The Kroger Co Annual Report 2022

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FY2022 Annual Report · The Kroger Co

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Notice of 2023 Annual Meeting of Shareholders

2023 Proxy Statement

and

2022 Annual Report on Form 10-K

Dear Fellow Shareholders,

One of the things I love about food retail is that customers are always evolving. As tastes and needs
continually shift, accommodating those shifts with agility earn us the privilege of continuing to serve our
customers. This is what makes our industry so exciting.

The ways customers shop for food is ever evolving and always changing. Customers used to shop once a
week, checking off items from handwritten lists. Today, our customers manage their groceries with a mix
of in-person and online shopping, rely on digital technologies to make lists and track spending, and shop
for more ready-made meal solutions. Outside our stores, we know customers spend approximately half of
their food budgets at restaurants.

What hasn’t changed is our passion to deliver fresh, affordable food to the communities we serve and
inspire our customers to discover their love for food. Our business model is built around offering fresh
products at competitive prices with no compromise on quality, selection, and convenience. This is a time-
tested approach in any operating environment, and we remain committed to it into the future. Every day,
we provide our customers with lower prices on the foods they love and more choices to meet their needs
and wants.

Our passion for our customers, associates and communities is also on display in our willingness to take on
difficult challenges and see them through. We see it in the way our store and supply chain teams respond
to natural disasters, always the first to help our communities. We see it in the way our associates worked
with the White House, governors, and mayors to ensure America had access to fresh, affordable food
during the pandemic. And we see it in our willingness to address one of our food systems most intractable
challenges – that more than 40% of the food produced goes to waste each year while one in eight
Americans struggle with hunger – through our Zero Hunger | Zero Waste impact plan.

Kroger has the fortitude to take on these challenges because we know that when we take care of our
customers, associates and communities, our shareholders will benefit.

We continue delivering value for our shareholders. On a three-year basis, Kroger’s adjusted net earnings
per diluted share has grown at a compounded annual growth rate of 24.5% which has helped support a
total shareholder return of 78.2% over the same period.

This incredible outcome is the result of our dedicated and thriving associates delivering a full, fresh and
friendly experience for more than 11 million customers every day. It’s no wonder Kroger was recently
included in a list of America’s Most Trustworthy Companies. From our manufacturing facilities and
fulfillment centers to our store and office teams, we appreciate everything our associates do to embody
Our Purpose: To Feed the Human Spirit.

Our associates are driving consistent execution of our go-to-market strategy in every interaction, everyday
positioning the company for sustainable, long-term growth.

Kroger is building momentum and has the people, the plan, and the operational discipline to win today
and in the future.

Update on proposed merger with Albertsons Co.
In October 2022, we announced our definitive merger agreement with Albertsons Companies, Inc. We are
incredibly impressed with the Albertsons team and their commitment to their associates, culture,
customers, and communities.

Lower prices. More Choices.
We believe bringing our highly complementary organizations together will provide customers with lower
prices and more choices. Our proposed merger will mean more value for our customers, with lower prices
and more food choices to discover. And we will begin on day one post-close, with $500 million already
committed to bringing down prices.

Empower our associates’ success
Our associates are responsible for our success, and we are committed to investing in theirs. The proposed
combination will secure the long-term future of union jobs while creating a more competitive alternative
to larger, non-union retailers. We have already committed $1 billion to continue raising associate wages
and comprehensive, industry-leading benefits.

It is vital that we support our associates as they explore what their individual career paths will be. So
many of our associates come to Kroger to experience their first job. In 2022, approximately 20% of our
new hires were 18 years old or younger. It is amazing that Kroger introduces so many young people to a
fulfilling career in the grocery industry. We demonstrate how our associates can choose from many
different paths and how a foundation in amazing customer service supports associates’ long-term goals,
no matter where associates choose to build their careers.

At Kroger, associates get to help families discover healthier answers to the question, “what’s for dinner
tonight;” create technology that makes customers’ shopping trips simpler; make healthcare more
accessible for their neighbors – and even dream up a job that has yet to be created. The career
opportunities are truly endless.

Build healthier communities free of hunger
The proposed merger will also allow our organization to invest in our communities in ways we simply
cannot do on our own. I am so proud of what we have accomplished in our Zero Hunger | Zero Waste
work and am impressed by the Albertsons team’s commitment to supporting their communities as
outlined in their Recipe for Change plan. We know that when families eat together, it supports their
children’s success across all aspects of their lives. I cannot wait to see how our combined efforts will
connect people with the meals they need to thrive.

We look forward to continue working cooperatively with regulators and remain on track for a projected
closure of the merger in early 2024.

2022 in Review
As the pandemic continued to fade and inflation caused ongoing economic uncertainty, our associates
showed up for our customers. Last year, Kroger associates did everything we could to minimize the
impact of inflation and help stretch tight food budgets so families could access fresh, affordable food,
with zero compromise on convenience or selection. Our Leading with Fresh and Accelerating with
Digital strategy and key focus areas of Fresh, Our Brands, seamless and personalization give us the
flexibility to navigate a changing operating environment – all while providing value to our customers and
our associates. We will continue to consider a five- to ten-year time horizon as we make key decisions.

During the year, we:

 Achieved positive identical sales without fuel of 5.6%


Increased associate wages, resulting in an average hourly wage of $18 and rate of more than $23
with comprehensive benefits

 Exceeded $1 billion in cost savings for the fifth consecutive year
 Announced 14 additional Kroger Delivery locations across the U.S.

The subsequent sections will highlight progress we made across our business in 2022 and ways we intend
to continue building on our momentum moving forward.

Leading with Fresh
For us, Fresh for EveryoneTM is more than a brand promise. It’s a commitment to bringing fresh,
affordable foods to more people in more neighborhoods. Fresh foods are central to families living healthy,
thriving lives. And our customers prioritize fresh when they shop with Kroger – with more than more
than 90% of customers purchasing fresh foods. Many companies claim they are focused on fresh – we
have demonstrated success in creating fresher shopping experiences, and our customers are rewarding us
for it.

In the last year, we continued to put our focus on fresh, both with our in-store and e-commerce
experiences. The End-to-End Fresh initiative is at the center of how we are changing the way we bring
fresh to life in our stores. Today, we have more than 1,400 stores implementing this initiative in their
produce departments, driving higher produce and overall store sales. We look forward to exploring how
we can expand this work in other fresh departments in 2023 and beyond.

We are also working closely with our technology and supply chain teams to understand ways we can add
days of freshness to our products. From optimizing delivery routes to simplifying associate tasks, we want
to ensure our customers can buy food at its peak of freshness and trust those items will remain fresh in
their homes.

Freshness is also important when we think about innovation in Our Brands. In 2022, we launched a
simplified opening-price-point brand known as Smart Way™. This new concept is easily identifiable for
customers who want to stretch their budgets. It joins Kroger’s carefully curated, extensive Our Brands
portfolio, which includes the company’s namesake Kroger brand, Simple Truth®, Private Selection®,
Home Chef® and Heritage Farm®, among others.

In addition to the Smart Way brand introduction, we launched more than 680 new, unique Our Brands
products last year. We engage with food trends throughout the year to understand what our customers are
craving and ensure we have those items on our shelves. We aim to bring every customer the high-quality,
affordable products they love – from pantry staples and fresh foods to ready-to-heat, restaurant-quality
meals.

