of these awards is included in the Summary Compensation Table for 2014 in the “Stock Awards” column and described in footnote 2 to that table.
(4)	These amounts represent the number of shares of restricted stock granted under one of the Company’s long-term incentive plans. 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 2014 in the “Stock Awards” column and described in footnote 2 to that table.
(5)	These amounts represent the number of stock options granted under one of the Company’s long-term incentive plans. 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 2014 in the “Option Awards” column.

The Compensation Committee, and the independent members of the Board in the case of the CEO, established the bonus potentials shown in this table as “Target” amounts for the performance-based annual awards, and established the amounts shown in this table as “Maximum” amounts for the long-term cash bonus awards. Amounts are payable to the extent that performance meets specific objectives established at the beginning of the performance period. As described in the Compensation Discussion and Analysis, actual earnings under the annual cash bonus plan may exceed the target amount if the Company’s performance exceeds the performance objectives, but are limited to 200% of the target amount. The Compensation Committee, and the independent members of the Board in the case of the CEO, also determined the number of performance units to be awarded to each named executive officer, under which common shares are earned to the extent performance meets specific objectives established at the beginning of the performance period. The performance units and the long-term cash bonus awards are more particularly described in the Compensation Discussion and Analysis.

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Restrictions on restricted stock awards made to the named executive officers normally lapse, so long as the officer is then in our employ, in equal amounts on each of the five anniversaries of the grant date, except that: 10,000 shares of restricted stock granted to each of Messrs. Schlotman and Ellis in 2014 vest as follows: 2,000 shares on 7/15/2015, 2,000 shares on 7/15/2016, and 6,000 shares on 7/15/2017; and the 13,000 shares of restricted stock granted to Ms. Barclay vests on 7/15/2015. Any dividends declared on Kroger common shares are payable on restricted stock. Nonqualified stock options granted to the named executive officers normally vest, so long as the officer is then in our employ, in equal amounts on each of the five anniversaries of the grant date.

2014 Outstanding Equity Awards at Fiscal Year-End

The following table provides information about outstanding equity-based incentive compensation awards for the named executive officers as of the end of fiscal 2014. Each outstanding award is shown separately. 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 $69.05 on January 30, 2015, the last trading day of fiscal 2014.

		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			75,000				—					$	16.39				5/5/2015				5,250	(6)				$	362,513
			60,000				—					$	19.94				5/4/2016				13,716	(7)				$	947,090
			60,000				—					$	28.27				6/28/2017				21,924	(8)				$	1,513,852
			65,000				—					$	28.61				6/26/2018				29,232	(9)				$	2,018,470
			65,000				—					$	22.34				6/25/2019				64,000	(10)				$	4,419,200
			56,000				14,000	(1)				$	20.16				6/24/2020				56,250	(11)				$	3,884,063
			54,864				36,576	(2)				$	24.74				6/23/2021														20,219	(19)				$	1,437,253
			38,976				58,464	(3)				$	21.96				7/12/2022														23,438	(20)				$	1,668,984
			19,488				77,952	(4)				$	37.76				7/15/2023
			—				150,000	(5)				$	49.33				7/15/2024
J. Michael Schlotman			20,000				5,000	(1)				$	20.16				6/24/2020				1,875	(6)				$	129,469
			27,384				18,256	(2)				$	24.74				6/23/2021				6,846	(7)				$	472,716
			21,856				32,784	(3)				$	21.96				7/12/2022				12,294	(8)				$	848,901
			10,928				43,712	(4)				$	37.76				7/15/2023				16,392	(9)				$	1,131,868
			—				40,000	(5)				$	49.33				7/15/2024				9,750	(12)				$	673,238
																					10,000	(13)				$	690,500
																					15,000	(11)				$	1,035,750
																															11,338	(19)				$	805,948
																															6,250	(20)				$	445,063

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	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 ($)
Michael L. Ellis			15,000				—					$	19.94				5/4/2016				1,500	(6)				$	103,575
			20,000				—					$	28.27				6/28/2017				3,300	(7)				$	227,865
			20,000				—					$	28.61				6/26/2018				4,950	(8)				$	341,798
			20,000				—					$	22.34				6/25/2019				3,334	(14)				$	230,213
			16,000				4,000	(1)				$	20.16				6/24/2020				7,608	(9)				$	525,332
			13,200				8,800	(2)				$	24.74				6/23/2021				20,000	(10)				$	1,381,000
			8,800				13,200	(3)				$	21.96				7/12/2022				16,875	(11)				$	1,165,219
			5,072				20,288	(4)				$	37.76				7/15/2023				10,000	(13)				$	690,500
			—				45,000	(5)				$	49.33				7/15/2024														5,262	(19)				$	374,063
																															7,031	(20)				$	500,695
Kathleen S. Barclay			25,000				—					$	20.06				12/10/2019				1,875	(6)				$	129,469
			20,000				5,000	(1)				$	20.16				6/24/2020				4,956	(7)				$	342,212
			19,824				13,216	(2)				$	24.74				6/23/2021				6,000	(15)				$	414,300
			13,216				19,824	(3)				$	21.96				7/12/2022				10,000	(16)				$	690,500
			6,608				26,432	(4)				$	37.76				7/15/2023				9,750	(17)				$	673,238
			—				35,000	(5)				$	49.33				7/15/2024				13,000	(16)				$	897,650
																															6,856	(19)				$	487,345
																															5,469	(20)				$	389,430
Michael J. Donnelly			18,000				—					$	19.94				5/4/2016				1,500	(6)				$	103,575
			20,000				—					$	28.27				6/28/2017				4,804	(7)				$	331,716
			20,000				—					$	28.61				6/26/2018				5,706	(8)				$	393,999
			20,000				—					$	22.34				6/25/2019				1,667	(14)				$	115,106
			16,000				4,000	(1)				$	20.16				6/24/2020				9,608	(9)				$	663,432
			21,216				14,144	(2)				$	24.74				6/23/2021				9,750	(12)				$	673,238
			10,144				15,216	(3)				$	21.96				7/12/2022				11,250	(11)				$	776,813
			5,072				20,288	(4)				$	37.76				7/15/2023														5,262	(19)				$	374,063
			—				30,000	(5)				$	49.33				7/15/2024														4,688	(20)				$	333,797
David B. Dillon(21)			240,000				—					$	19.94				5/4/2016				17,250	(6)				$	1,191,113
			220,000				—					$	28.27				6/28/2017				42,540	(7)				$	2,937,387
			225,000				—					$	28.61				6/26/2018				55,984	(18)				$	3,865,695
			225,000				—					$	22.34				6/25/2019				89,575	(9)				$	6,185,154
			184,000				46,000	(1)				$	20.16				6/24/2020				56,250	(11)				$	3,884,063
			170,160				113,440	(2)				$	24.74				6/23/2021														42,892	(19)				$	3,048,971
			119,432				179,148	(3)				$	21.96				7/12/2022														8,414	(20)				$	599,143
			59,716				238,864	(4)				$	37.76				7/15/2023
			—				150,000	(5)				$	49.33				7/15/2024

(1)	Stock options vest on 6/24/2015.
(2)	Stock options vest in equal amounts on 6/23/2015 and 6/23/2016.
(3)	Stock options vest in equal amounts on 7/12/2015, 7/12/2016 and 7/12/2017.

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(4)	Stock options vest in equal amounts on 7/15/2015, 7/15/2016, 7/15/2017 and 7/15/2018.
(5)	Stock options vest in equal amounts on 7/15/2015, 7/15/2016, 7/15/2017, 7/15/2018 and 7/15/2019.
(6)	Restricted stock vests on 6/24/2015.
(7)	Restricted stock vests in equal amounts on 6/23/2015 and 6/23/2016.
(8)	Restricted stock vests in equal amounts on 7/12/2015, 7/12/2016 and 7/12/2017.
(9)	Restricted stock vests in equal amounts on 7/15/2015, 7/15/2016, 7/15/2017 and 7/15/2018.
(10)	Restricted stock vests in equal amounts on 12/12/2015, 12/12/2016, 12/12/2017 and 12/12/2018.
(11)	Restricted stock vests in equal amounts on 7/15/2015, 7/15/2016, 7/15/2017, 7/15/2018 and 7/15/2019.
(12)	Restricted stock vests as follows: 3,250 shares on 12/12/2015 and 6,500 shares on 12/12/2016.
(13)	Restricted stock vests as follows: 2,000 shares on 7/15/2015, 2,000 shares on 7/15/2016 and 6,000 shares on 7/15/2017.
(14)	Restricted stock vests on 12/6/15.
(15)	Restricted stock vests on 7/12/2015.
(16)	Restricted stock vests on 7/15/2015.
(17)	Restricted stock vests as follows: 3,250 shares on 12/17/2015 and 6,500 shares on 12/17/2016.
(18)	Restricted stock vests in equal amounts on 7/12/2015 and 7/12/2016.
(19)	Performance units granted under the 2013 Long-Term Incentive Plan are earned as of the last day of fiscal year 2015, to the extent performance conditions are achieved. Because the awards earned are not currently determinable, the number of units and the corresponding market value, including cash payments equal to projected dividend equivalent payments, reflect the probable outcome of performance conditions as of fiscal year-end. Assuming that the highest level of performance conditions is achieved, the number of units payable and the market value, including cash payments equal to projected dividend equivalent payments, are as follows: Mr. McMullen: 24,360 units, $1,731,631; Mr. Schlotman: 13,660 units, $971,021; Mr. Ellis: 6,340 units, $450,679; Ms. Barclay: 8,260 units, $587,162; Mr. Donnelly: 6,340 units, $450,679; and Mr. Dillon: 51,677 units, $3,673,460. Due to his retirement, Mr. Dillon’s performance units are prorated for service credited through February 28, 2015 and that prorated amount is reflected in the table.
(20)	Performance units granted under the 2014 Long-Term Incentive Plan are earned as of the last day of fiscal year 2016, to the extent performance conditions are achieved. Because the awards earned are not currently determinable, the number of units and the corresponding market value, including cash payments equal to projected dividend equivalent payments, reflect the probable outcome of performance conditions as of fiscal year-end. Assuming that the highest level of performance conditions is achieved, the number of units payable and the market value, including cash payments equal to projected dividend equivalent payments, are as follows: Mr. McMullen: 37,500 units, $2,670,375; Mr. Schlotman: 10,000 units, $712,100; Mr. Ellis: 11,250 units, $801,113; Ms. Barclay: 8,750 units, $623,088; Mr. Donnelly: 7,500 units, $534,075; and Mr. Dillon: 13,462 units, $958,629. Due to his retirement, Mr. Dillon’s performance units are prorated for service credited through February 28, 2015 and that prorated amount is reflected in the table.
(21)	By the terms of our stock option award agreements and 2013 and 2014 restricted stock award agreements, if a participant retires after reaching age 62 with at least 5 years of service, vesting of the awards will continue on the regular schedule and stock options will remain exercisable through the original term, provided the participant does not provide services to a competitor of ours. Mr. Dillon has met the age and service requirements and accordingly, his stock options and his 2013 and 2014 restricted awards will continue to vest according to their original schedule and the options will remain exercisable through their original term. As described in the Compensation Discussion and Analysis section, Mr. Dillon’s

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restricted stock awards granted in 2011 and 2012 will also continue to vest according to the original schedule. By the terms of the performance unit award agreements, if a participant retires after reaching age 55 with at least 5 years of service, the participant is eligible to receive a prorated number of the performance units earned at the end of the performance period, based on the number of weeks of active employment during the performance period, provided the participant does not provide services to a competitor of ours. Mr. Dillon’s prorated performance units are described in footnotes 19 and 20 above.

