EXHIBIT 10.19


 


PERFORMANCE UNIT AWARD


UNDER THE PROVISIONS OF


ONE OF THE KROGER CO.


LONG-TERM INCENTIVE PLANS


 


Pursuant to the provisions
of a Long-Term Incentive Plan (the “Plan”) of The Kroger Co., the Compensation
Committee (the “Committee”) of the Board of Directors has granted to you, on June 24,
2010, a performance unit award, on and subject to the terms of the Plan and
your agreement to the following terms, conditions and restrictions.


 


1.  Delivery of Shares. Subject to and
upon the terms, conditions, and restrictions set


forth in this Agreement, The
Kroger Co. (“Kroger”) will deliver to you the number of common shares, $1 par
value per share, of Kroger (the “Shares”) equal to the product determined by
multiplying (a) the number of performance units indicated on your 2010
Executive Compensation form (“Notice of Award”) by (b) the percentage  determined in accordance with the provisions
of Paragraphs 2 and 3 below. Delivery of Shares will occur on the date of
the regularly scheduled meeting of Kroger’s Board of Directors held in March 2013.


 


2.  Performance Criteria. You are eligible
to earn a percentage of the number of Shares indicated on your Notice of
Award.  The percentage will be determined
based on the extent to which Kroger’s (i) Customer 1st Tracker results increase, (ii) Associate
1st Survey associate engagement results increase,
and (iii) total operating costs, as a percentage of sales, decrease, as of
the end of the third fiscal year (the “Performance Period”) from January 31,
2010, when compared to those results as of January 30, 2010.  Customer 1st Tracker,
measuring Kroger performance in four key areas (people, shopping experience,
product, and price), will be based on results of customer surveys using the
methodology currently in use by Kroger, subject to modification by the
Committee.  Associate 1st Survey, measuring associate satisfaction, will
be based on results of associate surveys using the methodology currently in use
by Kroger, subject to modification by the Committee.  Total operating costs will be calculated by
adding (i) OG&A, depreciation, and rent (excluding fuel), for the
total Company, and (ii) warehouse and transportation costs, shrink, and
advertising expenses (excluding fuel), for our supermarket operations.


 


3.  Calculation of Awards.  The number of shares earned will be based on
the criteria set forth in Paragraph 2 above, calculated in the manner shown on
Attachment A.  Any resulting partial
Shares will be rounded up or down to the nearest whole Share amount.  The Company will pay to participants, in
cash, an amount equal to the product of the total dividends per share paid on
Kroger common stock during the Performance Period and the number of shares
earned during the Performance Period.  In
no event will awards exceed 100% of the number of Shares indicated on the
Notice of Award.


 


4.   Termination of Employment, Retirement, or
Death of Participant.


 


(a)  Participation in
the Plan does not create a contract of employment, or grant any employee the
right to be retained in the service of Kroger. 
Any participant whose employment is terminated by Kroger; who
voluntarily terminates his or her employment (other than in accordance with
paragraph (b) below); or whose pay level drops below pay level 35, prior
to the end of the Performance Period, will forfeit all rights hereunder.


 


(b)  If a participant
voluntarily terminates his or her employment after reaching age 55 with at
least five years of service with Kroger, participation will continue, and that
participant will receive a prorata number of Shares earned according to the
terms of the award proportionate to the period of active service during the
Performance Period.


 


(c)  If a participant
dies during the Performance Period, participation will continue, and the
participant’s designated beneficiary (or if none, then the participant’s
estate) will receive a prorata number of Shares earned according to the terms
of the award proportionate to the period of service during the Performance
Period before the participant’s death.


 


(d) 
Notwithstanding anything contained in this paragraph 4 to the contrary, in the
event that while this agreement is outstanding the participant provides
services as an employee, director, consultant, agent, or otherwise, to any of
Kroger’s competitors, this agreement and the award hereunder terminate.   For purposes of this paragraph 4(d), a
competitor is any business that sells groceries, food, drugs, health and beauty
care items, motor fuels, or pharmaceuticals, at retail in one or more of the
same geographic areas that Kroger sells those products.


 


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5.  Change in Control.  Shares in an amount equal to 50% of the
number of Shares indicated on the Notice of Award will be delivered to you if
at any time after the date of this agreement any of the following occur:


 


(a)     without prior approval of Kroger’s Board of
Directors, any person,  group, entity or
group thereof, excluding Kroger’s employee benefit plans, becomes the owner of,
or obtains the right to acquire, 20% or more of the voting power of our then
outstanding voting securities; or


 


(b)     a tender or exchange offer has expired,
other than an offer by Kroger, under which 20% or more of our then outstanding
voting securities have been purchased; or


 


(c)     as a result of, or in connection with, or
within two years following (i) a merger or business combination, (ii) a
reorganization, or (iii) a proxy contest, in any case which was not
approved by Kroger’s Board of Directors, the individuals who were directors of
Kroger immediately before the transaction cease to constitute at least a
majority thereof, except for changes caused by death, disability or normal
retirement; or


 


(d)      Kroger’s shareholders have approved (i) an
agreement to merge or consolidate with or into another corporation and Kroger
is not the surviving corporation or (ii) an agreement, including a plan of
liquidation, to sell or otherwise dispose of all or substantially all of Kroger’s
assets.


