EXHIBIT 10.1

 

THE KROGER CO.

DEFERRED COMPENSATION PLAN FOR INDEPENDENT DIRECTORS

 

The Kroger Co. hereby amends and restates, effective as of January 1, 2005
(except where another date is indicated herein), its Deferred Compensation Plan
for Independent Directors established for the purpose of providing to members of
the Board of Directors who are eligible to participate in the Plan the option of
deferring a portion of future compensation that may become due from the Company.

 

ARTICLE I.

DEFINITIONS

 

For purposes hereof, the following words and phrases have the meanings
indicated:

 

  1. “Plan” means The Kroger Co. Deferred Compensation Plan for Independent
Directors, as set forth herein, together with all amendments hereto.

 

  2. “Cash Credit(s)” of a Participant at any time means the sum of all amounts
of Deferred Compensation, including interest, credited to a Participant and
recorded on his/her Deferred Compensation Account as Cash Credits.

 

  3. “Committee” means the Retirement Management Committee.

 

  4. “Compensation Committee” means the Compensation Committee of the Board of
Directors of the Company.

 

  5. “Company” means The Kroger Co., an Ohio corporation, its corporate
successor, and the surviving corporation, resulting from any merger of the
Company with any other corporation or corporations.

 

  6. “Independent Director” means any member of the Board of Directors of the
Company who is not an employee of the Company.

 

  7. “Compensation” means the retainer and any fee payable to an Independent
Director with respect to a fiscal year of the Company.

 

  8. “Deferral Year” means the calendar year during which, but for an election
to defer under the Plan, the Independent Director would actually receive
Compensation from the Company.

 

  9. “Deferral Election Agreement” means an agreement, in the form attached
hereto as Exhibit A, executed by a Participant in order to defer Compensation in
accordance with the provisions of the Plan, and to designate whether such
Deferred Compensation shall be allocated to the Participant’s Deferred
Compensation Account as Cash Credits or as Stock Price Credits.

 

  10. “Deferred Compensation” means the amount of Compensation deferred in
accordance with the Plan.

 

  11. “Deferred Compensation Account” means the bookkeeping account for each
Deferral Year on which the amount of Deferred Compensation of a Participant is
recorded as a “Cash Credit” or “Stock Price Credit” for each Deferral Year in
accordance with the Plan.

 

  12. “Designated Beneficiary” means the person(s) designated by a Participant
on the Participant’s Deferral Election Agreement, in accordance with the Plan,
to receive payment of the remaining balance of the Deferred Compensation Account
in the event of the death of the Participant prior to Participant’s receipt of
the entire amount of the Deferred Compensation Account.

 

  13. “Fair Market Value” of the Stock Credits allocated to a Participant’s
Deferred Compensation Account as of any date means the average of the highest
and lowest price of common stock of the Company on the last day of the calendar
quarter immediately preceding such date, multiplied by the “Stock Price Credits”
in his/her Deferred Compensation Account.

 

  14. “Participant” means an Independent Director who has been elected to defer
payment of all or a portion of the Participant’s Compensation in accordance with
the Plan.

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  15. “Stock Price Credit(s)” means the credits allocated to the Participant’s
Deferred Compensation Account in the manner described in Section 5 of Article
II.

 

  16. “Unforeseeable Emergency” means a severe financial hardship to the
Participant resulting from an illness or accident of the Participant, the
Participant’s spouse, or a dependent (as defined in section 152(a) of the Code)
of the Participant, loss of the Participant’s property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant. An unforeseeable emergency will
not include the need to send a Participant’s child to college or the desire to
purchase a home.

 

  17. “Code” shall mean the Internal Revenue Code of 1986, as amended and as in
effect from time to time.

 

ARTICLE II.

DEFERRAL OF COMPENSATION

 

  1. Deferral Elections. For each Deferral Year, each Independent Director is
entitled to defer the receipt of payment of up to 100% (or any stated dollar
amount not to exceed the amount of Compensation) of the Compensation payable
during the Deferral Year, and such Deferred Compensation shall be recorded in
the Deferred Compensation Account of the Participant as a “Cash Credit” or a
“Stock Price Credit”. The Independent Director must make all deferral elections
on a Deferral Election Agreement. The Committee will establish procedures to
make deferral elections that will include the times during which the deferral
elections can be made and that will comply with applicable Internal Revenue
Service requirements.