2014 Option Exercises and Stock Vested

The following table provides information for fiscal 2014 regarding stock options exercised, restricted stock vested, and common shares issued to the named executive officers pursuant to performance units earned under the 2012 long-term incentive plan.

		Option Awards(1)									Stock Awards(2)
		Number of									Number of
		Shares Acquired				Value Realized					Shares Acquired				Value Realized
		on Exercise				on Exercise					on Vesting				on Vesting
Name		(#)				($)					(#)				($)
W. Rodney McMullen			75,000				$	2,079,019				101,045				$	5,611,392
J. Michael Schlotman			80,000				$	2,157,424				27,896				$	1,660,207
Michael L. Ellis			—					—				20,720				$	1,220,209
Kathleen S. Barclay			—					—				29,137				$	1,626,026
Michael J. Donnelly			30,000				$	1,109,153				19,371				$	1,127,956
David B. Dillon			300,000				$	9,716,250				161,917				$	9,317,612

(1)	Stock options granted under our long-term incentive plans 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 respective date(s) of exercise.
(2)	The Stock Awards columns include the following two components:
	In 2012, executives were awarded performance units that are earned based on performance criteria established by the Compensation Committee at the beginning of the three-year performance period. Actual payouts are based on the level of performance achieved, and are paid in common shares. The number of common shares issued and the value realized based on the closing price of Kroger common shares of $76.29 on March 12, 2015, the date of deemed delivery of the shares, are as follows: Mr. McMullen: 16,321 shares, $1,245,129; Mr. Schlotman: 9,152 shares, $698,206; Mr. Ellis: 3,685 shares, $281,129; Ms. Barclay: 5,534 shares, $422,189; Mr. Donnelly: 4,248 shares, $324,080; and Mr. Dillon: 50,012 shares, $3,815,415.
	The table also includes the number of shares acquired upon vesting of restricted stock and the value realized on the vesting of restricted stock as follows: Mr. McMullen: 84,724 shares, $4,366,248; Mr. Schlotman: 18,744 shares, $961,986; Mr. Ellis: 17,035 shares, $939,080; Ms. Barclay: 23,603 shares, $1,203,822; Mr. Donnelly: 15,123 shares, $803,891; and Mr. Dillon: 111,905 shares, $5,502,197.

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Pension Benefits

The following table provides information regarding pension benefits as of the last day of fiscal 2014 for Messrs. McMullen, Schlotman, Ellis, Donnelly and Dillon. Ms. Barclay does not participate in a defined benefit pension plan.

2014 PENSION BENEFITS TABLE
				Number		Present			Payments
				of Years		Value of			During
				Credited		Accumulated			Last Fiscal
				Service		Benefit			Year
Name		Plan Name		(#)		($)			($)
						(1)
W. Rodney McMullen		The Kroger Consolidated Retirement Benefit Plan		29		$	1,122,749		—
		The Kroger Co. Excess Benefit Plan		29		$	9,686,214		—
J. Michael Schlotman		The Kroger Consolidated Retirement Benefit Plan		29		$	1,202,046		—
		The Kroger Co. Excess Benefit Plan		29		$	5,380,629		—
Michael L. Ellis		The Kroger Consolidated Retirement Benefit Plan		(2)		$	103,400		—
		The Kroger Co. Excess Benefit Plan		(2)		$	81,662		—
Michael J. Donnelly		The Kroger Consolidated Retirement Benefit Plan		35		$	168,844		—
		The Kroger Co. Excess Benefit Plan		35		$	2,999,752		—
David B. Dillon		The Kroger Consolidated Retirement Benefit Plan		19		$	893,750		—
		The Kroger Co. Excess Benefit Plan		19		$	11,913,067		—
		Dillon Companies, Inc. Excess Benefit Pension Plan		20		$	5,629,722		—

 

(1)	The discount rate used to determine the present values was 3.87%, which is the same rate used at the measurement date for financial reporting purposes. Additional assumptions used in calculating the present values are set forth in Note 15 to the consolidated financial statements in Kroger’s 10-K for fiscal year 2014 ended January 31, 2015.
(2)	The benefits for cash balance participants, including Mr. Ellis, are not based on years of credited service. Please see the narrative discussion following this table for a description of how plan benefits are determined.

Messrs. McMullen, Schlotman, Ellis, Donnelly and Dillon participate in The Kroger Consolidated Retirement Benefit Plan (the “Consolidated Plan”), which is a qualified defined benefit pension plan. The Consolidated Plan generally determines accrued benefits using a cash balance formula, but retains benefit formulas applicable under prior plans for certain “grandfathered participants” who were employed by Kroger on December 31, 2000. Each of the above listed named executive officers, except for Mr. Ellis, is eligible for these grandfathered benefits under the Consolidated Plan. Their benefits, therefore, are determined using formulas applicable under prior plans, including the Kroger formula covering service to The Kroger Co. and the Dillon Companies, Inc. formula covering service to Dillon Companies, Inc. Mr. Ellis is not a grandfathered participant, and therefore, his benefits are determined using the cash balance formula.

Messrs. McMullen, Schlotman, Ellis, Donnelly and Dillon also are eligible to receive benefits under The Kroger Co. Excess Benefit Plan (the “Kroger Excess Plan”), and Mr. Dillon also is eligible to receive benefits under the Dillon Companies, Inc. Excess Benefit Pension Plan (the “Dillon Excess Plan”). These plans are collectively referred to as the “Excess Plans.” The Excess Plans are each considered to be nonqualified deferred compensation plans as defined in Section 409A of the Internal Revenue Code. The purpose of the Excess Plans 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 Internal Revenue Code.

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As “grandfathered participants”, Messrs. McMullen, Schlotman, Donnelly and Dillon will receive benefits under the Consolidated Plan and the Excess Plans, determined as follows:

●	1½% times years of credited service multiplied by the average of the highest five years of total earnings (base salary and annual bonus) during the last ten calendar years of employment, reduced by 1¼% times years of credited service multiplied by the primary social security benefit;
●	normal retirement age is 65;
●	unreduced benefits are payable beginning at age 62; and
●	benefits payable between ages 55 and 62 will be reduced by ⅓ of one percent for each of the first 24 months and by ½ of one percent for each of the next 60 months by which the commencement of benefits precedes age 62.

Although participants generally receive credited service beginning at age 21, certain participants in the Consolidated Plan and the Kroger Excess Plan who commenced employment prior to 1986, including Messrs. McMullen, Schlotman and Dillon, began to accrue credited service after attaining age 25 and one year of service. In the event of a termination of employment other than death or disability, Messrs. Schlotman and Donnelly currently are eligible for a reduced early retirement benefit, as each has attained age 55, and Mr. Dillon is eligible for the full retirement benefit, as he has attained age 62. If a “grandfathered participant” becomes disabled while employed by Kroger and after attaining age 55, the participant will receive the full retirement benefit. If a married “grandfathered participant” dies while employed by Kroger, the surviving spouse will receive benefits as though a retirement occurred on such date, based on the greater of: actual benefits payable to the participant if he was over age 55, or the benefits that would have been payable to the participant assuming he was age 55 on the date of death.

Mr. Ellis began participating in the Consolidated Plan and the Kroger Excess Plan in April 1999 as a cash balance participant. Until those plans were frozen on December 31, 2006, cash balance participants received an annual pay credit equal to 5% of that year’s eligible earnings plus an annual interest credit equal to the account balance at the beginning of the plan year multiplied by the annual rate of interest on 30-year Treasury Securities in effect prior to the plan year. Beginning on January 1, 2007, cash balance participants receive an annual interest credit but no longer receive an annual pay credit. Upon retirement, cash balance participants generally are eligible to receive a life annuity which is the actuarial equivalent of his account balance, but may elect in some circumstances to receive a lump sum distribution equal to his account balance. Normal retirement age is 65 and participants are eligible for reduced benefits beginning at age 55. In the event of a termination of employment other than disability or death, Mr. Ellis currently is eligible for the reduced retirement benefit as he has attained age 55. If a cash balance participant becomes disabled while still employed by Kroger, he or she will receive the full retirement benefit. If a cash balance participant dies while employed by Kroger, his or her beneficiary will receive a death benefit equal to the benefit the participant was eligible to receive if a retirement occurred on such date.

Messrs. Donnelly and Dillon also participate in the Dillon Employees’ Profit Sharing Plan, which is a qualified defined contribution plan (the “Dillon Profit Sharing Plan”) under which Dillon Companies, Inc. and its participating subsidiaries may choose to make discretionary contributions each year that are allocated to each participant’s account. Participation in Dillon Profit Sharing Plan was frozen effective January 1, 2001. Mr. Dillon is no longer eligible for employer contributions under the Dillon Profit Sharing Plan. Participants in the Dillon Profit Sharing Plan elect from among a number of investment options and the amounts in their accounts are invested and credited with investment earnings in accordance with their elections. Prior to July 1, 2000, participants could elect to make voluntary contributions under the Dillon Profit Sharing Plan, but that option was discontinued effective as of July 1, 2000. Participants can elect to receive their Dillon Profit Sharing Plan benefit in the form of either a lump sum payment or installment payments.

Due to offset formulas contained in the Consolidated Plan and the Dillon Excess Plan, the accrued benefits under the Dillon Profit Sharing Plan for each of Messrs. Donnelly and Dillon offset a portion of the benefit that would otherwise accrue for them under those plans for their service with Dillon Companies, Inc. Although benefits that accrue under defined contribution plans are not reportable under the accompanying table, we have added narrative disclosure of the Dillon Profit Sharing Plan because of the offsetting effect that benefits under that plan has on benefits accruing under the Consolidated Plan and the Dillon Excess Plan.

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Nonqualified Deferred Compensation

The following table provides information on nonqualified deferred compensation for the named executive officers for 2014.