 


6. Transferability.
Your right to receive a payout under this award is not assignable or
transferable by you other than by will or by the laws of descent and
distribution.


 


7.  Taxes. 
In connection with a payment to you under this award, Kroger will
withhold or cause to be withheld from that payment the amount of tax required
by law to be withheld with respect to the payment.   For Shares to be issued under this award,
Kroger will withhold sufficient Shares with a market value equal to the tax
required by law to be withheld with respect to the award unless you have
notified us in writing in advance of the issuance of the Shares of your desire
to pay the taxes and have made the funds available to us or our designated
agent.


 


8.  Compliance with Code.  This award is designed to be exempt from the
provisions of Section 409A of the Code as a short term deferral.  This award will be construed, administered,
and governed in a manner that effects that intent.   Kroger does not represent or guarantee that
any particular federal or state income, estate, payroll, or other tax
consequences will occur because of this award and the compensation
provided hereunder.  In the event that
any other agreement serves to modify this award in a manner that causes the
award to not be exempt from Section 409A as a short term deferral, any issuance
of Stock or payment of cash to a “specified employee” within the meaning of
Treas. Reg. 1.409A-1(i) (or any successor thereto) on account of
termination of employment will be made six months after the date of
termination, and termination of employment will not be considered to occur
until there is a termination of employment within the meaning of Treasury
Regulation Section 1.409(h)(1)(ii), where the employee’s services
permanently decrease to less than 50% of the average level of services
performed over the preceding 36 month period.


 


9.  Acceptance of Agreement.  In the event that you fail to accept this
Agreement within one year from the grant date, we will accept it on your
behalf, and your failure to notify us in writing directed to the Benefits Department,
The Kroger Co., 1014 Vine Street, Cincinnati, OH  45202, of your desire to
reject this Agreement will be deemed to be your express authority for us to
accept this Agreement on your behalf.


 


10.  Amendments. Any amendment to the Plan
will be deemed to be an amendment to this Agreement to the extent that the
amendment is applicable hereto.  No
amendment will adversely affect your rights under this Agreement without your
consent. Notwithstanding the forgoing, to the extent necessary to preserve Kroger’s
federal tax deduction that would otherwise be denied due to Section 162(m) of
the Internal Revenue Code (applicable only to certain top senior executives),
Kroger may elect (without your consent) to delay delivery of your award Shares
until 30 days following your termination of employment.  If Kroger so elects to delay payment, all
other deferred compensation payments for the year that would be nondeductible
under Section 162(m) also will be delayed to avoid negative tax
consequences to you.


 


11.  Severability. In the event that any
provision of this Agreement is invalidated for any reason by a court of
competent jurisdiction, any provision so invalidated will be deemed to be
separable from the other provisions hereof. 
The remaining provisions will continue to be valid and fully
enforceable.


 


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12.  Relation to Plan. This Agreement is
subject to the terms and conditions of the Plan. In the event of any
inconsistency between the provisions of this Agreement and the Plan, the Plan
will govern. Capitalized terms used herein without definition have the meanings
assigned to them in the Plan. The Committee acting pursuant to the Plan, as
constituted from time to time, will, except as expressly provided otherwise
herein, have the right to determine any questions that arise in connection with
the grant of this award.


 


13.  Successors and Assigns. Without
limiting Paragraph 6 hereof, the provisions of this Agreement will inure
to the benefit of, and be binding upon, your successors, administrators, heirs,
legal representatives and assigns, and the successors and assigns of Kroger.


 


14.  Governing Law. The interpretation,
performance, and enforcement of this Agreement will be governed by the laws of
the State of Ohio, without giving effect to the principles of conflict of laws
thereof.


 


 


	
   

  	
  THE KROGER CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “participant”

  



 


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ATTACHMENT
A


TO


PERFORMANCE
UNIT AWARD


 


	
  Performance

  Metric

  	
   

  	
  Shares Earned as a

   Percent of the Number

   of Shares Covered

   by the Award

  	
   

  
	
  Customer
  1st

  	
   

  	
  1% per each point
  improvement, provided that improvement is achieved in each of the four key
  areas

  	
   

  
	
  Associate
  1st

  	
   

  	
  2% per each point
  improvement

  	
   

  
	
  Total
  Operating Costs

  	
   

  	
  0.25% per each basis point
  reduction

  	
   

  



 


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