 

  2. Period of Deferral. The Independent Director must, in the Deferral Election
Agreement, designate the time and manner in which Deferred Compensation is to be
later paid, all in accordance with the distribution option prescribed in Article
III. Upon making a deferral election pursuant to the foregoing provisions, an
Independent Director will become a Participant of the Plan and will continue to
be a Participant until all amounts of Deferred Compensation have been paid from
the Plan.

 

  3. Deferred Compensation Account. The amount of Compensation deferred by a
Participant for any Deferral Year will be credited to a separate Deferred
Compensation Account for that Deferral Year in the name of the Participant,
effective as of the day on which the Compensation otherwise would have been paid
to the Participant. The Participant’s Deferred Compensation Account for the year
will be either credited with interest pursuant to Section 4 of this Article or
credited with Stock Price Credits pursuant to Section 5 of this Article.

 

  4. Crediting of Interest. The Participant’s Cash Credit in his/her Deferred
Compensation Account for the Deferral Year will be credited with interest based
upon the interest rate representing the cost to the Company of 10-year debt as
determined by the Chief Executive Officer of the Company before the beginning of
the Deferral Year. Subject to future change by the Chief Executive Officer, the
Board of Directors or the Compensation Committee, such interest rate will apply
to all subsequent years until the Deferred Compensation is paid out to the
Participant or his/her Beneficiary. For the Deferral Year and each subsequent
year, the Participant’s Cash Credit in his/her Deferred Compensation Account
will be credited with interest on a quarterly basis pursuant to the following
provisions:

 

  (A) The interest for a calendar quarter will be credited effective as of the
last day of the calendar quarter.

 

  (B) The interest credited for a calendar quarter will be in an amount equal to
(i) the rate for the Deferral Year, multiplied by (ii) the average of the
beginning and ending balances of the Participant’s Cash Credit in his/her
Deferred Compensation Account for the calendar quarter.

 

  5. Crediting of Stock Price Credits. For each calendar quarter, a Participant
shall have allocated to his Deferred Compensation Account a number of Stock
Price Credits equal to the amount of Deferred Compensation which the Participant
has elected to allocate to the Participant’s Deferred Compensation Account for
the quarter, divided by the average of the closing prices of the Company’s
common stock on the first and last days of the quarter. Such Stock Price Credits
will be recorded in the Participant’s Deferred Compensation Account for the
Deferral Year and for each subsequent year until the Deferred Compensation is
paid out to the Participant or the Participant’s Beneficiary.

 

  6. Designated Beneficiary. The Participant must, in the Participant’s Deferral
Election Agreement, name a Designated Beneficiary with respect to the
Participant’s Deferred Compensation. The Participant is entitled to provide for
multiple or contingent persons as Designated Beneficiary. The Participant may
change or revoke the Participant’s designation of a Designated Beneficiary by
written notice to the Committee.

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  7. Continued Right to Defer. A Independent Director’s right to defer the
Participant’s Compensation ceases when he/she retires, dies or otherwise
terminates the Participant’s services to the Company.

 

ARTICLE III.

PAYMENT OF DEFERRED COMPENSATION

 

  1. Payment Upon Participant’s Termination of Services. The Participant, in the
Participant’s Deferral Election Agreement, must specify the time and manner that
Deferred Compensation is to be paid to the Participant upon the Participant’s
termination of services to the Company (for any reason other than death) from
among the following choices, as irrevocably elected by the Participant.

 

  (A) For Cash Credits the choices of payment are:

 

  (i) Immediate (Next Quarter) Lump Sum. The Participant’s Deferred Compensation
Account will be paid to the Participant in a single cash lump sum payment as
soon as administratively possible after the first day of the calendar quarter
following the date of the Participant’s termination of services as an
Independent Director. The amount of the lump sum payment will be equal to the
balance of the Participant’s Deferred Compensation Account as of the last day of
the calendar quarter preceding the date of payment to the Participant.