2014 NONQUALIFIED DEFERRED COMPENSATION TABLE
		Executive				Registrant		Aggregate			Aggregate		Aggregate
		Contributions				Contributions		Earnings			Withdrawals		Balance at
Name		in Last FY				in Last FY		in Last FY(4)			Distributions		Last FYE
W. Rodney McMullen		$	344,589	(1)		—		$	496,003		—		$	7,838,774
J. Michael Schlotman			—			—			—		—			—
Michael L. Ellis		$	604,457	(2)		—		$	53,360		—		$	1,242,576
Kathleen S. Barclay			—			—			—		—			—
Michael J. Donnelly			—			—		$	22,793		—		$	348,220
David B. Dillon		$	75,000	(3)		—		$	84,397		—		$	1,333,129

 

(1)		This amount represents the deferral of a portion of the 2013 performance-based annual cash bonus earned in fiscal 2013 and paid in March 2014 in the amount of $219,989 and the deferral of a portion of the 2011 long-term cash bonus, which was earned during the 2011 through 2013 performance period and paid in March 2014 in the amount of $124,600. This amount is included in the Summary Compensation Table for 2013 under the “Non-Equity Incentive Plan Compensation” column.
(2)		This amount represents the deferral of a portion of the 2013 performance-based annual cash bonus earned in fiscal 2013 and paid in March 2014 in the amount of $345,121 and the deferral of a portion of the 2011 long-term cash bonus, which was earned during the 2011 through 2013 performance period and paid in March 2014 in the amount of $259,336. This amount is included in the Summary Compensation Table for 2013 under the “Non-Equity Incentive Plan Compensation” column.
(3)		This amount represents the deferral of a portion of the 2013 performance-based annual cash bonus earned in fiscal 2013 and paid in March 2014 in the amount of $75,000. This amount is included in the Summary Compensation Table for 2013 under the “Non-Equity Incentive Plan Compensation” column.
(4)		These amounts include the aggregate earnings on all accounts for each named executive officer, including any above-market or preferential earnings. The following amounts earned in 2014 are deemed to be preferential earnings and are included in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table for 2014: Mr. McMullen, $71,919; Mr. Ellis, $3,933; Mr. Donnelly, $4,141; and Mr. Dillon, $17,071.

Eligible 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 Internal Revenue Code Section 125 plan deductions, as well as up to 100% of their annual and long-term bonus compensation. The Company does not match any deferral. Deferral account amounts are credited with interest at the rate representing Kroger’s cost of ten-year debt as determined by Kroger’s CEO and reviewed 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 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 the Company, except that the Company has discretion to approve an early distribution to a participant upon the occurrence of an unforeseen emergency. Participants who are “specified employees” under Section 409A of the Internal Revenue Code, which includes the named executive officers, may not receive a post-termination distribution for at least six months following separation. If the employee dies prior to or during the distribution period, the remainder of the account will be distribution to his designated beneficiary in lump sum or quarterly installments, according to the participant’s prior election.

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Potential Payments upon Termination or Change in Control

Kroger does not have employment agreements or other contracts, agreements, plans or arrangements that provide for payments to the named executive officers in connection with a termination of employment or a change in control of Kroger. However, The Kroger Co. Employee Protection Plan, or KEPP, our award agreements for stock options, restricted stock and performance units, and our long-term cash bonus plans provide for certain payments and benefits to participants, including the named executive officers, in the event of a termination of employment or a change in control of Kroger, as described below. Our pension plans and nonqualified deferred compensation plan also provide for certain payments and benefits to participants in the event of a termination of employment, as described above in the Pension Benefits section and the Nonqualified Deferred Compensation section, respectively. For purposes of KEPP, and our equity and non-equity incentive awards, a change in control occurs if:

●	any person or entity (excluding Kroger’s employee benefit plans) acquires 20% or more of the voting power of Kroger;
●	a merger, consolidation, share exchange, division, or other reorganization or transaction with Kroger results in Kroger’s voting securities existing prior to that event representing less than 60% of the combined voting power immediately after the event;
●	Kroger’s shareholders approve a plan of complete liquidation or winding up of Kroger or an agreement for the sale or disposition of all or substantially all of Kroger’s assets; or
●	during any period of 24 consecutive months, individuals at the beginning of the period who constituted Kroger’s Board of Directors cease for any reason to constitute at least a majority of the Board of Directors.

The Kroger Co. Employee Protection Plan

The Kroger Co. Employee Protection Plan, or KEPP, applies to all management employees and administrative support personnel who are not covered by a collective bargaining agreement, with at least one year of service, and provides severance benefits when a participant’s employment is terminated actually or constructively within two years following a change in control of Kroger. The actual amount is dependent on pay level and years of service. The named executive officers are eligible for the following benefits:

●	a lump sum severance payment equal to up to two times the sum of the participant’s annual base salary and 70% of the greater of the current annual bonus potential or the average of the actual annual bonus payments for the prior three years;
●	a lump sum payment equal to the participant’s accrued and unpaid vacation, including banked vacation;
●	a lump sum payment equal to 1/12th of the sum of the participant’s annual vacation pay plus 70% of the greater of the current year’s annual cash bonus potential or the average of the actual annual bonus payments for the prior three years, multiplied by the number of months elapsed in the current calendar year;
●	continued medical and dental benefits for up to 24 months and continued life insurance coverage for up to 6 months; and
●	up to $5,000 as reimbursement for eligible tuition expenses and up to $10,000 as reimbursement for eligible outplacement expenses.

Payments to executive officers under KEPP will be reduced, to the extent necessary, so that payments will not exceed 2.99 times the officers average W-2 earnings over the preceding five years.

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Equity and Non-equity Incentive Awards

The following table describes the treatment of equity and non-equity incentive awards following a termination of employment or change in control of Kroger. 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(1)		Long-Term Cash Bonus(1)
Involuntary Termination			Forfeit all unvested options. Previously vested options remain exercisable for the shorter of one year after termination or the remainder of the 10-year term.		Forfeit all unvested shares		Forfeit all rights to performance units for which the three year performance period has not ended		Forfeit all rights to bonuses for which the three year performance period has not ended
Voluntary Termination/ Retirement - Prior to minimum age and years of service(2)			Forfeit all unvested options. Vested options remain exercisable for the shorter of one year after termination or the remainder of the 10-year term.		Forfeit all unvested shares		Forfeit all rights to performance units for which the three year performance period has not ended		Forfeit all rights to bonuses for which the three year performance period has not ended
Voluntary Termination/ Retirement - After minimum age and years of service(2)			Unvested options continue vesting on the original schedule. All options are exercisable for remainder of the original 10-year term.		Forfeit all unvested shares granted prior to 2013. Vesting continues on the original schedule for awards granted during or after 2013.		Pro rata portion of units earned based on performance results over the full three-year period		Pro rata portion of bonus earned based on performance results over the full three-year period
Death			Unvested options are immediately vested and exercisable. All options are exercisable for remainder of the original 10-year term.		Unvested shares immediately vest		Pro rata portion of units earned based on performance results through the end of the fiscal year in which death occurs. The performance period is shortened to end on the last day of such fiscal year.		Pro rata portion of bonus earned based on performance results through the end of the fiscal year in which death occurs. The performance period is shortened to end on the last day of such fiscal year.
Disability			Unvested options are immediately vested and exercisable. All options are exercisable for remainder of the original 10-year term.		Unvested shares immediately vest		Pro rata portion of units earned based on performance results over the full three-year period		Pro rata portion of bonus earned based on performance results over the full three-year period
Change in Control(3)			Unvested options are immediately vested and exercisable in full.		Unvested shares immediately vest		50% of the maximum award granted at the beginning of the performance period		50% of the maximum award granted at the beginning of the performance period

 

(1)		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.
(2)		The minimum service requirement for all awards is 5 years. The minimum age requirement is age 62 for stock options and restricted stock and age 55 for performance units and the long-term cash bonus.
(3)		These benefits are payable upon a change in control of Kroger with or without a termination of employment.

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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 named executive officers if the triggering event occurred on January 31, 2015, given compensation, age and service levels as of that date and, where applicable, based on the closing price per Kroger common share on the last trading day of the fiscal year ($69.05 on January 30, 2015). 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 price of Kroger common shares, and the officer’s age, length of service and compensation levels.

															Change in
						Voluntary									Control			Change in
		Involuntary				Termination/									without			Control with
Name		Termination				Retirement			Death			Disability			Termination			Termination
W. Rodney McMullen
Accrued and Banked Vacation			$738,464			$	738,464		$	738,464		$	738,464		$	738,464		$	738,464
Severance			—				—			—			—			—		$	4,640,016
Additional Vacation and Bonus			—				—			—			—			—		$	104,872
Continued Health and Welfare
Benefits(1)			—				—			—			—			—		$	86,963
Stock Options(2)			—				—		$	10,455,330		$	10,455,330		$	10,455,330		$	10,455,330
Restricted Stock(3)			—				—		$	13,145,188		$	13,145,188		$	13,145,188		$	13,145,188
Performance Units(4)			—				—		$	1,470,213		$	1,470,213		$	2,135,717		$	2,135,717
Long-Term Cash Bonus(5)			—				—		$	749,079		$	749,079		$	1,019,800		$	1,019,800
Executive Group Life Insurance			—				—		$	5,670,000			—			—			—
J. Michael Schlotman
Accrued and Banked Vacation			$467,680			$	467,680		$	467,680		$	467,680		$	467,680		$	467,680
Severance			—				—			—			—			—		$	2,316,744
Additional Vacation and Bonus			—				—			—			—			—		$	40,505
Continued Health and Welfare
Benefits(1)			—				—			—			—			—		$	64,739
Stock Options(2)			—				—		$	4,753,720		$	4,753,720		$	4,753,720		$	4,753,720
Restricted Stock(3)			—				—		$	4,982,442		$	4,982,442		$	4,982,442		$	4,982,442
Performance Units(4)			—			$	665,780		$	665,780		$	665,780		$	816,862		$	816,862
Long-Term Cash Bonus(5)			—			$	524,467		$	524,467		$	524,467		$	703,050		$	703,050
Executive Group Life Insurance			—				—		$	2,934,606			—			—			—
Michael L. Ellis
Accrued and Banked Vacation			$138,465			$	138,465		$	138,465		$	138,465		$	138,465		$	138,465
Severance			—				—			—			—			—		$	2,720,016
Additional Vacation and Bonus			—				—			—			—			—		$	54,359
Continued Health and Welfare
Benefits(1)			—				—			—			—			—		$	59,828
Stock Options(2)			—				—		$	2,729,288		$	2,729,288		$	2,729,288		$	2,729,288
Restricted Stock(3)			—				—		$	4,665,502		$	4,665,502		$	4,665,502		$	4,665,502
Performance Units(4)			—			$	404,058		$	404,058		$	404,058		$	607,295		$	607,295
Long-Term Cash Bonus(5)			—			$	444,765		$	444,765		$	444,765		$	643,500		$	643,500
Executive Group Life Insurance			—				—		$	2,170,669			—			—			—
Kathleen S. Barclay
Accrued and Banked Vacation			$69,325			$	69,325		$	69,325		$	69,325		$	69,325		$	69,325
Severance			—				—			—			—			—		$	1,589,262
Additional Vacation and Bonus			—				—			—			—			—		$	39,179
Continued Health and Welfare
Benefits(1)			—				—			—			—			—		$	52,226
Stock Options(2)			—				—		$	3,280,820		$	3,280,820		$	3,280,820		$	3,280,820
Restricted Stock(3)			—				—		$	3,147,369		$	3,147,369		$	3,147,369		$	3,147,369
Performance Units(4)			—			$	441,483		$	441,483		$	441,483		$	587,270		$	587,270
Long-Term Cash Bonus(5)			—			$	520,606		$	520,606		$	520,606		$	688,650		$	688,650
Executive Group Life Insurance			—				—		$	2,834,000			—			—			—