Accelerating with Digital
We continue to invest in our seamless ecosystem – bringing our customers the products they love when
and where they want them. We see customers shift the ways they interact with us based on their
individual needs, which aligns with our vision of a truly seamless shopping experience.

Our goal remains to be there for our customers – however they need us in a particular moment.

When it fits their day’s plans, customers may choose to shop in our stores. Sometimes, they find a Kroger
Delivery order easier during a busy weekend. Or when nothing looks good in the refrigerator or the last
paper towel comes off the roll, we’re here with Kroger Delivery Now, delivering in as little as 30
minutes. We remain well-positioned to achieve double-digit digital growth in the next three years.

Our brick-and-mortar stores and automated fulfillment centers work together to ensure our customers
have access to the fresh foods and pantry staples they want when they need them most.

Our efforts to bring a truly personalized shopping experience to life are creating value for our customers.
We serve the right promotions at the right time, directly to the customers who would be most interested in
the offer. From providing suggestions to start a basket to offering a new item, we are providing customers
real value. In 2022 alone, customers saved $1.4 billion through a combination of paper and digital
coupons.

Last year, we also launched Boost by Kroger, the retail industry’s most-affordable membership program.
We are already exceeding internal expectations in both incremental engagement and household spend. We
look forward to evolving our membership program to appeal to more customers and create additional
value.

The Accelerating with Digital piece of our strategy continues to drive our profit flywheel. We are
improving margins by reducing digital cost-to-serve, all while growing our alternative profit streams.

Investing in Our Associates
Our associates are at the heart of everything we do. I am always impressed at the ways they create
memorable food moments for our customers every day. I regularly think back to my time working in a
Kroger store when I began my career more than 40 years ago. I learned how to run a successful store, how
to create real community with my customers and coworkers, and how important our stores are to the
neighborhoods they serve.

Kroger provides opportunities for people seeking their first job, a new beginning, or a new challenge to
discover a fulfilling career path. And we continue to invest in our associates. Earlier this year we
committed nearly $800 million to raise wages and benefits, create new training opportunities, and
improve healthcare options in 2023.

This investment builds on our $1.9 billion in incremental investments in wages and comprehensive
benefits Kroger has made since 2018. As a result, we raised our average hourly rate to $18, or $23.50 an
hour with comprehensive benefits.

We understand we must support our associates’ holistic well-being. To accomplish this goal, Kroger
creates programs that power our associates’ growth, including a world-class educational benefit program
offering associates up to $21,000 toward continuing education opportunities – whatever that may mean to
our associates. In 2022 alone, more than 5,000 people engaged with this program. We provide affordable,
accessible healthcare options, which includes free counseling. Also in 2022, we introduced a first-of-its-
kind free financial coaching services to all our hourly associates. We remain committed to helping our
associates thrive in their careers and at home, ensuring Kroger remains an employer of choice.

Environmental Sustainability and Social Impact
Kroger is committed to responsible sourcing practices, respecting human rights, and advancing animal
welfare. Our comprehensive programs hold our suppliers accountable to meet our high standards and
support our continual improvement. We rely on deep knowledge from our category sourcing leaders, data
insights and input from our investors, industry groups, NGOs, and subject-matter experts.

In 2022, we published our greenhouse gas (GHG) reduction goal roadmap. We are diligently working to
reduce absolute Scope 1 and 2 GHG emissions from our operations by 30% by 2030 against a 2018
baseline. This goal was developed using climate science, supporting a well-below 2ºC climate scenario
according to the absolute contraction method.

Kroger made considerable progress against our Framework for Action: Diversity, Equity & Inclusion
plan. Launched in 2020, this action plan is accelerating change across the entire company. Since its
introduction, we successfully provided unconscious bias training to all leaders and nearly half a million
associates. We are working with 53 Historically Black Colleges and Universities, and institutions serving
Hispanic, Asian American and Pacific Islander, and Native American students. And we are taking strong
steps to achieve our goal of increasing our spend with diverse suppliers to $10 billion annually by 2030.

We are growing the many ways we participate in our communities – both big and small. In 2022, we
celebrated the fifth anniversary of our Zero Hunger | Zero Waste impact plan. Since its inception, we

directed more than $1.65 billion in food and funds to help end hunger, which includes more than 2.3
billion meals. We remain on track to donate 3 billion meals to our neighbors by 2025.

One accomplishment I am so proud of is our stores’ work to achieve 100% execution of our food rescue
program in participating Kroger stores. Flawless execution is an ideal for which we always strive. It is
inspirational to see the way our store teams embrace our mission of providing healthy food to their
communities.

Looking to the Future
I am optimistic for what 2023 and beyond will mean for Kroger, our customers, our associates, and our
communities. We are committed to providing the freshest food to our customers, with zero compromise
on value, convenience, or selection. We are investing in the business to continuously optimize our
approach to freshness – and our customers are taking notice. Our teams are always looking for new
opportunities to bring fresh Our Brands items to our customers, both capitalizing on food trends and
creating experiences that can only come from Kroger.

Customers continue to expect the convenience our digital experience offers. We are working toward
innovative ways to ensure grocery shopping fits easily into our customers’ days – whether they are
looking for a need-it-now item, a weekly stock-up shop, or the perfect ingredient to make a special meal
more memorable. And we do more than make it convenient – we make the shopping experience personal.
We know our customers, and we earn their trust daily by providing engaging offers on the foods they
love.

And our amazing associates bring it all to life. In addition to creating a full, fresh, and friendly shopping
experience for every customer, every time, our associates are committed to making their communities a
better place to live. This year, we are recognizing 50 outstanding associates who raised significant funds
for our Zero Hunger | Zero Waste Foundation. These dollars support our nonprofit partners across
America who are working to create communities free from hunger and waste. Congratulations to each of
these “Zero Heroes” for making measurable change for your neighbors.

I would like to thank our customers, associates, and shareholders for your ongoing support for Kroger. I
look forward to everything we will do together in the year ahead.

With gratitude,

Rodney McMullen
Chairman and CEO, The Kroger Co.

Safe Harbor Statement

This letter contains “forward-looking statements” within the meaning of the safe harbor provisions of the
United States Private Securities Litigation Reform Act of 1995 about future performance of Kroger, including with
respect to Kroger’s ability to achieve sustainable net earnings growth, strategic capital deployment, strong and
attractive total shareholder return, strong free cash flow and ability to increase the dividend, ability to achieve
certain operational goals, as well as ESG targets, goals, and commitments outlined in this proxy statement, or
elsewhere among other statements. These statements are based on management’s assumptions and beliefs in light of
the information currently available to it. These statements are indicated by words such as “will,” “aim,” “model,”
“driving,” “goal,” “plan,” “continue,” “on track,” “committed” and “believe,” as well as similar words or phrases.
These statements are subject to known and unknown risks, uncertainties and other important factors that could cause
actual results and outcomes to differ materially from those contained in the forward-looking statements, including
the specific risk factors identified in “Risk Factors” in Kroger’s most recent Annual Report on Form 10-K and any
subsequent filings with the Securities and Exchange Commission. Kroger assumes no obligation to update the
information contained herein, unless required to do so by applicable law.

Zero Hunger | Zero Waste: Associate Fundraising Heroes

The Kroger Co. Zero Hunger | Zero Waste Foundation is a nonprofit public charity designed to help align

philanthropy with the company’s Zero Hunger | Zero Waste social and environmental impact plan. We invite
customers of the Kroger Family of Companies to join our journey by rounding up their purchase to the nearest dollar
at checkout to benefit the Zero Hunger | Zero Waste Foundation.