 

  (ii) Deferred (Next Year) Lump Sum. The Participant’s Deferred Compensation
Account will be paid to the Participant in a single cash lump sum payment as
soon as administratively possible after the first day of the calendar year
following the date of the Participant’s termination of services as an
Independent Director. The amount of the lump sum payment will be equal to the
balance of the Participant’s Deferred Compensation Account as of the last day of
the calendar year preceding the date of payment to the Participant.

 

In the event that the Participant dies before the date of actual payment of the
lump sum payment, the Participant’s Designated Beneficiary will receive the
Participant’s lump sum payment at the same time and manner prescribed by
paragraphs (i) and (ii) above.

 

  (iii) Immediate (Next Quarter) Quarterly Installments. The Participant’s
Deferred Compensation Account will be paid to the Participant in quarterly
installment payments as designated on the Deferral Election Agreement (not less
than 4 nor more than 40) commencing as soon as administratively possible after
the first day of the calendar quarter following the date of the Participant’s
termination of services as a Independent Director. The amount of each quarterly
installment will be determined by dividing (i) the balance of the Participant’s
Deferred Compensation Account as of the last day of the calendar quarter
preceding the quarterly installment payment to the Participant, by (ii) the
number of the remaining quarterly installment payments to be made to the
Participant plus the payment currently being made.

 

  (iv) Deferred (Retirement Age) Quarterly Installments. The Participant’s
Deferred Compensation Account will be paid to the Participant in quarterly
installment payments as designated on the Deferral Election Agreement (not less
than 4 nor more than 40) commencing as soon as administratively possible after
the first day of the calendar quarter following the date of the Participant’s
retirement age specified in the Participant’s Deferral Election Agreement. The
amount of each quarterly installment will be determined by dividing (i) the
balance of the Participant’s Deferred Compensation Account as of the last day of
the calendar quarter preceding the quarterly installment payment to the
Participant, by (ii) the number of the remaining quarterly installment payments
to be made to the Participant plus the payment currently being made.

 

In the event that the Participant designates payment in the form of installments
but dies after the termination of the Participant’s service as a, Independent
Director but before completion of the Participant’s quarterly installment
payments, the Participant’s Designated Beneficiary will receive, at the election
of the Participant in Deferral Election Agreement, either (i) the unpaid
quarterly installment payments, at the same time and manner prescribed by
paragraphs (A)(iii) and (A)(iv) as if the quarterly installment payments were
being made to the Participant, or (ii) a single lump sum payment as

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soon as administratively possible after the first day of the calendar quarter
following the date of the Participant’s death in an amount equal to the balance
of the Participant’s Deferred Compensation Account as of the last day of the
calendar year preceding the date of payment to the Designated Beneficiary.

 

  (B) For Stock Credits the Fair Market Value of a Participant’s Stock Credits
in his/her Deferred Compensation Account will be paid in the form of a single
lump sum cash payment on the first day of the quarter following (as designated
in the Participant’s Deferral Election Agreement) either the first, second,
third, fourth or fifth anniversary of the Participant’s termination of services
as an Independent Director.

 

  2. Payment Upon Participant’s Death. The Participant, in the Participant’s
Deferral Election Agreement, must specify the time and manner that the Deferred
Compensation is to be paid to the Participant’s Designated Beneficiary upon the
Participant’s death during the Participant’s tenure as Independent Director
among the following choices, as irrevocably elected by the Participant:

 

  (A) Immediate (Next Quarter) Lump Sum. All Cash Credits or the Fair Market
Value of any Stock Price Credits in the Participant’s Deferred Compensation
Account will be paid to his/her Designated Beneficiary in a single cash lump sum
payment as soon as administratively possible after the first day of the calendar
quarter following the date of the Participant’s death. The amount of the lump
sum payment will be equal to the balance of the Participant’s Deferred
Compensation Account as of the last day of the calendar quarter preceding the
date of payment to the Designated Beneficiary.