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															Change in
						Voluntary									Control			Change in
		Involuntary				Termination/									without			Control with
Name		Termination				Retirement			Death			Disability			Termination			Termination
Michael J. Donnelly
Accrued and Banked Vacation			$216,716			$	216,716		$	216,716		$	216,716		$	216,716		$	216,716
Severance			—				—			—			—			—		$	2,095,800
Additional Vacation and Bonus			—				—			—			—			—		$	38,457
Continued Health and Welfare
Benefits(1)			—				—			—			—			—		$	51,566
Stock Options(2)			—				—		$	2,765,214		$	2,765,214		$	2,765,214		$	2,765,214
Restricted Stock(3)			—				—		$	3,057,879		$	3,057,879		$	3,057,879		$	3,057,879
Performance Units(4)			—			$	350,130		$	350,130		$	350,130		$	477,826		$	477,826
Long-Term Cash Bonus(5)			—			$	438,685		$	438,685		$	438,685		$	597,030		$	597,030
Executive Group Life Insurance			—				—		$	2,601,600			—			—			—
David B. Dillon(6)
Accrued and Banked Vacation			—			$	790,380		$	790,380		$	790,380		$	790,380		$	790,380
Severance			—				—			—			—			—		$	4,773,240
Additional Vacation and Bonus			—				—			—			—			—		$	97,891
Continued Health and Welfare
Benefits(1)			—				—			—			—			—		$	175,898
Stock Options(2)			—				—		$	26,143,600		$	26,143,600		$	26,143,600		$	26,143,600
Restricted Stock(3)			—				—		$	18,063,412		$	18,063,412		$	18,063,412		$	18,063,412
Performance Units(4)			—			$	2,168,124		$	2,168,124		$	2,168,124		$	3,871,806		$	3,871,806
Long-Term Cash Bonus(5)			—			$	611,950		$	611,950		$	611,950		$	1,350,000		$	1,350,000
Executive Group Life Insurance			—				—		$	4,745,000			—			—			—

 

(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 paid by the Company during the eligible period. The eligible period for continued medical and dental benefits is based on the length of service and is 17 months for Ms. Barclay and 24 months for the other named executive officers. The eligible period for continued executive term life insurance coverage is six months for all named executive officers. The amounts reported may ultimately be lower if the executive 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 January 30, 2015. In accordance with SEC rules, no amount is reported in the voluntary termination/retirement column because vesting is not accelerated, but the awards 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 restricted stock. In accordance with SEC rules, no amount is reported in the voluntary termination/retirement column because vesting is not accelerated, but the awards 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 2013 and 2014, based on the probable outcome of the performance conditions as of January 31, 2015 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 2013 and 2014 at the beginning of the performance period.

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(5)		Amounts reported in the voluntary termination/retirement, death, and disability columns represent the aggregate value of the long-term cash bonuses granted in 2013 and 2014, based on the probable outcome of the performance conditions as of January 31, 2015 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 award granted in 2013 and 2014 at the beginning of the performance period.
(6)		Mr. Dillon retired as Chairman of the Board on December 31, 2014. On January 1, 2015, he began receiving accrued and banked vacation, which will continue through August 15, 2015. During this time, he remains eligible for benefits in the event of death, disability or a change in control. The amounts reported in the voluntary termination/retirement column represent the amounts for which he is eligible as a result of his retirement.

DIRECTOR COMPENSATION

The following table describes the fiscal 2014 compensation for non-employee directors. Mr. McMullen does not receive compensation for his Board service.

2014 DIRECTOR COMPENSATION TABLE
											Change in
											Pension Value
											and
		Fees									Nonqualified
		Earned									Deferred			All
		or Paid			Stock			Option			Compensation			Other
Name		in Cash			Awards			Awards			Earnings			Compensation		Total
					(1)			(1)						(2)
Reuben V. Anderson(3)		$	77,689		$	67,434		—	(4)		$2,000	(10)		$514		$	147,637
Nora A. Aufreiter(3)		$	11,881		$	97,662		—			—			$189		$	109,732
Robert D. Beyer		$	124,664		$	165,256		—	(5)		$7,425	(11)		$189		$	297,534
Susan J. Kropf		$	94,745		$	165,256		—	(6)		—			$189		$	260,190
David B. Lewis		$	84,772		$	165,256		—	(6)		—			$189		$	250,217
Jorge P. Montoya		$	99,731		$	165,256		—	(6)		—			$189		$	265,176
Clyde R. Moore		$	104,718		$	165,256		—	(5)		$6,000	(10)		$189		$	276,163
Susan M. Phillips		$	94,745		$	165,256		—	(7)		$2,446	(11)		$189		$	262,636
Steven R. Rogel(3)		$	77,689		$	67,434		—	(5)		—			$514		$	145,637
James A. Runde		$	99,731		$	165,256		—	(8)		—			$189		$	265,176
Ronald L. Sargent		$	114,692		$	165,256		—	(8)		$2,518	(11)		$189		$	282,655
Bobby S. Shackouls		$	94,745		$	165,256		—	(9)		—			$189		$	260,190

 

(1)		These amounts represent the aggregate grant date fair value of the annual incentive stock award, computed in accordance with FASB ASC Topic 718. Options are no longer granted to non-employee directors. The footnotes in the Option Awards column represent previously granted stock options that remain unexercised.
(2)		This amount reflects the value of gift cards in the amount of $75 and the cost to the Company per director for providing accidental death and dismemberment insurance coverage for non-employee directors in the amount of $114. The amounts reported for Messrs. Anderson and Rogel also include a retirement gift valued at $325.
(3)		Messrs. Anderson and Rogel retired from the Board in December 2014. Ms. Aufreiter joined the Board in December 2014. The fees and stock awards for each of these directors were prorated accordingly.
(4)		Aggregate number of stock options outstanding at fiscal year end was 10,400 shares.
(5)		Aggregate number of stock options outstanding at fiscal year end was 47,500 shares.

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(6)		Aggregate number of stock options outstanding at fiscal year end was 37,500 shares.
(7)		Aggregate number of stock options outstanding at fiscal year end was 46,500 shares.
(8)		Aggregate number of stock options outstanding at fiscal year end was 42,500 shares.
(9)		Aggregate number of stock options outstanding at fiscal year end was 19,500 shares.
(10)		This amount reflects the change in pension value for Messrs. Anderson and Moore. Only those directors elected to the Board prior to July 17, 1997 are eligible to participate in the outside director retirement plan.
(11)		This amount reflects preferential earnings on nonqualified deferred compensation. For a complete explanation of preferential earnings, please refer to footnote 5 to the Summary Compensation Table.

Each non-employee director receives an annual retainer of $85,000. The chairs of each of the Audit Committee and the Compensation Committee receive an additional annual retainer of $20,000. The chair of each of the other committees receives an additional annual retainer of $15,000. Each member of the Audit Committee receives an additional annual retainer of $10,000. The director designated as the Lead Director receives an additional annual retainer of $25,000. Beginning in 2013, incentive shares were issued to non-employee directors in lieu of options and restricted stock, as a portion of the directors’ overall compensation. On July 15, 2014, each non-employee director, except for Ms. Aufreiter and Messrs. Anderson and Rogel, received 3,350 common shares. On July 15, 2014, Messrs. Anderson and Rogel received 1,367 common shares, which represents a prorated portion of the annual grant as a result of their planned retirement. Ms. Aufreiter received 1,578 common shares on December 11, 2014 upon joining the Board.

Non-employee 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 Messrs. Anderson and Moore are eligible for this benefit. Participants who retire from the Board prior to age 70 will be credited with 50% vesting after five years of service, and 10% for each additional year up to a maximum of 100%. Benefits for participants who retire prior to age 70 begin at the later of actual retirement or age 65. Because Mr. Anderson retired after reaching age 70, he will receive the full annual benefit of $75,833, which will be paid on a monthly basis.

We also maintain a deferred compensation plan, in which all non-employee directors are eligible to participate. Participants may defer up to 100% of their cash compensation. They 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.

The Board has determined that compensation of non-employee directors must be competitive on an on-going basis to attract and retain directors who meet the qualifications for service on the Board. Non-employee director compensation will be reviewed from time to time as the Corporate Governance Committee deems appropriate.

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BENEFICIAL OWNERSHIP OF COMMON STOCK

The following table sets forth the common shares beneficially owned as of February 13, 2015 by Kroger’s directors, the named executive officers, and the directors and executive officers as a group. The percentage of ownership is based on 491,597,775 of Kroger common shares outstanding on February 13, 2015. 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.

	Amount and Nature of
Name	Beneficial Ownership*
Nora A. Aufreiter	1,578
Kathleen S. Barclay	139,633	(1)
Robert D. Beyer	153,692	(2)
David B. Dillon	2,674,553	(1)(3)(4)(5)
Michael J. Donnelly	225,042	(1)(5)
Michael L. Ellis	283,108	(1)(5)
Susan J. Kropf	62,670	(6)
David B. Lewis	70,822	(6)
W. Rodney McMullen	1,525,093	(1)(6)
Jorge P. Montoya	52,269	(6)(7)
Clyde R. Moore	93,870	(2)
Susan M. Phillips	86,260	(8)
James A. Runde	71,170	(9)
Ronald L. Sargent	74,620	(10)
J. Michael Schlotman	270,848	(1)(3)(5)
Bobby S. Shackouls	51,320	(11)(12)
Directors and executive officers as a group (29 persons,
including those named above)	7,049,179	(1)(5)

 

*	No director or officer owned as much as 1% of Kroger common shares. The directors and executive officers as a group beneficially owned 1% of Kroger common shares.
(1)	This amount includes shares underlying options that are or become exercisable on or before April 14, 2015, in the following amounts: Ms. Barclay, 84,648; Mr. Dillon, 1,443,308; Mr. Donnelly, 130,432; Mr. Ellis, 118,072; Mr. McMullen, 494,328; Mr. Schlotman, 80,168; and all directors and executive officers as a group, 3,061,909.
(2)	This amount includes 39,700 shares underlying options that are or become exercisable on or before April 14, 2015.
(3)	This amount includes Kroger common shares that are pledged as security for bank loans in the following amounts: Mr. Dillon, 398,787 shares; and Mr. Schlotman, 25,000 shares. Both Mr. Dillon’s and Mr. Schlotman’s ownership of Kroger common shares far exceeds our stock ownership guidelines as described in the Compensation Discussion and Analysis. As such, they were permitted to pledge shares in excess of their required stock ownership.
(4)	This amount includes 307,392 shares held in trusts by Mr. Dillon’s wife. Mr. Dillon disclaims beneficial ownership of these shares.
(5)	The fractional interest resulting from allocations under Kroger’s defined contribution plans has been rounded to the nearest whole number.
(6)	This amount includes 29,700 shares underlying options that are or become exercisable on or before April 14, 2015.
(7)	This amount includes 11,000 shares held in Mr. Montoya’s trust. Mr. Montoya disclaims beneficial ownership of these shares.

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(8)	This amount includes 38,700 shares underlying options that are or become exercisable on or before April 14, 2015.
(9)	This amount includes 34,700 shares underlying options that are or become exercisable on or before April 14, 2015.
(10)	This amount includes 42,500 shares underlying options that are or become exercisable on or before April 14, 2015.
(11)	This amount includes 11,700 shares underlying options that are or become exercisable on or before April 14, 2015.
(12)	This amount includes 18,435 shares held by Mr. Shackouls’ wife. Mr. Shackouls disclaims beneficial ownership of these shares.