Cashiers across the country are leading the way in activating donations through Round Up. Dollars raised are
directed to nonprofit partners that help end hunger and waste in our communities. These are our 2022 Zero Heroes:

Fred Meyer Division
Pat Sears

Mid-Atlantic Division
Dee Dee Hamby

Atlanta Division
Jessica Wellborn
Dianne Perkins
Rachel Dickens
Betalhem Tolla

Central Division
Carol Dietz
Jess Warburton
Rebekah Lehman
Sheri Fornter

Cincinnati-Dayton Division
Jen Tudor

Fry’s Division
Jayne Cota
Melissa Horowitz
Barbara Stockton

Houston Division
Debra Van Matre
Mashuny Squierdo

Columbus Division
Colleen Burrows

King Soopers Division
Chris Vellos
Dan Cahill

Louisville Division
Stacey Harrison
Laury Shulhafer
Robin Adams

Mariano’s Division
Loran Henderson
Vikki Hornbaker

Michigan Division
Tammy Depuy
Tracey Regits

Dallas Division
Jon Mullin
Julie Olinick
Tonja Buckley

Delta Division
Sherbert Ware
Laura Sparks
Mae Watson

Dillons Division
Trista Soendker
Pam Meyer
Joan Rogers

Food 4 Less - MW
Tamara Primm
Rohel Terrazas

Nashville Division
Linda Whitfield

Ralphs Division
John Dailey
Marquett Valencia
Debra Sutton
Pedro Daniel

Roundy’s Division
Nancy Johnson

QFC Division
Kurt Mincin
Amber Brask

Smith’s Division
Tonya Tall

Food 4 Less
Jimmy Hu
Maricruz Chico
Mayra Sanguino
Rufina Kniefel

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Proxy Summary

This summary highlights information contained elsewhere in this Proxy Statement. It does not contain all of the

information that you should consider. You should read the entire Proxy Statement carefully before voting.

Overview of Voting Matters and Board Recommendations

No. 1 – Election of Directors

Proposals

No. 2 Advisory Vote to Approve Executive Compensation

No. 3 Advisory Vote on Frequency of Future Advisory Votes on Executive

Compensation

No. 4 Ratification of Independent Auditors

Nos. 5 – 9 Shareholder Proposals

Corporate Governance Highlights

Board Recommendation

FOR
Each Director Nominee
recommended by
your Board

FOR

ONE YEAR

FOR

AGAINST
Each Proposal

Kroger is committed to strong corporate governance. We believe that strong governance builds trust and
promotes the long-term interests of our shareholders. Highlights of our corporate governance practices include the
following:

Board Governance Practices

 Strong Board oversight of enterprise risk.

 Strong experienced independent Lead Director with clearly defined role and responsibilities.

 Commitment to Board refreshment and diversity.

 5 of 11 director nominees are women.

 The chairs of the Audit, Finance, and Public Responsibilities Committees are women.

 Annual evaluation of the Chairman and CEO by the independent directors, led by the independent Lead

Director.

 All director nominees are independent, except for the CEO.

 All five Board Committees are fully independent.

 Annual Board and Committee self-assessments conducted by independent Lead Director or an

independent third party.

 Regular executive sessions of the independent directors, at the Board and Committee level.

 High degree of Board interaction with management to ensure successful oversight and succession

planning.

 Balanced tenure.

 Robust shareholder engagement program.

 Robust code of ethics.

Environmental, Social, & Governance (ESG) Practices

 Long-standing Board Committee dedicated to ESG oversight — Public Responsibilities Committee —

formed in 1977.

o Amended the Committee Charter in 2021 to more specifically reflect the Committee’s focused and
prioritized approach to material ESG topics related to environmental issues, sustainability, and
social impact

 Annual ESG report, sharing progress on our goals for Zero Hunger | Zero Waste, Just & Inclusive

Economy, Food Waste, Operational Waste, Water, Packaging, Climate Impact, and Responsible Sourcing.

o The 2022 ESG report represented the 16th year of describing our progress and initiatives regarding

sustainability and other ESG matters

 Committed to transparency in our disclosure, informed by frameworks consistent with shareholder

expectations:

o SASB’s Food Retailers and Distributors Standard
o GRI Global Sustainability Reporting Standards
o Task Force on Climate-related Financial Disclosures (TCFD) framework

 Established formal Diversity, Equity & Inclusion (DE&I) Framework for Action to:

o Create a more inclusive culture
o Develop diverse talent
o Advance diverse partnerships
o Advance equitable communities
o Listen deeply and report progress

 Specifically include diverse candidates in every external executive officer and Board director search.

 Disclose EEO-1 data annually.

Shareholder Rights

 Annual director election.

 Simple majority standard for uncontested director elections and plurality in contested elections.

 No poison pill.

 Shareholders have the right to call a special meeting.

 Robust, long-standing shareholder engagement program with regular engagements, including with

independent directors, to better understand shareholders’ perspectives and concerns on a broad array of
topics, such as corporate governance and ESG matters.

 Adopted proxy access for director nominees, enabling a shareholder, or group of up to 20 shareholders,

holding 3% of the Company’s common shares for at least three years to nominate candidates for the greater
of two seats or 20% of Board nominees.

Compensation Governance

 Robust clawback and recoupment policy.

 Pay program tied to performance and business strategy.

 Majority of pay is long-term and at-risk with no guaranteed bonuses or salary increases.

 Stock ownership guidelines align executive and director interests with those of shareholders.

 Prohibition on all hedging, pledging, and short sales of Kroger securities by directors and executive

officers.

 No tax gross-up payments to executives.

Environmental, Social, & Governance Strategy

Kroger’s Environmental, Social & Governance Strategy is called Thriving Together. This strategy reflects the

evolution of the Company’s long history of operating responsibly, advancing economic opportunity and
sustainability in our own operations and supply chain, and giving back meaningfully to our communities.

Our ESG objective is to achieve positive and lasting change through a shared-value framework that benefits
people and our planet and creates more resilient systems for the future. The centerpiece of Kroger’s ESG strategy is
our Zero Hunger | Zero Waste social and environmental impact plan. Introduced five years ago, Zero Hunger | Zero
Waste is an industry-leading platform for collective action and systems change at global, national, and local levels.

Our ESG strategy aims to address material topics of importance to our business and key stakeholders, including

our associates, customers, shareholders, and others. Key ESG topics — informed by a structured materiality
assessment and engagement with our shareholders and other stakeholders — align to three strategic pillars: People,
Planet and Systems. Please see more details here in Kroger’s annual ESG Report: https://www.thekrogerco.com/wp-
content/uploads/2022/08/Kroger-Co-2022-ESG-Report.pdf. The information on, or accessible through, this website
is not part of, or incorporated by reference into, this proxy statement.