 

  (B) Deferred (Next Year) Lump Sum. All Cash Credits and the Fair Market Value
of any Stock Price Credits in the Participant’s Deferred Compensation Account
will be paid to his/her Designated Beneficiary in a single cash lump sum payment
as soon as administratively possible after the first day of the calendar year
following the date of the Participant’s death. The amount of the lump sum
payment will be equal to the balance of the Participant’s Deferred Compensation
Account as of the last day of the calendar year preceding the date of payment to
the Designated Beneficiary.

 

  (C) Immediate (Next Quarter) Quarterly Installments Available for Cash Credits
Only. Cash Credits in the Participant’s Deferred Compensation Account will be
paid to his/her Designated Beneficiary in quarterly installment payments as
designated on the Deferral Election Agreement (not less than 4 nor more than 40)
commencing as soon as administratively possible after the first day of the
calendar quarter following the date of the Participant’s death. The amount of
each quarterly installment will be determined by dividing (i) the balance of the
Participant’s Deferred Compensation Account as of the last day of the calendar
quarter preceding the quarterly installment payment to the Designated
Beneficiary, by (ii) the number of the remaining quarterly installment payments
to be made to the Designated Beneficiary plus the payment currently being made.

 

  3. Special Death Distribution Provisions. In the event of the death of a
Participant, the Committee must receive written notice and verification of the
death of the Participant and reserves the right to delay distribution of a
Participant’s Deferred Compensation Account to the Participant’s Designated
Beneficiary until the Committee’s receipt and acceptance of that notice and
verification of death. The distribution options elected by the Participant in
Sections 1 and 2 of this Article, where applicable, are binding on any
subsequent Designated Beneficiary, including any subsequent Designated
Beneficiary arising by a change by the Participant or by operation of any
contingency provisions of the Participant’s beneficiary designation.

 

The Participant’s written designation of the Participant’s Designated
Beneficiary and Participant’s contingency provisions (if any) will govern the
determination of the proper person entitled to benefits under the Plan following
the death of the Participant and the Participant’s Designated Beneficiary.
However, in the absence of a specific contingency provision therefor, the
following default provisions will apply:

 

  (A) In the event that the Participant dies without any Designated Beneficiary,
the Participant’s Designated Beneficiary will be deemed the Participant’s
estate.

 

  (B) In the event that the Participant’s Designated Beneficiary dies after the
Participant and with outstanding benefits under the Plan, the Designated
Beneficiary’s own beneficiary designated in writing to the Committee (or, if
none, the Participant’s estate) will thereafter be considered the Participant’s
Designated Beneficiary.

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  (C) In the event that the Participant and the Designated Beneficiary die
simultaneously or under circumstances such that the order of death cannot be
determined, the Participant, for purposes of the Plan, will be deemed to have
survived the Designated Beneficiary.

 

In the event the Participant has elected the installment distribution option
available for Cash Credits and the Participant’s Designated Beneficiary is the
Participant’s estate (or, if applicable, the estate of a Designated
Beneficiary), the Participant’s Deferred Compensation Account will continue to
be made in installment payments consistent with the installment distribution
option to the proper beneficiary under the estate of the Participant (or, if
applicable, the estate of the Designated Beneficiary).

 

  4. Unforeseeable Emergency. If a Participant has an Unforeseeable Emergency,
the Participant may apply in writing to the Committee for an emergency payment
under this Section 4. The Company will pay to the Participant that portion of
the Participant’s Deferred Compensation Account(s) under the Plan as necessary
to meet the Unforeseeable Emergency. For purposes of this Section 4 a payment
due to an Unforeseeable Emergency will not exceed the amount that the Committee
determines is reasonably necessary to satisfy the need created by the
Unforeseeable Emergency, plus amounts reasonably necessary to pay taxes
reasonably anticipated as the result of the payment, after taking into account
the extent to which such need is or may be relieved through reimbursement or
compensation by insurance or otherwise, or by liquidation of the Participant’s
assets (to the extent that such liquidation would not itself cause severe
financial hardship. Upon application for a payment due to Unforeseeable
Emergency, the Participant will furnish to the Committee all information as the
Participant deems appropriate and as the Committee deems necessary and
appropriate to make a determination on the application.