The following table sets forth information regarding the beneficial owners of more than five percent of Kroger common shares as of February 13, 2015 based on reports on Schedule 13G filed with the SEC or other reliable information.

				Amount and
				Nature of		Percentage
Name		Address of Beneficial Owner		Ownership		of Class
BlackRock, Inc. (1)		55 East 52nd Street		38,970,033			7.90	%
		New York, NY 10055
FMR LLC (2)		245 Summer Street		26,480,687			5.40	%
		Boston, MA 02210
Vanguard Group Inc. (3)		100 Vanguard Blvd		25,406,163			5.17	%
		Malvern, PA 19355

(1)		Reflects beneficial ownership by BlackRock Inc., as of December 31, 2014, as reported on Amendment No. 5 to the Schedule 13G filed with the SEC on January 23, 2015, and reports sole voting power with respect to 33,588,424 common shares and sole dispositive power with respect to 38,970,033 common shares.
(2)		Reflects beneficial ownership by FMR LLC, as of December 31, 2014, as reported on Schedule 13G filed with the SEC on February 13, 2015, and reports sole voting power with respect to 2,286,153 common shares and sole dispositive power with respect to 26,480,687 common shares.
(3)		Reflects beneficial ownership by Vanguard Group Inc. as of December 31, 2014, as reported on Schedule 13G filed with the SEC on February 10, 2015, and reports sole voting power with respect to 846,345 common shares, sole dispositive power of 24,605,819 common shares, and shared dispositive power of 800,344 common shares.

Section 16(A) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our officers and directors, and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC. Those officers, directors and shareholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.

Based solely on our review of the copies of Forms 3 and 4 received by Kroger, and any written representations from certain reporting persons that no Forms 5 were required for those persons, we believe that during fiscal 2014 all filing requirements applicable to our executive officers, directors and 10% beneficial owners were timely satisfied, with the following exception. In September 2014, Kevin M. Dougherty was 11 days late in the filing of a Form 4 to report restricted stock awarded under a Company long-term incentive plan due to an administrative error by the Company.

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Related Person Transactions

In accordance with our Statement of Policy with Respect to Related Person Transactions and the rules of the SEC, the Audit Committee approved the following related person transaction:

●

During fiscal year 2014, Kroger made purchases from Staples, Inc., totaling approximately $8.7 million. This amount represents substantially less than 1% of Staples’ annual consolidated gross revenue. Kroger periodically employs a bidding process or negotiations following a benchmarking of costs of products from various vendors for the items purchased from Staples and awards the business based on the results of that process. Ronald L. Sargent, a member of Kroger’s Board, is Chairman and Chief Executive Officer of Staples.

Director independence is discussed above under the heading “Information Concerning the Board.” Kroger’s policy on related person transactions is as follows:

Statement of Policy
with Respect to
Related Person Transactions

A . Introduction

It is the policy of Kroger’s Board that any Related Person Transaction may be consummated or may continue only if the Committee approves or ratifies the transaction in accordance with the guidelines set forth in this policy. The Board has determined that the Audit Committee of the Board is best suited to review and approve Related Person Transactions.

For the purposes of this policy, a “Related Person” is:

	1.		any person who is, or at any time since the beginning of Kroger’s last fiscal year was, a director or executive officer of Kroger or a nominee to become a director of Kroger;
	2.		any person who is known to be the beneficial owner of more than 5% of any class of Kroger’s voting securities; and
	3.		any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the director, executive officer, nominee or more than 5% beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee or more than 5% beneficial owner.

For the purposes of this policy, a “Related Person Transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) since the beginning of Kroger’s last fiscal year in which Kroger (including any of its subsidiaries) was, is or will be a participant and the amount involved exceeds $120,000, and in which any Related Person had, has or will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10 percent beneficial owner of another entity).

Notwithstanding the foregoing, the Audit Committee has reviewed the following types of transactions and has determined that each type of transaction is deemed to be pre-approved, even if the amount involved exceeds $120,000.

1.

Certain Transactions with Other Companies. Any transaction for property or services in the ordinary course of business involving payments to or from another company at which a Related Person’s only relationship is as an employee (including an executive officer), director, or beneficial owner of less than 10% of that company’s shares, if the aggregate amount involved in any fiscal year does not exceed the greater of $1,000,000 or 2 percent of that company’s annual consolidated gross revenues.

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	2.		Certain Company Charitable Contributions. Any charitable contribution, grant or endowment by Kroger (or one of its foundations) to a charitable organization, foundation, university or other not for profit organization at which a Related Person’s only relationship is as an employee (including an executive officer) or as a director, if the aggregate amount involved does not exceed $250,000 or 5 percent, whichever is lesser, of the charitable organization’s latest publicly available annual consolidated gross revenues.
	3.		Transactions where all Shareholders Receive Proportional Benefits. Any transaction where the Related Person’s interest arises solely from the ownership of Kroger common stock and all holders of Kroger common stock received the same benefit on a pro rata basis.
	4.		Executive Officer and Director Compensation. (a) Any employment by Kroger of an executive officer if the executive officer’s compensation is required to be reported in Kroger’s proxy statement, (b) any employment by Kroger of an executive officer if the executive officer is not an immediate family member of a Related Person and the Compensation Committee approved (or recommended that the Board approve) the executive officer’s compensation, and (c) any compensation paid to a director if the compensation is required to be reported in Kroger’s proxy statement.
	5.		Other Transactions. (a) Any transaction involving a Related Person where the rates or charges involved are determined by competitive bids, (b) any transaction with a Related Person involving the rendering of services as a common or contract carrier, or public utility, at rates or charges fixed in conformity with law or governmental authority, or (c) any transaction with a Related Person involving services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture or similar services.

B. Audit Committee Approval

In the event management becomes aware of any Related Person Transactions that are not deemed pre-approved under paragraph A of this policy, those transactions will be presented to the Committee for approval at the next regular Committee meeting, or where it is not practicable or desirable to wait until the next regular Committee meeting, to the Chair of the Committee (who will possess delegated authority to act between Committee meetings) subject to ratification by the Committee at its next regular meeting. If advance approval of a Related Person Transaction is not feasible, then the Related Person Transaction will be presented to the Committee for ratification at the next regular Committee meeting, or where it is not practicable or desirable to wait until the next regular Committee meeting, to the Chair of the Committee for ratification, subject to further ratification by the Committee at its next regular meeting.

In connection with each regular Committee meeting, a summary of each new Related Person Transaction deemed pre-approved pursuant to paragraphs A(1) and A(2) above will be provided to the Committee for its review.

If a Related Person Transaction will be ongoing, the Committee may establish guidelines for management to follow in its ongoing dealings with the Related Person. Thereafter, the Committee, on at least an annual basis, will review and assess ongoing relationships with the Related Person to see that they are in compliance with the Committee’s guidelines and that the Related Person Transaction remains appropriate.

The Committee (or the Chair) will approve only those Related Person Transactions that are in, or are not inconsistent with, the best interests of Kroger and its shareholders, as the Committee (or the Chair) determines in good faith in accordance with its business judgment.

No director will participate in any discussion or approval of a Related Person Transaction for which he or she, or an immediate family member (as defined above), is a Related Person except that the director will provide all material information about the Related Person Transaction to the Committee.

C. Disclosure

Kroger will disclose all Related Person Transactions in Kroger’s applicable filings as required by the Securities Act of 1933, the Securities Exchange Act of 1934 and related rules.

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Audit Committee Report

The primary function of the Audit Committee is to represent and 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 this report that SEC rules require be included in the Company’s annual proxy statement. 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. 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 Committee’s charter. The Audit Committee held five meetings during fiscal year 2014. The Audit Committee meets separately with the Company’s internal auditor and PricewaterhouseCoopers LLP, the Company’s independent public accountants, without management present, to discuss the results of their audits, their evaluations of the Company’s internal controls over financial reporting, and the overall quality of the Company’s financial reporting. The Audit Committee also meets separately with the Company’s Chief Financial Officer and General Counsel when needed. Following these separate discussions, the Audit Committee meets in executive session.

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’ conformity with generally accepted accounting principles and the effectiveness of the Company’s internal control over financial reporting.

In the performance of its oversight function, the Audit Committee has reviewed and discussed with management and PricewaterhouseCoopers LLP the audited financial statements for the year ended January 31, 2015, management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of January 31, 2015, and PricewaterhouseCoopers LLP’s evaluation of the Company’s internal control over financial reporting as of that date. The Audit Committee has also discussed with the independent public accountants the matters that the independent public accountants must communicate to the Audit Committee under applicable requirements of the Public Company Accounting Oversight Board.

With respect to the Company’s independent public accountants, the Audit Committee, among other things, discussed with PricewaterhouseCoopers LLP matters relating to its independence and has received the written disclosures and the letter from the independent public accountants required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent public accountants’ communications with the Audit Committee concerning independence. The Audit Committee has reviewed and approved in advance all services provided to the Company by PricewaterhouseCoopers LLP.

The Audit Committee annually reviews PricewaterhouseCoopers LLP’s independence and performance in connection with the Audit Committee’s responsibility for the appointment and oversight of the Company’s independent public accountants. The Audit Committee considers, among other things, PricewaterhouseCoopers LLP’s historical and recent performance on the Company’s audit, including an internal survey of their service quality by members of management and the Audit Committee. The Audit Committee reviews recent Public Company Accounting Oversight Board reports on PricewaterhouseCoopers LLP and its peer firms, and considers PricewaterhouseCoopers LLP’s tenure as the Company’s independent public accountants and their familiarity with our operations, businesses, accounting policies and practices and internal control over financial reporting. Further, in conjunction with the mandated rotation of the public accountants’ lead engagement partner, the Audit Committee is directly involved in the selection of PricewaterhouseCoopers LLP’s lead engagement partner every five years. The Audit Committee believes that the continued retention of PricewaterhouseCoopers LLP to serve as the Company’s independent public accountants is in the best interests of the Company and its shareholders.

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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 January 31, 2015, as filed with the SEC.

This report is submitted by the Audit Committee.

Ronald L. Sargent, Chair
Susan J. Kropf
Susan M. Phillips
Bobby S. Shackouls

Advisory Vote on Executive Compensation
(Item No. 2)

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 named executive officers as disclosed earlier in this proxy statement in accordance with the SEC’s rules.

As discussed earlier in the Compensation Discussion and Analysis, our compensation philosophy is:

●	A significant portion of pay should be performance-based, 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, equity ownership; and
●	Components of compensation should be tied to an evaluation of business and individual performance measured against metrics that align with our business strategy.

Furthermore, as previously disclosed, an increased percentage of total potential compensation is performance-based as opposed to time-based as half of the compensation previously awarded to the named executive officers as restricted stock (and earned based on the passage of time) is now only earned to the extent that performance goals are achieved. In addition, annual and long-term cash bonuses are performance-based and earned only to the extent that performance goals are achieved. In tying a large portion of executive compensation to achievement of short-term and long-term strategic and operational goals, we seek to closely align the interests of our named executive officers with the interests of our shareholders.

The vote on this resolution is not intended to address any specific element of compensation. Rather, the vote relates to the compensation of our named executive officers 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 that 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 named executive officers, 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 Board of Directors Recommends a Vote For This Proposal.