Director Nominee Highlights

2023 Director Nominee Snapshot

Diversity and Tenure

Skills and Experience

Key Attributes and Skills of All Kroger Director Nominees


Intellectual and analytical skills
 High integrity and business ethics
 Strength of character and judgement
 Ability to devote significant time to Board

duties

 Desire and ability to continually build expertise
in emerging areas of strategic focus for our
Company

 Demonstrated focus on promoting equality

 Business and professional achievements
 Ability to represent the interests of all shareholders
 Knowledge of corporate governance matters
 Understanding of the advisory and proactive

oversight responsibility of our Board

 Comprehension of their his or her as a public

company director and the fiduciary duties owed to
shareholders

 Ability to work cooperatively with other members

of the board

Nora
Aufreiter

Kevin
Brown

Elaine
Chao

Anne
Gates

Karen
Hoguet

Rodney
McMullen

Clyde
Moore

Ronald
Sargent

Amanda
Sourry

Mark
Sutton

Ashok
Vemuri

Total
(of 11)

Business

Management

Retail

Consumer

Financial

Expertise

Risk

Management

Operations &
Technology

ESG

Manufacturing

•

2022 Compensation Highlights

Executive Compensation Philosophy

Executive Summary

We delivered exceptional performance in 2022. Kroger achieved exceptional results in 2022 as we
executed on our Leading with Fresh and Accelerating with Digital strategy, building on record years
in 2020 and 2021. We are delivering a fresh, affordable, and seamless shopping experience for our
customers, with zero compromise on quality, selection, or convenience. We are delivering on our
financial commitments through our strong, resilient Value Creation Model. In 2022, we achieved
financial performance results of ID sales, without fuel, of 5.6%, and adjusted FIFO operating profit,
including fuel, of $5.1 billion1.

Our executive compensation program aligns with long-term shareholder value creation. 91% of
our CEO’s target total direct compensation and, on average, 84% of the other NEOs’ compensation is
at risk and performance-based, tied to achievement of performance targets that are important to our
shareholders or our long-term share price performance.

The annual performance incentive was earned above target reflecting our 2022 performance.
The annual incentive program, based on a grid of identical sales, excluding fuel, and adjusted FIFO
operating profit, including fuel, paid out at 192.40% of target. In light of macroeconomic conditions,
including inflation, as well as the Compensation Committee’s desire to create ongoing alignment with
shareholders and reward sustained performance beyond 2022, the Compensation Committee
determined to structure the payout to the NEOs as follows: 150% in cash and the remaining 42.4% in
restricted stock vesting in one year.
The long-term performance incentive payout reflects alignment with performance over fiscal
years 2020, 2021, and 2022. Long-term performance unit equity awards granted in 2020 and tied to
commitments made to our investors and other stakeholders regarding long-term sales growth,
adjusted FIFO operating profit growth, free cash flow generation, our commitment to Fresh, and
Relative Total Shareholder Return were earned at 93.75% of target.

1 See pages 27 – 33 of our Annual Report on Form 10-K for the fiscal year ended January 28, 2023, filed with the SEC on March 28, 2023, for a
reconciliation of GAAP operating profit to adjusted FIFO operating profit.

We prioritized investment in our people. We strive to create a culture of opportunity for nearly
430,000 associates and take seriously our role as a leading employer in the United States. In 2022, we
invested more than ever in our associates by continuing to raise our average hourly wage to $18, or
over $23, including industry-leading benefits.

In response to our shareholder feedback, we incorporated an ESG metric focused on diversity
and inclusion into our 2022 individual performance management program. Our core values of
Diversity, Equity & Inclusion are incorporated into compensation decisions made for our associates
who supervise a team of others, which range from store department leaders through our NEOs. These
performance goals are factored into compensation decisions for these leaders, including salary
increases and the amount of the annual grant of equity awards.

Summary of Key Compensation Practices

To achieve our objectives, the Compensation Committee seeks to ensure that compensation is competitive and

that there is a direct link between pay and performance. To do so, it is guided by the following principles:

• Compensation must be designed to attract and retain those individuals who are best suited to be an NEO at

Kroger.

• A significant portion of pay should be performance-based, with the percentage of total pay tied to

performance increasing proportionally with an NEO’s level of responsibility.

• Compensation should include incentive-based pay to drive performance, providing superior pay for superior

performance, including both a short- and long-term focus.

• Compensation policies should include an opportunity for, and a requirement of, significant equity ownership

to align the interests of NEOs and shareholders.

• Components of compensation should be tied to an evaluation of business and individual performance

measured against metrics that directly drive our business strategy and progress toward our corporate ESG
priorities.

• Compensation plans should provide a direct line of sight to company performance.

• Compensation programs should be aligned with market practices.

• Compensation programs should serve to both motivate and retain talent.

Names Executive Officers (NEOs) for 2022

For the 2022 fiscal year ended January 28, 2023, the NEOs were

Name

Title

W. Rodney McMullen

Chairman and Chief Executive Officer

Gary Millerchip

Stuart W. Aitken

Yael Cosset

Senior Vice President and Chief Financial Officer

Senior Vice President and Chief Merchandising & Marketing Officer

Senior Vice President and Chief Information Officer

Timothy A. Massa

Senior Vice President and Chief People Officer

Fellow Kroger Shareholders:

Notice of 2023 Annual Meeting of Shareholders

We are pleased to invite you to join us for Kroger’s 2023 Annual Meeting of Shareholders on June 22, 2023 at
11:00 a.m. eastern time. The 2023 Annual Meeting of Shareholders will once again be a completely virtual
meeting conducted via webcast. We believe this is the most effective approach for enabling the highest
possible attendance.

You will be able to participate in the virtual meeting online, vote your shares electronically, and submit questions
during the meeting by visiting www.virtualshareholdermeeting.com/KR2023.

When:
Where:
Items of Business:

June 22, 2023, at 11:00 a.m. eastern time.
Webcast at www.virtualshareholdermeeting.com/KR2023

1. To elect 11 director nominees
2. To approve our executive compensation, on an advisory basis.
3. To select the frequency of future advisory votes on executive compensation, on an

advisory basis.

4. To ratify the selection of our independent auditor for fiscal year 2023.
5. To vote on five shareholder proposals, if properly presented at the meeting.
6. To transact other business as may properly come before the meeting.

Who can Vote:

Holders of Kroger common shares at the close of business on the record date April 24, 2023 are
entitled to notice of and to vote at the meeting.

How to Vote:

YOUR VOTE IS EXTREMELY IMPORTANT NO MATTER HOW MANY SHARES
YOU OWN! Please vote your proxy in one of the following ways:

1. By the internet, you can vote by the Internet by visiting www.proxyvote.com.
2. By telephone, you can vote by telephone by following the instructions on your proxy

card, voting instruction form, or notice.

3. By mail, you can vote by mail by signing and dating your proxy card if you requested
printed materials, or your voting instruction form, and returning it in the postage-paid
envelope provided with this proxy statement.

4. By mobile device, by scanning the QR code on your proxy card, notice of internet

availability of proxy materials, or voting instruction form.

5. By attending and voting electronically during the virtual Annual Meeting at

www.virtualshareholdermeeting.com/KR2023.

Attending the
Meeting:

Shareholders holding shares at the close of business on the record date may attend the virtual
meeting. You will be able to attend the Annual Meeting, vote and submit your questions in
advance of and real-time during the meeting via a live audio webcast by visiting
www.virtualshareholdermeeting.com/KR2023. To participate in the meeting, you must have
your sixteen-digit control number that is shown on your Notice of Internet Availability of Proxy
Materials or on your proxy card if you receive the proxy materials by mail. There is no physical
location for the Annual Meeting. You may only attend the Annual Meeting virtually.

Our Board of Directors unanimously recommends that you vote “FOR ALL” of Kroger’s director
nominees on the proxy card, “FOR” the management proposals 2 and 4, “FOR” one year for management
proposal 3, and “AGAINST” the shareholder proposals 5 through 9.