 

ARTICLE IV.

BENEFIT RELATED PROVISIONS

 

  1. Plan Tax Status. This Plan is intended to comply with the requirements of
Section 409A of the Code (to the extent such section is applicable to the Plan)
and shall be applied and interpreted in accordance with such intent.

 

  2. Plan Binding. As a condition to participating in and receiving benefits
under this Plan, a Participant will be bound by the provisions of this Plan.

 

  3. Fully Vested; Forfeiture For Cause. All amounts held in the Participant’s
Deferred Compensation Account will be fully vested and nonforfeitable at all
times. Notwithstanding the foregoing, any Participant whose services are
terminated for cause, will forfeit 100% of the interest credited to the
Participant’s Deferred Compensation Account

 

  4. Unsecured Obligation. The obligation of the Company to make payments under
the Plan merely constitutes a general, unsecured promise of the Company to make
payments from its general assets. No Participant or Designated Beneficiary will
have any interest in, or a lien or prior claim upon, any property of the
Company. The right of a Participant or a Designated Beneficiary to receive
benefits under the Plan will be an unsecured claim against the general assets of
the Company and the Participant and the Participant’s Beneficiary will have no
greater rights to the general assets of the Company than any other general
creditor of the Company.

 

  5. Nonalienation of Benefits. The Participant’s benefits under this Plan, or
the current right of a Participant or Designated Beneficiary to receive benefits
under the Plan, will not be anticipated, alienated, sold, transferred, assigned,
pledged, encumbered, garnished or subjected to any charge or legal process, by
the Participant, Designated Beneficiary or any other person (such as their
creditors), and any attempt to do so will be null and void and of no force and
effect.

 

  6. Tax Withholding. The Participant and Designated Beneficiary will be
responsible for all taxes on amounts paid under the Plan, except to the extent
taxes are withheld as required by law.

 

  7. Benefit Payments in the Event of Incapacity. If the Committee finds that
any Participant or Designated Beneficiary is unable to care for the
Participant’s affairs because of illness or injury, or is a minor, then any
payment due under the Plan will be made, in the discretion of the Committee, to
the spouse, child, brother, sister or parent of the respective Participant or
Designated Beneficiary, for the Participant’s benefit, unless a prior claim has
been made by a duly appointed guardian or other legal representative.

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ARTICLE V.

ADMINISTRATION

 

  1. Committee Authority. The Committee is responsible for the general
administration of the Plan and for carrying out the provisions hereof. The
Committee has all powers necessary to carry out the provisions of the Plan,
including the discretionary authority to interpret and construe all provisions
of the Plan and make all benefit determinations under the Plan, including but
not limited to eligibility for and the amount in the Deferred Compensation
Account, crediting and calculation of interest, and all questions pertaining to
claims for benefits and procedures for claim review. The Committee is empowered
to take all action deemed advisable in the administration of the Plan. The
actions taken and the decisions made hereunder will be final and binding on all
interested parties.

 

  2. Claims Procedure. The Company will provide a procedure for handling claims
of Participants or their Designated Beneficiaries under the Plan. The procedure
will provide adequate written notice within a reasonable period of time with
respect to the Committee’s denial of any claim, as well as a reasonable
opportunity for a full and fair review of any denial. The decision after any
review will be conclusive and binding on Participants, Designated Beneficiaries
and the Company.

 

  3. Account Statements. As soon as administratively possible after the end of
each calendar year, the Company will prepare and furnish to each Participant a
statement of the status of each of the Participant’s Cash Credits and Stock
Credits in his/her Deferred Compensation Account of the Plan effective as of the
last day of the calendar year. The statement will show the contributions and
earnings credited to the Account during the year and the payments made from the
Account during the year, and any other information as the Committee may
prescribe.

 

  4. Indemnification. The Company will indemnify, through insurance or
otherwise, each member of the Committee against any claims, losses, expenses,
damages or liabilities arising out of the performance (or failure of
performance) of their responsibilities under the Plan.

 

ARTICLE VI.