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Selection of Auditors
(Item No. 3)

The Audit Committee of the Board of Directors is responsible for the appointment, compensation and retention of Kroger’s independent auditor, as required by law and by applicable NYSE rules. On March 11, 2015, the Audit Committee appointed PricewaterhouseCoopers LLP as Kroger’s independent auditor for the fiscal year ending January 30, 2016. 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 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 Kroger and our shareholders.

A representative of PricewaterhouseCoopers LLP is expected to be present at the meeting to respond to appropriate questions and to make a statement if he or she desires to do so.

The Board of Directors Recommends a Vote For This Proposal.

Disclosure of Auditor Fees

The following describes the fees billed to Kroger by PricewaterhouseCoopers LLP related to the fiscal years ended January 31, 2015 and February 1, 2014.

		Fiscal Year 2014					Fiscal Year 2013
Audit Fees			$	5,250,203				$	5,151,390
Audit-Related Fees			$	441,704				$	151,878
Tax Fees			$	360,498				$	188,021
All Other Fees			$	85,000					—
Total			$	6,137,405				$	5,491,289

Audit Fees. Audit fees for fiscal 2014 and fiscal 2013 were for professional services rendered for the audits of Kroger’s consolidated financial statements, the issuance of comfort letters to underwriters, consents, and assistance with the review of documents filed with the SEC.

Audit-Related Fees. Audit-related fees for fiscal 2014 and fiscal 2013 were for assurance and related services pertaining to accounting consultation in connection with attest services that are not required by statute or regulation, and consultations concerning financial accounting and reporting standards. These services are considered approved under the Company’s existing Audit and Non-Audit Service Pre-Approval Policy. These fees also included services related to acquisition related due diligence.

Tax Fees. Tax fees for fiscal 2014 and fiscal 2013 were for state tax compliance, tax audit support and debt restructuring.

All Other Fees. Other fees for fiscal 2014 were for advisory services pertaining to retiree healthcare benefits. We did not engage PricewaterhouseCoopers LLP for other services in fiscal 2013.

The Audit Committee requires that it approve in advance all audit and non-audit work performed by PricewaterhouseCoopers LLP. On March 11, 2015, the Audit Committee approved services to be performed by PricewaterhouseCoopers LLP for the remainder of fiscal year 2014 that are related to the audit of Kroger or involve the audit itself. In 2007, the Audit Committee adopted an audit and non-audit service pre-approval policy. Pursuant to the terms of that 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 independent accountant may perform the additional work.

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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.

Shareholder Proposal
(Item No. 4)

We have been notified by eleven shareholders, the names and shareholdings of which will be furnished promptly to any shareholder upon written or oral request to Kroger’s Secretary at our executive offices, that they intend to propose the following resolution at the annual meeting:

“The Kroger Company
Human Rights Risk Assessment- 2015

RESOLVED, that shareholders of The Kroger Company (“Kroger”) urge the Board to report to shareholders, at reasonable cost and omitting proprietary information, on Kroger’s process for identifying and analyzing potential and actual human rights risks of Kroger’s operations and supply chain (referred to herein as a “human rights risk assessment”) addressing the following:

●	Human rights principles used to frame the assessment
●	Frequency of assessment
●	Methodology used to track and measure performance
●	Nature and extent of consultation with relevant stakeholders in connection with the assessment
●	How the results of the assessment are incorporated into company policies and decision making

The report should be made available to shareholders on Kroger’s website no later than October 31, 2015.

Supporting Statement

As long-term shareholders, we favor policies and practices that protect and enhance the value of our investments. There is increasing recognition that company risks related to human rights violations, such as litigation, reputational damage, and project delays and disruptions, can adversely affect shareholder value.

Kroger, like many other companies, has adopted a supplier code of conduct (See The Kroger Company Standard Vendor Agreement) but has yet to publish a company-wide Human Rights Policy, addressing human rights issues and a separate human rights code that applies to its suppliers. Adoption of these principles would be an important first step in effectively managing human rights risks. Companies must then assess risks to shareholder value of human rights practices in their operations and supply chains to translate principles into protective practices.

The importance of human rights risk assessment is reflected in the United Nations Guiding Principles on Business and Human Rights (the “Ruggie Principles”) approved by the UN Human Rights Council in 2011. The Ruggie Principles urge that “business enterprises should carry out human rights due diligence…accessing actual and potential human rights impacts, integrating and acting upon the findings, tracking responses, and communicating how impacts are addressed.” (http://www.business-humanrights.org/media/documents/ ruggie/ruggie-guiding-principles-21-mar-201l.pdf)

Kroger’s business exposes it to significant human rights risks. As of year-end 2012, Kroger operations, including supermarkets, convenience and jewelry stores, are located in over 40 states, with suppliers in countries around the world, including Iran, China and Malaysia. The company’s supply chain is complex and global and unsuccessful labor negotiations, supply chain interruptions and civil unrest could adversely affect the company’s ability to execute its strategic plan.

We urge shareholders to vote for this proposal.”

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The Board of Directors Recommends a Vote Against This Proposal for the Following Reasons:

Kroger recognizes the importance of ensuring basic human rights are recognized by those seeking to do business with us. In the past 12 months, we have undertaken a number of steps to improve our social responsibility and compliance programs. An internal team of Kroger leaders has been working in the past year to evaluate and assess our current and future efforts with regard to social responsibility and compliance. We looked at our supply chain and identified key areas where we believe additional supply chain audits, especially with regard to social responsibility, would be beneficial. The specific items we have undertaken are:

●	We have revised and updated our Vendor Code of Conduct. It will be published in our 2015 Sustainability Report.
●	We have updated our existing social audit protocol to better align with industry best practices and recommended standards. This audit will be required for Kroger suppliers that are being audited. We will choose which suppliers to audit based on various risk variables such as country, product and industry.
●	We are significantly increasing the number of social compliance audits that we will conduct in future years, beginning with 2015. Our strategy includes adding new compliance audit managers to our team. This team will be responsible for reviewing social compliance audits, assessing risks as described above, and developing a reporting structure that informs our business decisions.
●	Our 2015 Sustainability Report will include a more in-depth report on our social compliance activities. This will include our revised Vendor Code of Conduct, a description of our 2015 and beyond social compliance audit strategy, and our approach to identifying risks.

These are the initial steps that we will be taking and we expect our program to continue to evolve and develop based on new trends, input from suppliers, customers, government, and non-governmental organizations. We believe that these efforts represent significant and positive steps forward for our company’s social compliance program.

As such, we do not believe that the requested report would serve to benefit our shareholders and that preparation of a report different from what will be included in our sustainability report would divert resources that otherwise could be more appropriately used in the best interest of our shareholders.

This proposal covers the same subject matter as one submitted to a vote at the last four years’ annual meetings and was defeated by our shareholders.

Shareholder Proposal
(Item No. 5)

We have been notified by four shareholders, the name and shareholdings of which will be furnished promptly to any shareholder upon written or oral request to Kroger’s Secretary at our executive offices, that they intend to propose the following resolution at the annual meeting:

“WHEREAS: A portion of Kroger house brand product packaging is unrecyclable, including plastics, which are a growing component of marine litter. Authorities say that marine litter kills and injures marine life, spreads toxics, and poses a potential threat to human health.

Plastic is the fastest growing form of packaging; U.S. flexible plastic sales are estimated at $26 billion. Dried fruit, frozen meat, cheese, and dog food are some of the Kroger house brand items packaged in unrecyclable plastic pouches. Private label items account for a quarter of all sales- nearly $20 billion annually. Using unrecyclable packaging when recyclable alternatives are available wastes valuable resources. William McDonough, a leading green design advisor, calls pouch packaging a “monstrous hybrid” designed to end up either in a landfill or incinerator.

Recyclability of household packaging is a growing area of focus as consumers become more environmentally conscious, yet recycling rates stagnate. Only 14% of plastic packaging is recycled, according to the. Environmental Protection Agency (EPA). Billions of pouches and similar plastic laminates, representing

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significant amounts of embedded value, lie buried in landfills. Unrecyclable packaging is more likely to be littered and swept into waterways. A recent assessment of marine debris by a panel of the Global Environment Facility concluded that one cause of debris entering oceans is “design and marketing of products internationally without appropriate regard to their environmental fate or ability to be recycled…”

In the marine environment, plastics break down into indigestible particles that marine life mistake for food. Studies by the EPA suggest a synergistic effect between plastic debris and persistent, bioaccumulative, toxic chemicals. Plastics absorb toxics such as polychlorinated biphenyls and dioxins from water or sediment and transfer them to the marine food web and potentially to human diets. One study of fish from the North Pacific found one or more plastic chemicals in all fish tested, independent of location and species.

California spends nearly $500 million annually preventing trash, much of it packaging, from polluting beaches, rivers and oceanfront. Making all packaging recyclable, if possible, is the first step needed to reduce the threat posed by ocean debris.

Companies who aspire to corporate sustainability yet use these risky materials need to explain why they use unrecyclable packaging. Other companies who manufacture and sell food and household goods are moving towards recyclability. Procter & Gamble and Colgate-Palmolive agreed to make most of their packaging recyclable by 2020. Keurig Green Mountain will K-cup coffee pods recyclable; and McDonald’s and Dunkin Donuts shifted away from foam plastic cups, which cannot be readily recycled.

RESOLVED: Shareowners of Kroger request that the board of directors issue a report, at reasonable cost, omitting confidential information, assessing the environmental impacts of continuing to use unrecyclable brand packaging.

Supporting Statement: Proponents believe that the report should include an assessment of the reputational, financial and operational risks associated with continuing to use unrecyclable brand packaging and, if possible, goals and a timeline to phase out unrecyclable packaging.”

The Board of Directors Recommends a Vote Against This Proposal for the Following Reasons:

Kroger shares the proponents’ concerns regarding plastic recyclability and recognizes the important role we play as a good steward of the environment.

We continue to improve the recyclability of our corporate branded products. We follow a balanced, multi-pronged approach to optimize packaging designs that consider attributes including but not limited to food safety, shelf life, availability, quality, material type, function, recyclability and cost.

Kroger is increasingly labeling corporate branded products that can be recycled, per the Federal Trade Commission’s Green Guides, prompting our customers to “PLEASE RECYCLE.” Examples include banner brand water bottles, which are made from polyethylene terephthalate (PETE), one of the most widely recycled plastics available. Our banner branded bread bags are made from low-density polyethylene (LDPE), which can be recycled at most of our stores, as part of the plastic bag recycling program.

Kroger also works with various industry experts and forums to advocate for expanded recycling infrastructure to support multiple forms of plastic packaging and to support diversion from landfills. For example, polypropylene (PP) has many properties and desirable traits for our banner brand ice cream such as easy opening and reclosing and longer shelf life. It allows us to use less material by weight, due to its strength, than other polymers. While not yet widespread, it is increasingly being accepted at curbside programs.

For each of the past several years we have published online our annual Sustainability Report that highlights our sustainability initiatives and waste reduction efforts in greater detail. We will continue to support efforts to reduce waste, find optimized solutions and advocate for expanded recycling infrastructure. We believe these efforts are significant and meaningful.