We appreciate your continued confidence in Kroger, and we look forward to your participation in our virtual

meeting.

May 12, 2023
Cincinnati, Ohio

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

8Proxy Statement

May 12, 2023

We are providing this notice, proxy statement, and annual report to the shareholders of The Kroger Co.

(“Kroger”, “we”, “us”, “our”) in connection with the solicitation of proxies by the Board of Directors of Kroger (the
“Board”) for use at the Annual Meeting of Shareholders to be held on June 22, 2023 at 11:00 a.m. eastern time, and
at any adjournments thereof. The Annual Meeting will be held virtually and can be accessed online at
www.virtualshareholdermeeting.com/KR2023. There is no physical location for the 2023 Annual Meeting of
Shareholders.

Our principal executive offices are located at 1014 Vine Street, Cincinnati, Ohio 45202-1100. Our telephone
number is 513-762-4000. This notice, proxy statement, and annual report, and the accompanying proxy card are first
being sent or given to shareholders on or about May 12, 2023.

Questions and Answers about the Annual Meeting

Why are you holding a virtual meeting?

We believe a virtual meeting is the most effective approach for enabling the highest possible attendance. Based

on our experience with virtual meetings during the COVID-19 pandemic, we believe this facilitates shareholder
attendance and participation, and has allowed a greater number of questions from a broader group of shareholders to
be asked and answered at the Meeting than in an in-person format. It also reduces our costs and in a small way the
carbon footprint of our activities. Therefore, our 2023 Annual Meeting is being held on a virtual-only basis with no
physical location. Our goal for the Annual Meeting is to enable the broadest number of shareholders to participate in
the meeting, while providing substantially the same access and exchange with Management and the Board as an in-
person meeting. We believe that we are observing best practices for virtual shareholder meetings, including by
providing a support line for technical assistance and addressing as many shareholder questions as time allows.

Who can vote?

You can vote if, as of the close of business on April 24, 2023, the record date, you were a shareholder of record

of Kroger common shares.

Who is asking for my vote, and who pays for this proxy solicitation?

Your proxy is being solicited by Kroger’s Board of Directors. Kroger is paying the cost of solicitation. We
have hired D.F. King & Co., Inc., a proxy solicitation firm, to assist us in soliciting proxies and we will pay them a
fee estimated not to exceed $17,500, plus reasonable expenses for the solicitation.

We also will reimburse banks, brokers, nominees, and other fiduciaries for postage and reasonable expenses

incurred by them in forwarding the proxy material to beneficial owners of our common shares.

Proxies may be solicited personally, by telephone, electronically via the Internet, or by mail.

Who are the members of the Proxy Committee?

Anne Gates, W. Rodney McMullen, and Ronald L. Sargent, all Kroger Directors, are the members of the Proxy

Committee for our 2023 Annual Meeting.

What is the difference between a “shareholder of record” and a “beneficial shareholder” of shares held in
street name?

You are the “shareholder of record” for any Kroger common shares that you own directly in your name in an

account with Kroger’s stock transfer agent, EQ Shareowner Services.

You are a “beneficial shareholder” of shares held in street name if your Kroger common shares are held in an
account with a broker, bank, or other nominee as custodian on your behalf. The broker, bank, or other nominee is
considered the shareholder of record of these shares. As the beneficial owner, you have the right to instruct the
broker, bank, or other nominee on how to vote your Kroger common shares.

How do I vote my shares held in street name?

If your shares are held by a bank, broker, or other holder of record, you will receive voting instructions from
the holder of record. Your broker is required to vote your shares in accordance with your instructions. In most cases,
you may vote by telephone or over the internet as instructed.

How do I vote my proxy?

You can vote your proxy in one of the following ways:

1. By the internet, you can vote by the Internet by visiting www.proxyvote.com.
2. By telephone, you can vote by telephone by following the instructions on your proxy card, voting

instruction form, or notice.

3. By mail, you can vote by mail by signing and dating your proxy card if you requested printed materials,

or your voting instruction form, and returning it in the postage-paid envelope provided with this proxy
statement.

4. By mobile device, by scanning the QR code on your proxy card, notice of internet availability of proxy

materials, or voting instruction form.

5. By attending and voting electronically during the virtual Annual Meeting at

www.virtualshareholdermeeting.com/KR2023

How can I participate and ask questions at the Annual Meeting?

We are committed to ensuring that our shareholders have substantially the same opportunities to participate in

the virtual Annual Meeting as they would at an in-person meeting. In order to submit a question at the Annual
Meeting, you will need your 16-digit control number that is printed on the Notice or proxy card that you received in
the mail, or via email if you have elected to receive material electronically. You may log in 15 minutes before the
start of the Annual Meeting and submit questions online. You will be able to submit questions during the Annual
Meeting as well. We encourage you to submit any question that is relevant to the business of the meeting. Questions
asked during the Annual Meeting will be read and addressed during the meeting. Shareholders are encouraged to log
into the webcast at least 15 minutes prior to the start of the meeting to test their Internet connectivity. You may also
submit questions in advance of the meeting via the internet at www.proxyvote.com when you vote your shares.

What documentation must I provide to be admitted to the virtual Annual Meeting and how do I attend?

If your shares are registered in your name, you will need to provide your sixteen-digit control number included

on your Notice or your proxy card (if you receive a printed copy of the proxy materials) in order to be able to
participate in the meeting. If your shares are not registered in your name (if, for instance, your shares are held in
“street name” for you by your broker, bank or other institution), you must follow the instructions printed on your
Voting Instruction Form. In order to participate in the Annual Meeting, please log on to
www.virtualshareholdermeeting.com/KR2023 at least 15 minutes prior to the start of the Annual Meeting to provide
time to register and download the required software, if needed. The webcast replay will be available at
www.virtualshareholdermeeting.com/KR2023 until the 2024 Annual Meeting of Shareholders. If you access the
meeting but do not enter your control number, you will be able to listen to the proceedings, but you will not be able
to vote or otherwise participate.

What if I have technical or other “IT” problems logging into or participating in the Annual Meeting webcast?

We have provided a toll-free technical support “help line” that can be accessed by any shareholder who is
having challenges logging into or participating in the virtual Annual Meeting. If you encounter any difficulties
accessing the virtual meeting during the check-in or meeting time, please call the technical support line number that
will be posted on the virtual Annual Meeting login page.

What documentation must I provide to vote online at the Annual Meeting?

If you are a shareholder of record and provide your sixteen-digit control number when you access the meeting,
you may vote all shares registered in your name during the Annual Meeting webcast. If you are not a shareholder of
record as to any of your shares (i.e., instead of being registered in your name, all or a portion of your shares are
registered in “street name” and held by your broker, bank or other institution for your benefit), you must follow the
instructions printed on your Voting Instruction Form.

How do I submit a question at the Annual Meeting?

If you would like to submit a question during the Annual Meeting, once you have logged into the webcast at

www.virtualshareholdermeeting.com/KR2023, simply type your question in the “ask a question” box and click
“submit”. You may also submit questions in advance of the meeting via the internet at www.proxyvote.com when
you vote your shares.

When should I submit my question at the Annual Meeting?

Each year at the Annual Meeting, we hold a question-and-answer session following the formal business portion

of the meeting during which shareholders may submit questions to us. We anticipate having such a question-and-
answer session at the 2023 Annual Meeting. You can submit a question up to 15 minutes prior to the start of the
Annual Meeting and up until the time we indicate that the question-and-answer session is concluded. However, we
encourage you to submit your questions before or during the formal business portion of the meeting and our
prepared statements, in advance of the question-and-answer session, in order to ensure that there is adequate time to
address questions in an orderly manner. You may also submit questions in advance of the meeting via the internet at
www.proxyvote.com when you vote your shares.