AMENDMENT AND TERMINATION

 

  1. The Company reserves the right to amend or modify the Plan at any time by
action of its Board of Directors or the Compensation Committee. The Board of
Directors may terminate this Plan at any time. No action will adversely affect
any Participant or Designated Beneficiary who has a Deferred Compensation
Account. The Board may, however, direct that all Deferred Compensation be paid
out in a lump sum or in a series of payments upon, and commencing with,
termination of the Plan. The Board will not be bound by any elections therefore
made by Participants to receive extended payout.

 

ARTICLE VII.

MISCELLANEOUS

 

  1. Claims of Other Persons. The Plan will not be construed as giving any
person, firm or corporation any legal or equitable right against the Company,
its officers, employees, or directors, except any rights specifically provided
for in the Plan or are hereafter created in accordance with the terms and
provisions of the Plan.

 

  2. Severability. The invalidity or unenforceability of any particular
provision of the Plan will not affect any other provisions hereof, and the Plan
will be construed in all respects as if all invalid or unenforceable provisions
were omitted herefrom.

 

  3. Governing Law. The provisions of the Plan will be governed and construed in
accordance with the laws of the State of Ohio. Nothing contained herein will be
construed to create any duty, right or obligation under the Employee Retirement
Income Security Act of 1974, as amended (ERISA).

 

EXHIBIT A

THE KROGER CO. DEFERRED COMPENSATION PLAN

FOR INDEPENDENT DIRECTORS

DEFERRAL ELECTION AGREEMENT

 

As an Independent Director under the Plan, I irrevocably elect to defer my fees
(excluding retainer) for the Deferral Year pursuant to the elections made in
this Deferral Election Agreement. The elections are subject to the terms and
conditions of the Plan, the receipt of which I hereby acknowledge.

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RETAINER/FEE ELECTION

 

Defer              %, or $              of my fees (excluding retainer), payable
beginning on or after January 1,              to my Deferred Compensation
Account as a Cash Credit or insert a % or $ deferral but not both. You may elect
to defer up to 100% of your fees in effect for the Deferral Year.

 

OR

 

No deferral.

 

PAYMENT ELECTIONS

 

  1. FOR CASH CREDIT ONLY:

 

Select one of the following options:

 

OPTION A: Immediate (Next Quarter) Lump Sum Payment of the calendar quarter
following my termination of services as an Independent Director. See Article
III, Section 1(A)(I).

 

OPTION B: Deferred (Next Year) Lump Sum Payment of the calendar year following
my termination of services as an Independent Director. See Article III, Section
1(A)(II).

 

OPTION C: Immediate (Next Quarter) Installment Payments              payments
(no less than 4 nor more than 40) commencing after the first day of the calendar
quarter following my termination of services as an Independent Director. See
Article III, Section 1(A)(III).

 

OPTION D: Deferred (Retirement Age) Installment Payments              payments
(no less than 4 nor more than 40) commencing after the first day of the calendar
quarter following the later of the date of my termination of services as an
Independent Director or my              the birthday. See Article III, Section
1(A)(IV).

 

 

  2. FOR STOCK PRICE CREDIT ONLY:

 

Lump sum payout on the following anniversary of my termination of services as an
Independent Director:

 

First

Second

Third

Fourth

Fifth

 

BENEFICIARY DESIGNATION

 

In accordance with Article II, Section 5, of the Plan, I designate
                         as my Designated Beneficiary under the Plan.

 

[Please attach any contingent Designated Beneficiary provisions]

 

PAYMENT ELECTION UPON DEATH WHILE SERVING AS AN Independent DIRECTOR Select one
of the following options:

 

OPTION A: Immediate (Next Quarter) Lump Sum Payment of the calendar quarter
following my death. See Article III, Section 2(A).

 

OPTION B: Deferred (Next Year) Lump Sum Payment of the calendar year following
my death. See Article III, Section 2(B).

 

OPTION C: Immediate (Next Quarter) Installment Payments For Cash Credits
Only             payments (no less than 4 nor more than 40) commencing after the
first day of the calendar quarter following my death. See Article III, Section
2(C).

 

Signature

 

 

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  Date  

 

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