This proposal requests that Kroger take additional steps to report on an assessment of the environmental impact of unrecyclable packaging. We believe that the requested report would serve little benefit to our shareholders, and preparation of a report would divert resources that otherwise could be more appropriately used in the best interests of our shareholders.

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Shareholder Proposal
(Item No. 6)

We have been notified by one shareholder, the name and shareholdings of which will be furnished promptly to any shareholder upon written or oral request to Kroger’s Secretary at our executive offices, that it intends to propose the following resolution at the annual meeting:

“Whereas: Antibiotic resistance has become a public health crisis. ‘Superbugs’ - bacteria immune or resistant to one or more antibiotics - infect over 2 million people in the U.S. and kill over 23,000 annually, according to the Centers for Disease Control and Prevention. As resistance increases, medications used to treat human infections lose their effectiveness, leading the World Health Organization to warn of “a post-antibiotic era.”

An important cause of antibiotic resistant bacteria is the overuse of antibiotics in food-animal production, for the routine, non-therapeutic purposes of promoting faster growth or preventing (instead of treating) illness. In the U.S., more than 70% of medically important antibiotics are sold for use on food-animals.

Calls to restrict or ban the routine use of medically important antibiotics for food-animals have been endorsed by the American Medical Association, American Public Health Association, and other leading health organizations:

Eating food contaminated with antibiotic resistant bacteria is one way in which superbugs can be transmitted from a farm to human population. Government testing of raw supermarket meat detected ‘superbug’ versions of salmonella, E. coli, or other bacteria in 81% of ground turkey, 55% of ground beef, and 39% of chicken sampled.

An outbreak of antibiotic-resistant Salmonella from chicken last year resulted in more than 600 known illnesses. Several Kroger private brand chicken products were recalled by Foster Farms as part of this outbreak.

A 2012 Consumer Reports survey concluded that the majority of consumers surveyed were extremely or very concerned about the use of antibiotics in animal feed and would spend more for meat produced without these drugs.

Companies including Whole Foods, Panera Bread, Chipotle, and Chik-fil-A have policies against purchasing meat produced with antibiotics, heightening the risks to companies not acting on this issue. Perdue Foods announced that it has phased out routine antibiotic use in the production of its chicken meat, demonstrating that meat can be produced on a large scale without overusing antibiotics.

Kroger is one of the largest supermarket chains in the nation, with perishable food including meat and deli items accounting for around 21% of the company’s revenue in 2013. Consequently, food quality and safety trends should be of top priority to the company. Kroger faces reputational risk and liability concerns if it sells meat containing antibiotic resistant bacteria.

Resolved: Shareholders request that the Board undertake and publish a study of policy options that could reduce or eliminate routine antibiotic use in the production of its private label brand meats.

Supporting Statement:
Proponents suggest that the Board explore policy options such as the following: adopt a time-bound plan to phase out purchases of meat produced with routine antibiotic use; establish a new procurement policy that gives preference to suppliers that meet these standards; public declaration of such preferences. “Routine antibiotic use” means using antibiotics, on food animals, that belong to the same classes of drugs administered to humans, for the non-therapeutic purposes of growth promotion or disease prevention.”

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The Board of Directors Recommends a Vote Against This Proposal for the Following Reasons:

As one of the largest retailers of natural and organic food, Kroger offers a wide variety of private label and national brand antibiotic free meat items in our stores. In 2012, we introduced our private label Simple Truth^® and Simple Truth Organic^® brands of natural and organic products. All of the meat items with the Simple Truth and Simple Truth Organic label are antibiotic free and are available in our stores. This includes beef, pork, and poultry.

Many of our customers have indicated a preference for antibiotic free meat items. In fact, sales of Simple Truth and Simple Truth Organic and other antibiotic free items have increased significantly in the past several years and we expect to see continued growth in these items. That’s why we are continuing to offer new antibiotic free items and working with suppliers as they transition their products to antibiotic free. We will continue to monitor the purchasing practices of our customers and will continue to meet their demand to the extent our suppliers are able to do so. We do not believe, however, that given current customer preferences and availability of product it is appropriate to immediately phase out all non-antibiotic-free meats or set a date-certain for when a transition should be complete.

As such, we believe that the requested report would serve little benefit to our shareholders, and preparation of a report would divert resources that otherwise could be more appropriately used in the best interests of our shareholders.

SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS – 2016 ANNUAL MEETING. Shareholder proposals and director nominations intended for inclusion in the proxy material relating to Kroger’s annual meeting of shareholders in June 2016 should be addressed to Kroger’s Secretary and must be received at our executive offices not later than January 13, 2016. These proposals must comply with Rule 14a-8 and the SEC’s proxy rules.

In addition, Kroger’s Regulations contain an advance notice of shareholder business and 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 offices, not later 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 2016 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 March 29, 2016, and comply with the requirements of the Regulations. If a shareholder submits a proposal outside of Rule 14a-8 for the 2015 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. Shareholder proposals, director nominations and advance notices should be addressed in writing to: Secretary, The Kroger Co., 1014 Vine Street, Cincinnati, Ohio 45202-1100.

Attached to this Proxy Statement is our 2014 Annual Report which includes a brief description of our business, including the general scope and nature thereof during fiscal year 2014, together with the audited financial information contained in our 2014 Annual Report on Form 10-K filed with the SEC. A copy of that report is available to shareholders on request without charge by writing to: Todd A. Foley, Treasurer, The Kroger Co., 1014 Vine Street, Cincinnati, Ohio 45202-1100 or by calling 513-762-1220. Our SEC filings are available to the public on the SEC’s website at www.sec.gov.

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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 Notice of Availability of Proxy Materials (or proxy materials in the case of shareholders who receive paper copies of such 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 Notice of Availability of Proxy Materials (or proxy materials in the case of shareholders who receive paper copies of such 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 45202-1100 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.

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_____________
 
 

2014 Annual Report
 

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Financial Report 2014

Management’s Responsibility for Financial Reporting

The management of The Kroger Co. has the responsibility for preparing the accompanying financial statements and for their integrity and objectivity. The statements were prepared in accordance with generally accepted accounting principles applied on a consistent basis and are not misstated due to material error or fraud. The financial statements include amounts that are based on management’s best estimates and judgments. Management also prepared the other information in the report and is responsible for its accuracy and consistency with the financial statements.

Kroger’s financial statements have been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, whose selection has been ratified by the shareholders. Management has made available to PricewaterhouseCoopers LLP all of Kroger’s financial records and related data, as well as the minutes of the shareholders’ and directors’ meetings. Furthermore, management believes that all representations made to PricewaterhouseCoopers LLP during its audit were valid and appropriate.

Management also recognizes its responsibility for fostering a strong ethical climate so that Kroger’s affairs are conducted according to the highest standards of personal and corporate conduct. This responsibility is characterized and reflected in The Kroger Co. Policy on Business Ethics, which is publicized throughout Kroger and available on Kroger’s website at ir.kroger.com. The Kroger Co. Policy on Business Ethics addresses, among other things, the necessity of ensuring open communication within Kroger; potential conflicts of interests; compliance with all domestic and foreign laws, including those related to financial disclosure; and the confidentiality of proprietary information. Kroger maintains a systematic program to assess compliance with these policies.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting for Kroger. With the participation of the Chief Executive Officer and the Chief Financial Officer, management conducted an evaluation of the effectiveness of Kroger’s internal control over financial reporting based on the framework and criteria established in Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management has concluded that Kroger’s internal control over financial reporting was effective as of January 31, 2015.

W. Rodney McMullen	J. Michael Schlotman
Chairman of the Board and	Senior Vice President and
Chief Executive Officer	Chief Financial Officer

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Selected Financial Data

		Fiscal Years Ended
		January 31,					February 1,					February 2,					January 28,					January 29,
		2015					2014					2013					2012					2011
		(52 weeks) (1)(2)					(52 weeks) (1)					(53 weeks)					(52 weeks)					(52 weeks)
		(In millions, except per share amounts)
Sales			$	108,465				$	98,375				$	96,619				$	90,269				$	81,967
Net earnings including
noncontrolling interests				1,747					1,531					1,508					596					1,133
Net earnings attributable to
The Kroger Co.				1,728					1,519					1,497					602					1,116
Net earnings attributable to
The Kroger Co. per diluted
common share				3.44					2.90					2.77					1.01					1.74
Total assets				30,556					29,281					24,634					23,454					23,505
Long-term liabilities, including
obligations under capital leases and
financing obligations				13,711					13,181					9,359					10,405					10,137
Total shareholders’ equity –
The Kroger Co.				5,412					5,384					4,207					3,981					5,296
Cash dividends per common share				0.680					0.615					0.495					0.430					0.390

(1)	Harris Teeter Supermarkets, Inc. (“Harris Teeter”) is included in our ending Consolidated Balance Sheets for 2013 and 2014 and in our Consolidated Statements of Operations for 2014. Due to the timing of the merger closing late in fiscal year 2013, its results of operations were not material to our consolidated results of operations for 2013.
(2)	Vitacost.com, Inc. (“Vitacost.com”) is included in our ending Consolidated Balance Sheets and Consolidated Statements of Operations for 2014.

Common Share Price Range

During 2013, we paid three quarterly cash dividends of $0.15 per share and one quarterly cash dividend of $0.165 per share. During 2014, we paid three quarterly cash dividends of $0.165 per share and one quarterly cash dividend of $0.185 per share. On March 1, 2015, we paid a quarterly cash dividend of $0.185 per share. On March 12, 2015, we announced that our Board of Directors have declared a quarterly cash dividend of $0.185 per share, payable on June 1, 2015, to shareholders of record at the close of business on May 15, 2015. We currently expect to continue to pay comparable cash dividends on a quarterly basis depending on our earnings and other factors.

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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.

COMPARISON OF CUMULATIVE FIVE-YEAR TOTAL RETURN*
Among The Kroger Co., the S&P 500, and Peer Group**

		Base		INDEXED RETURNS
		Period		Years Ending
Company Name/Index		2009		2010		2011		2012		2013		2014
The Kroger Co.		100		101.12		117.57		137.80		181.50		352.22
S&P 500 Index		100		122.19		128.70		151.35		182.08		207.98
Peer Group		100		108.56		114.10		137.81		155.93		188.85
Kroger’s fiscal year ends on the Saturday closest to January 31.

*	Total assumes $100 invested on January 30, 2010, in The Kroger Co., S&P 500 Index, and the Peer Group, with reinvestment of dividends.
**	The Peer Group consists of Costco Wholesale Corp., CVS Caremark Corp, Etablissements Delhaize Freres Et Cie Le Lion (Groupe Delhaize), Great Atlantic & Pacific Tea Company, Inc. (included through March 13, 2012 when it became private after emerging from bankruptcy), Koninklijke Ahold NV, Safeway, Inc. (included through January 29, 2015 when it was acquired by AB Acquisition LLC), Supervalu Inc., Target Corp., Tesco plc, Wal-Mart Stores Inc., Walgreens Boots Alliance Inc. (formerly, Walgreen Co.), Whole Foods Market Inc. and Winn-Dixie Stores, Inc. (included through March 9, 2012 when it became a wholly-owned subsidiary of Bi-Lo Holdings).
	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.