Can I change or revoke my proxy?

The common shares represented by each proxy will be voted in the manner you specified unless your proxy is

revoked before it is exercised. You may change or revoke your proxy by providing written notice to Kroger’s
Secretary at 1014 Vine Street, Cincinnati, Ohio 45202, by executing and sending us a subsequent proxy, or by
voting your shares while logged in and participating in the 2023 Annual Meeting of Shareholders.

How many shares are outstanding?

As of the close of business on April 24, 2023, the record date, our outstanding voting securities consisted of

717,648,391 common shares.

How many votes per share?

Each common share outstanding on the record date will be entitled to one vote on each of the 11 director
nominees and one vote on each other proposal. Shareholders may not cumulate votes in the election of directors.

What voting instructions can I provide?

You may instruct the proxies to vote “For” or “Against” each proposal (except for Proposal 3), or you may

instruct the proxies to “Abstain” from voting. For Proposal 3, you may instruct the proxies to vote for “One,”
“Two,” or “Three” years.

What happens if proxy cards or voting instruction forms are returned without instructions?

If you are a registered shareholder and you return your proxy card without instructions, the Proxy Committee

will vote in accordance with the recommendations of the Board.

If you hold shares in street name and do not provide your broker with specific voting instructions on proposals
1, 2, 3, and 5 – 9, which are considered non-routine matters, your broker does not have the authority to vote on those
proposals. This is generally referred to as a “broker non-vote.” Proposal 4, ratification of auditors, is usually
considered a routine matter and, therefore, your broker may vote your shares according to your broker’s discretion.

The vote required, including the effect of broker non-votes and abstentions for each of the matters presented for

shareholder vote, is set forth below.

11
What are the voting requirements and voting recommendation for each of the proposals?

Proposals

Board
Recommendation

Voting Approval
Standard

Effect of
Abstention

Effect of
broker
non-vote

No. 1 – Election of Directors

No. 2 Advisory Vote to Approve
Executive Compensation

FOR

Each Director
Nominee
recommended by
your Board

FOR

No. 3 Advisory Vote on Frequency of
Future Advisory Votes on Executive
Compensation

ONE YEAR

No. 4 Ratification of Independent

FOR

Auditors

More votes “FOR” than
“AGAINST” since it is an
uncontested election

No Effect No Effect

Affirmative vote of the
majority of shares
participating in the
voting(1)

The option that receives
the highest number of
votes cast by
shareholders(1)

Affirmative vote of the
majority of shares
participating in the voting

No Effect No Effect

Nos. 5 – 9 Shareholder Proposals

AGAINST
Each Proposal

Affirmative vote of the
majority of shares
participating in the voting

No Effect No Effect

(1) Although this is an advisory vote, the Board will take into consideration the outcome of the vote based on

this standard.

Important Notice Regarding the Availability of Proxy Materials for the Shareholder
Meeting to be Held on June 22, 2023

The Notice of 2023 Annual Meeting, Proxy Statement and 2022 Annual Report and the means to vote by internet
are available at www.proxyvote.com.

Kroger’s Corporate Governance Practices

Board Governance Practices

 Strong Board oversight of enterprise risk.

 Strong experienced independent Lead Director with clearly defined role and responsibilities.

 Commitment to Board refreshment and diversity.

 5 of 11 director nominees are women.

 The chairs of the Audit, Finance, and Public Responsibilities Committees are women.

 Annual evaluation of the Chairman and CEO by the independent directors, led by the independent Lead

Director.

 All director nominees are independent, except for the CEO.

 All five Board Committees are fully independent.

 Annual Board and Committee self-assessments conducted by independent Lead Director or an

independent third party.

 Regular executive sessions of the independent directors, at the Board and Committee level.

 High degree of Board interaction with management to ensure successful oversight and succession

planning.

 Balanced tenure.

 Robust shareholder engagement program.

 Robust code of ethics.

Environmental, Social, & Governance (ESG) Practices

 Long-standing Board Committee dedicated to ESG oversight — Public Responsibilities Committee —

formed in 1977.

 Annual ESG report, sharing progress on our goals for Zero Hunger | Zero Waste, Just & Inclusive

Economy, Food Waste, Operational Waste, Water, Packaging, Climate Impact, and Responsible Sourcing.

o The 2022 ESG report represented the 16th year of describing our progress and initiatives regarding

sustainability and other ESG matters

 Committed to transparency in our disclosure, informed by frameworks consistent with shareholder

expectations:

o SASB’s Food Retailers and Distributors Standard
o GRI Global Sustainability Reporting Standards
o Task Force on Climate-related Financial Disclosures (TCFD) framework

 Established formal Diversity, Equity & Inclusion (DE&I) Framework for Action to:

o Create a more inclusive culture
o Develop diverse talent
o Advance diverse partnerships
o Advance equitable communities
o Listen deeply and report progress

 Specifically include diverse candidates in every external executive officer and Board director search.

 Disclose EEO-1 data annually.

13
Shareholder Rights

 Annual director election.

 Simple majority standard for uncontested director elections and plurality in contested elections.

 No poison pill.

 Shareholders have the right to call a special meeting.

 Robust, long-standing shareholder engagement program with regular engagements, including with

independent directors, to better understand shareholders’ perspectives and concerns on a broad array of
topics, such as corporate governance and ESG matters.

 Adopted proxy access for director nominees, enabling a shareholder, or group of up to 20 shareholders,

holding 3% of the Company’s common shares for at least three years to nominate candidates for the greater
of two seats or 20% of Board nominees.

Compensation Governance

 Robust clawback and recoupment policy.

 Pay program tied to performance and business strategy.

 Majority of pay is long-term and at-risk with no guaranteed bonuses or salary increases.

 Stock ownership guidelines align executive and director interests with those of shareholders.

 Prohibition on all hedging, pledging, and short sales of Kroger securities by directors and executive

officers.

 No tax gross-up payments to executives.

Environmental, Social, & Governance Strategy

Kroger’s Environmental, Social & Governance Strategy is called Thriving Together. This strategy reflects the

Our ESG strategy aims to address material topics of importance to our business and key stakeholders, including

14
People — Our Aspiration: Help billions live healthier, more sustainable lifestyles

Food Access, Health, & Nutrition

Kroger’s brand promise, Fresh for Everyone, reflects our belief that everyone should have access to affordable,

fresh food. We are committed to food and product safety and to improving food access, food security, and health
and nutrition for all. Protecting our associates’ and customers’ health and safety and enhancing our shopping
experience are also key focus areas.

 Kroger associates have rescued more than 575 million pounds of wholesome surplus food to help end

hunger since introducing Zero Hunger | Zero Waste.



In the same period, Kroger directed a total of $1.2 billion in charitable giving for hunger relief in our
communities.

 With food and funds combined, Kroger directed 2.8 billion meals to our communities since 2017, well

ahead of our goal of 3 billion meals by 2025.

Just & Inclusive Economy

We offer access to employment, benefits, and more, providing good jobs for individuals ages 15 to 95 with a

wide range of experience, skills, and career aspirations. In 2020, Kroger introduced our Framework for Action:
Diversity, Equity, & Inclusion, a 10-point plan with short- and long-term steps to accelerate and promote greater
change in the workplace and communities we serve.

 Since 2020, Kroger has trained 661,000 leaders and associates in diversity, equity, & inclusion, including

Unconscious Bias training.

 We achieved nearly $4 billion in diverse supplier spend annually, on track to our goal of $10 billion

annually by 2030.

 Kroger achieved a perfect score of 100 on the Human Rights Campaign Corporate Equality Index for the
fourth consecutive year and was listed among the Best Places to Work for Disability Inclusion by the
Disability Equality Index.

 The Kroger Co. Foundation established a $5 million Racial Equity Fund and subsequently increased

funding to $10M to support organizations driving change at national and local levels. To date, the fund has
directed a total of $5.7 million in grants to nonprofit organizations advancing meaningful change in our
communities.

Planet — Our Aspiration: Protect and restore natural resources for a brighter future

Climate Impact

Kroger is committed to reducing the impact of our business on the climate and assessing the potential future

risk of a changing climate to our business operations. We support the transition to a lower-carbon economy by
investing in energy efficiency and renewable energy and by reducing greenhouse gas (GHG) emissions and food
waste.

 Kroger’s current commitment is to reduce Scope 1 and 2 GHG emissions by 30% by 2030 using a 2018
baseline. Reflecting updated guidance from the Intergovernmental Panel on Climate Change and the
Science Based Targets initiative (SBTi), Kroger is in the process of resetting this target to be more
ambitious and align to a 1.5⁰C scenario.



In addition, Kroger is conducting analysis to inform a new Scope 3 target to reduce GHG emissions in our
value chain. We expect to complete the goal-setting process in early 2024. To align with SBTi guidance,
Kroger is also setting a new Forest, Land, and Agriculture (FLAG) target to further reduce emissions in
land-intensive sectors like food and agricultural production.

 Reducing food waste is another way Kroger is helping reduce climate impacts. In 2021, we reduced retail
food waste generated and improved retail food waste diversion from landfill to 48.8% through our Zero
Hunger | Zero Waste plan, on the path to achieving 95%+ diversion by 2025.

15
Resource Conservation

As a responsible business, we conserve natural resources to help safeguard people and our planet. Our current
goal is to divert 90% or more of waste from landfills company-wide by 2025 and to identify alternative methods of
waste management.

 We have a comprehensive set of sustainable packaging goals that include seeking to achieve 100%

recyclable, reusable, or compostable packaging for Our Brands products by 2030. In 2022, we completed
an Our Brands packaging footprint and baseline to inform our roadmap to 2030.

 Kroger partnered with TerraCycle to launch a first-of-its-kind recycling program for flexible plastic

packaging across the Our Brands portfolio. Now, Kroger customers can collect flexible snack and chip
bags, pouches, pet food packaging, and more — items typically not eligible for curbside recycling — for
easy and free mail-in recycling.



In 2022, Kroger also conducted a six-month pilot with the innovative Loop reusable consumer product
packaging platform at 25 Fred Meyer stores in the Portland, Oregon, area. We plan to publish a report
outlining what may be needed to achieve commercial scale with reusable packaging in the future.
 To support more sustainable agriculture, Kroger offers an expanding selection of natural, organic, free-

from, and plant-based products, including our popular Simple Truth® product line. The company also is in
the process of developing a sustainable agriculture commitment for its fresh produce supply chain.

Systems — Our Aspiration: Build more responsible and inclusive global systems

Business Integration

Kroger is committed to strong corporate and ESG governance. Business and functional leaders are engaged in

our ESG strategy and accountable for results. Operationalizing ESG is a journey; however, we believe our
centralized structure, vertical integration and commitment to responsible sourcing enables our progress.

 We are committed to Board refreshment and diversity, with five of 11 directors being women, including the

chairs of the Audit, Finance, and Public Responsibilities Committees.

 The Public Responsibilities Committee meets three times a year to discuss progress related to the

company’s ESG strategy and key topics. In 2022, areas of focused engagement included Kroger’s GHG
emissions reduction roadmap and approach to responsible sourcing.

 A core ESG team leads internal cross-functional working groups focused on policy, issues management and
strategy implementation for key ESG topics, including food and product access and affordability, climate
impacts, sustainable packaging, and supply chain accountability.

Responsible & Resilient Systems

Kroger is part of – and dependent on – an interconnected global food system and consumer goods supply chain.
A renewed focus on these natural systems and the policies and practices governing them will help protect our planet
and workers whose livelihoods depend on a resilient and responsible supply chain.

 Kroger continues to advance its commitment to align our human rights practice with the UN Guiding
Principles on Business and Human Rights and develop a comprehensive human rights due diligence
framework. In the past year, Kroger conducted two human rights impact assessments in different sectors of
our global supply chain.

 We continue to offer a wide assortment of Fair Trade Certified products in the Our Brands assortment to

support communities around the world.

 Kroger continues to transition the foundation of our animal welfare policy to the Five Domains of Animal
Welfare, an internationally respected approach that emphasizes current animal science and outcome-based
standards. We are working with our suppliers to measure and report progress toward our goals.
 Our long-standing commitment to seafood sustainability includes partnerships and programs aimed at

improving marine ecosystems through conservation and fishery improvement practices.

 Kroger’s No-Deforestation Commitment for Our Brands aims to address deforestation impacts in higher-

risk supply chains, such as palm oil, pulp and paper, soy, and beef.

16
Proposals to Shareholders

Item No. 1. Election of Directors

You are being asked to elect 11 director nominees for a one-year term.

FOR

The Board of Directors unanimously recommends that you vote “FOR ALL” of Kroger’s director

nominees.

As of the date of this proxy statement, Kroger’s Board of Directors consists of 11 members. All nominees, if
elected at the 2023 Annual Meeting, will serve until the annual meeting in 2024 or until his or her successors have
been elected by the shareholders or by the Board pursuant to Kroger’s Regulations, and qualified. Each of our
director nominees identified in this proxy statement has consented to being named as a nominee in our proxy
materials and has accepted the nomination and agreed to serve as a director if elected by Kroger’s shareholders.

Kroger’s Articles of Incorporation provide that the vote required for election of a director nominee by the
shareholders, except in a contested election or when cumulative voting is in effect, is the affirmative vote of a
majority of the votes cast for or against the election of a nominee.

The Committee memberships stated below are those in effect as of the date of this proxy statement. 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. In
addition, all of our Director Nominees demonstrate the following qualities:

Key Attributes and Skills of All Kroger Director Nominees


Intellectual and analytical skills
 High integrity and business ethics
 Strength of character and judgement
 Ability to devote significant time to Board

duties

 Desire and ability to continually build expertise
in emerging areas of strategic focus for our
Company

 Demonstrated focus on promoting equality

 Business and professional achievements
 Ability to represent the interests of all shareholders
 Knowledge of corporate governance matters
 Understanding of the advisory and proactive

oversight responsibility of our Board

 Comprehension of their his or her as a public

company director and the fiduciary duties owed to
shareholders

 Ability to work cooperatively with other members

of the board

18
Board Nominees for Directors for Terms of Office Continuing until 2024

Nora A. Aufreiter

Age
63

Director Since

2014

Committees:
Finance
Public Responsibilities1

Qualifications:
Business Management
Retail
Consumer
Financial Expertise
Operations & Technology
ESG

Ms. Aufreiter is Director Emeritus of McKinsey & Company, a global
management consulting firm. She retired in June 2014 after more than 27 years
with McKinsey, most recently as a director and senior partner. During that time,
she worked extensively in the U.S., Canada, and internationally with major
retailers, financial institutions, and other consumer-facing companies. Before
joining McKinsey, Ms. Aufreiter spent three years in financial services working
in corporate finance and investment banking. She is a member of the Board of
Directors of The Bank of Nova Scotia and is chair of the Board of Directors of
MYT Netherlands Parent B.V., the parent company of MyTheresa.com, an e-
commerce retailer. She is also on the board of a privately held company,
Cadillac Fairview, a subsidiary of Ontario Teachers Pension Plan, which is one
of North America’s largest owners, operators, and developers of commercial
real estate. Ms. Aufreiter 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.