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Issuer Purchases of Equity Securities

Total Number of

Maximum Dollar

Shares

Value of Shares

Purchased as

that May Yet Be

Part of Publicly

Purchased Under

Total Number

Average

Announced

the Plans or

of Shares

Price Paid

Plans or

Programs (4)

Period (1)

Purchased (2)

Per Share

Programs (3)

(in millions)

First period - four weeks

November 9, 2014 to December 6, 2014

87,884

$58.72

78,700

$500

Second period - four weeks

December 7, 2014 to January 3, 2015

223,024

$62.33

182,731

$500

Third period – four weeks

January 4, 2015 to January 31, 2015

290,348

$66.08

259,725

$500

Total

601,256

$63.61

521,156

$500

(1)	The reported periods conform to our fiscal calendar composed of thirteen 28-day periods. The fourth quarter of 2014 contained three 28-day periods.
(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 (the “1999 Repurchase Program”), and (ii) 80,100 shares that were surrendered to the Company 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)	The amounts shown in this column reflect the amount remaining under the $500 million share repurchase program authorized by the Board of Directors and announced on June 26, 2014. Amounts available under the 1999 Repurchase Program are dependent upon option exercise activity. The repurchase programs do not have an expiration date but may be terminated by the Board of Directors at any time.

Business

The Kroger Co. (the “Company” or “Kroger”) was founded in 1883 and incorporated in 1902. As of January 31, 2015, we are one of the largest retailers in the nation based on annual sales. We also manufacture and process some of the food for sale in our supermarkets. Our principal executive offices are located at 1014 Vine Street, Cincinnati, Ohio 45202, and our telephone number is (513) 762-4000. We maintain a web site (www.thekrogerco.com) that includes additional information about the Company. 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.

Our revenues are predominately earned and cash is generated as consumer products are sold to customers in our stores. We earn income predominantly by selling products at price levels that produce revenues in excess of the costs 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 2014, 2013 and 2012 are to the fiscal years ended January 31, 2015, February 1, 2014 and February 2, 2013, respectively, unless specifically indicated otherwise.

Employees

As of January 31, 2015, Kroger employed approximately 400,000 full- and part-time employees. 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 300 such agreements, usually with terms of three to five years.

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Stores

As of January 31, 2015, Kroger operated, either directly or through its subsidiaries, 2,625 supermarkets and multi-department stores, 1,330 of which had fuel centers. Approximately 48% of these supermarkets were operated in Company-owned facilities, including some Company-owned buildings on leased land. Our current strategy emphasizes self-development and ownership of store real estate. Our stores operate under several banners that have strong local ties and brand recognition. 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 food store format. They typically draw customers from a 2 – 2½ mile radius. We believe this format is successful because the stores are large enough to offer the specialty departments that customers desire for one-stop shopping, 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, toys and fine jewelry.

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 a competitive advantage. The average size of a price impact warehouse store is similar to that of a combo store.

In addition to the supermarkets, as of January 31, 2015, we operated through subsidiaries 782 convenience stores, 326 fine jewelry stores and an online retailer. All 132 of our fine jewelry stores located in malls are operated in leased locations. In addition, 78 convenience stores were operated by franchisees through franchise agreements. Approximately 54% of the convenience stores operated by subsidiaries were operated in Company-owned facilities. The convenience stores offer a limited assortment of staple food items and general merchandise and, in most cases, sell gasoline.

Segments

We operate retail food and drug stores, multi-department stores, jewelry stores, and convenience stores throughout the United States. Our retail operations, which represent over 99% of our consolidated sales and earnings before interest, taxes and depreciation and amortization (“EBITDA”), is our only reportable segment. Our retail operating divisions have been aggregated 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 reflect the manner in which the business is managed and how our Chief Executive Officer and Chief Operating Officer, who act as our chief operating decision makers, assess performance internally. All of our operations are domestic. Revenues, profits and losses and total assets are shown in our Consolidated Financial Statements set forth below beginning on page A-30.

Merchandising and Manufacturing

Corporate brand products play an important role in our merchandising strategy. Our supermarkets, on average, stock approximately 13,000 private label items. Our corporate brand products are primarily produced and sold in three “tiers.” Private Selection® is the premium quality brand designed to be a unique item in a category or to meet or beat the “gourmet” or “upscale” brands. The “banner brand” (Kroger®, Ralphs®, Fred

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Meyer®, King Soopers®, etc.), which represents the majority of our private label items, is designed to satisfy customers with quality products. Before we will carry a “banner brand” product we must be satisfied that the product quality meets our customers’ expectations in taste and efficacy, and we guarantee it. P$$T…®, Check This Out… and Heritage Farm™ are the three value brands, designed to deliver good quality at a very affordable price. In addition, we continue to grow our other brands, including Simple Truth® and Simple Truth Organic®. Both Simple Truth and Simple Truth Organic are Free From 101 artificial preservatives and ingredients that customers have told us they do not want in their food, and the Simple Truth Organic products are USDA certified organic.

Approximately 40% of the corporate brand units sold in our supermarkets are produced in our manufacturing plants; the remaining corporate brand items are produced to our strict specifications by outside manufacturers. We perform a “make or buy” analysis on corporate brand products and decisions are based upon a comparison of market-based transfer prices versus open market purchases. As of January 31, 2015, we operated 37 manufacturing plants. These plants consisted of 17 dairies, nine deli or bakery plants, five grocery product plants, two beverage plants, two meat plants and two cheese plants.

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.

Executive Officers of the Registrant

The disclosure regarding executive officers is set forth in Item 10 of Part III of the Company’s Annual Report on Form 10-K for fiscal year 2014 under the heading “Executive Officers of the Company,” and is incorporated herein by reference.

Competitive Environment

For the disclosure related to our competitive environment, see Item 1A of the Company’s Annual Report on Form 10-K for fiscal year 2014 under the heading “Competitive Environment.”

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Management’s Discussion and Analysis of
Financial Condition and Results of Operations

Our Business

The Kroger Co. was founded in 1883 and incorporated in 1902. Kroger is one of the nation’s largest retailers, as measured by revenue, operating 2,625 supermarket and multi-department stores under two dozen banners including Kroger, City Market, Dillons, Food 4 Less, Fred Meyer, Fry’s, Harris Teeter, Jay C, King Soopers, QFC, Ralphs and Smith’s. Of these stores, 1,330 have fuel centers. We also operate 782 convenience stores, either directly or through franchisees, 326 fine jewelry stores and an online retailer.

We operate 37 manufacturing plants, primarily bakeries and dairies, which supply approximately 40% of the corporate brand units sold in our supermarkets.

Our revenues are earned and cash is generated as consumer products are sold to customers in our stores. 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 over 99% of our consolidated sales and EBITDA, is our only reportable segment.

On January 28, 2014, we closed our merger with Harris Teeter by purchasing 100% of the Harris Teeter outstanding common stock for approximately $2.4 billion. The merger allows us to expand into the fast-growing southeastern and mid-Atlantic markets and into Washington, D.C. Harris Teeter is included in our ending Consolidated Balance Sheets for 2013 and 2014 and in our Consolidated Statements of Operations for 2014. Due to the timing of the merger closing late in fiscal year 2013, its results of operations were not material to our consolidated results of operations for 2013. Year-over-year comparisons will be affected as a result. See Note 2 to the Consolidated Financial Statements for more information related to our merger with Harris Teeter.

On August 18, 2014, we closed our merger with Vitacost.com by purchasing 100% of the Vitacost.com outstanding common stock for $8.00 per share or $287 million. Vitacost.com is a leading online retailer in health and wellness products, which are sold directly to consumers through the website vitacost.com. The merger affords us access to Vitacost.com’s extensive e-commerce platform, which can be combined with our customer insights and loyal customer base, to create new levels of personalization and convenience for our customers. Vitacost.com is included in our ending Consolidated Balance Sheets and Consolidated Statements of Operations for 2014. See Note 2 to the Consolidated Financial Statements for more information related to our merger with Vitacost.com.

Our 2014 Performance

We achieved outstanding results in 2014. Our business strategy continues to resonate with a full range of customers and our results reflect the balance we seek to achieve across our business including positive identical sales growth, increases in loyal household count, and good cost control, as well as growth in net earnings and net earnings per diluted share. Our 2014 net earnings were $1.7 billion or $3.44 per diluted share, compared to $1.5 billion, or $2.90 per diluted share for the same period of 2013.

Our net earnings for 2014 include a net $39 million after-tax charge for an $87 million ($56 million after-tax) charge to operating, general and administrative (“OG&A”) expenses due to the commitments and withdrawal liabilities arising from restructuring of certain pension plan agreements to help stabilize associates’ future pension benefits, offset partially by the benefits from certain tax items ($17 million) (“2014 Adjusted Items”). In addition, our net earnings for 2014 included unusually high fuel margins, partially offset by a last-in, first-out (“LIFO”) charge that was significantly higher than 2013 and $140 million in contributions charged to OG&A expenses for the United Food and Commercial Workers International Union (“UFCW”) Consolidated Pension Plan ($55 million) and our charitable foundation ($85 million) (“2014 Contributions”). Fuel margin per gallon was $0.19 per gallon in 2014, compared to $0.14 per gallon in 2013. The $55 million contribution to the UFCW Consolidated Pension Plan was to further fund the plan. The $85 million contribution

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to Kroger’s charitable foundation will enable it to continue to support causes such as hunger relief, breast cancer awareness, the military and their families and local community organizations. Our net earnings for 2013 include a net benefit of $23 million, which includes benefits from certain tax items of $40 million, offset partially by costs of $11 million in interest and $16 million in OG&A expenses ($17 million after-tax) related to our merger with Harris Teeter (“2013 Adjusted Items”).

Excluding the 2014 Adjusted Items, net earnings for 2014 totaled $1.8 billion, or $3.52 per diluted share, compared to net earnings in 2013 of $1.5 billion, or $2.85 per diluted share, excluding the 2013 Adjusted Items. We believe adjusted net earnings and adjusted net earnings per diluted share present a more accurate year-over-year comparison of our financial results because the Adjusted Items were not the result of our normal operations. Our adjusted net earnings per diluted share for 2014 represent a 24% increase, compared to 2013. Please refer to the “Net Earnings” section of MD&A for more information.

Our identical supermarket sales increased 5.2%, excluding fuel, in 2014, compared to 2013. We have achieved 45 consecutive quarters of positive identical supermarket sales growth, excluding fuel. As we continue to outpace many of our competitors on identical supermarket sales growth, we continue to gain market share. We focus on identical supermarket sales growth, excluding fuel, as it is a key performance target for our long-term growth strategy.

Increasing market share is an important part of our long-term strategy as it best reflects how our products and services resonate with customers. Market share growth allows us to spread the fixed costs in our business over a wider revenue base. Our fundamental operating philosophy is to maintain and increase market share by offering customers good prices and superior products and service. Based on Nielsen POS+ data, our overall market share of the products we sell in markets in which we operate increased by approximately 60 basis points in 2014. This data also indicates that our market share increased in 18 markets and declined slightly in two. Wal-Mart is one of our top two competitors in 15 of the 20 markets outlined in the Nielson report. Our market share increased in all 15 of these markets. These market share results reflect our long-term strategy of market share growth.

Results of Operations</