Ms. Aufreiter has over 30 years of broad business experience in a variety of
retail sectors. Her vast experience in leading McKinsey’s North American
Retail Practice, North American Branding service line and the Consumer Digital
and Omnichannel service line is of particular value to the Board. In addition,
during her tenure with McKinsey, the firm advised consulting clients on a
variety of matters, including ESG topics and setting and achieving sustainability
goals which is of value to the Board and the Public Responsibilities Committee.
Ms. Aufreiter has served on our Public Responsibilities Committee for
eight years, the last three as chair. In 2021, she led the Board’s review of ESG
accountability to clarify committee oversight of ESG topics and led the revision
of the Committee’s charter to reflect the Committee’s increasing focus on
material environmental sustainability and social impact topics. She also brings
to the Board valuable insight on commercial real estate. In her current role as
Chair of the Human Capital and Compensation Committee for the Bank of
Nova Scotia, Ms. Aufreiter has responsibility for overseeing senior management
succession and CEO evaluation and incentive compensation. In her previous
role as Chair of the Corporate Governance Committee of The Bank of Nova
Scotia, Ms. Aufreiter had responsibility for overseeing shareholder engagement,
the composition of its Board of Directors, including diversity, the effectiveness
of the diversity policy of its Board of Directors, ESG strategy and priorities, and
the Bank’s statement on human rights. This experience is of particular value to
the Board and to her role as the Chair of the Public Responsibilities Committee.

1Denotes Chair of Committee

Kevin M. Brown

Mr. Brown is the Executive Vice President and Chief Supply Chain Officer at
Dell Technologies, a leading global technology company. His previous roles at
Dell include senior leadership roles in procurement, product quality, and
manufacturing. Mr. Brown joined Dell in 1998 and has held roles of increasing
responsibility throughout his career, including Chief Procurement Officer and
Vice President, ODM Fulfillment & Supply Chain Strategy before being named
Chief Supply Chain Officer in 2013. Before Dell, he spent 10 years in the
shipbuilding industry, directing U.S. Department of Defense projects.
Mr. Brown currently serves on the National Committee of the Council on
Foreign Relations and on the Boards of the Congressional Black Caucus
Foundation and the Howard University Center for Supply Chain Excellence. He
is also a member of the Executive Leadership Council.

Mr. Brown is a global leader with over twenty years of leadership experience
and supply chain innovation experience. His efforts led Dell to be recognized as
having one of the most efficient, sustainable, and innovative supply chains.
Mr. Brown has established himself as an authority on sustainable business
practices. His combined deep global supply chain and procurement expertise
and track record of sustainability and resilience leadership, as well as his
experience in circular economic business practices, are of value to the Board in
his role as director and member of the Public Responsibilities Committee. His
deep expertise in all matters related to supply chain, supply chain resilience, and
risk and crisis management are of particular value to the Board.

Age
60

Director Since

2021

Committees:
Audit
Public Responsibilities

Qualifications:
Business Management
Consumer
Financial Expertise
Risk Management
Operations & Technology
ESG
Manufacturing

Elaine L. Chao

Ms. Chao served as the 18th U.S. Secretary of Transportation from January 2017
until January 2021. Prior thereto, she served as the 24th U.S. Secretary of Labor
from January 2001 until January 2009, and was the first woman of Asian
American & Pacific Islander heritage to serve in a President’s cabinet in history.
Previously, Ms. Chao was President and CEO of United Way of America,
Director of the Peace Corps and a banker with Citicorp and BankAmerica
Capital Markets Group. She earned her M.B.A. from Harvard Business School
and has served on a number of Fortune 500 and nonprofit boards. She currently
serves on the Board of Directors of ChargePoint Holdings, Inc. and Embark
Technology, Inc., both of which are new economy technology companies in the
mobile sector focusing on sustainable and environmentally friendly
transportation. In the past five years, she also served as a director of and Hyliion
Holdings Corp. Recognized for her extensive record of accomplishments and
public service, she is also the recipient of 38 honorary doctorate degrees. In her
capacity as a director on numerous public boards while out of government, she
has advocated for innovation and business transformations. She has also been a
director on many private and nonprofit boards, including Harvard Business
School Board of Dean’s Advisors and Global Advisory Board, Los Angeles
Organizing Committee for the Olympic and Paraolympic Games 2028, and a
trustee of the Kennedy Center for the Performing Arts.

Ms. Chao brings to the Board extensive experience in the public, private and
non-profit sectors. In her two cabinet positions, she led high-profile
organizations, navigating complex regulatory and public policy environments,
and she provides the Board with valuable insight on strategy, logistics,
transportation, and workforce issues. Under her leadership, the Department of
Labor set up a record number of health and safety partnerships with labor
unions. While she was Director of the Peace Corps, she launched the first Peace
Corps programs in the newly independent Baltic states and the former republics
of the former Soviet Union, including Ukraine. This experience leading social
impact at scale is of value to the Board in her role as an independent director
and member of the Public Responsibilities Committee. Ms. Chao’s leadership
and governance expertise gained from her government service, nonprofits, and
public company boards is of value to the Board.

Age
70

Director Since

2021

Committees:
Corporate Governance
Public Responsibilities

Qualifications:
Business Management
Consumer
Financial Expertise
Risk Management
Operations & Technology
ESG

21
Anne Gates

Ms. Gates was President of MGA Entertainment, Inc., a privately-held
developer, manufacturer, and marketer of toy and entertainment products for
children, from 2014 until her retirement in 2017. Ms. Gates held roles of
increasing responsibility with The Walt Disney Company from 1992-2012. Her
roles included Chief Financial Officer for Disney Consumer Products (DCP)
and Managing Director, DCP, Europe and emerging markets. She is currently a
director of Tapestry, Inc., where she serves as Chair of the Board, Chair of the
Governance Committee, and is on the Tapestry Foundation Board. She is also a
director of Raymond James Financial, Inc., where she is the Chair of the
Corporate Governance ESG Committee. She is also a member of the Boards of
the Salzburg Global Seminar, PBS SoCal, Save the Children, and the Packard
Foundation, one of the largest global foundations focused on environmental and
other key ESG issues.

Ms. Gates has over 25 years of experience in the retail and consumer products
industry. She brings to Kroger financial expertise gained while serving as
President of MGA and CFO of a division of The Walt Disney Company.
Ms. Gates has a broad business background in finance, marketing, strategy and
business development, including international business. As the chair of the
Corporate Governance and ESG Committee at Raymond James Financial, Inc.,
she oversees their code of ethics, Board composition, including diversity,
environmental policies and programs, sustainability targets and ESG reporting
which are aligned with SASB, shareholder proposals, and shareholder
engagements efforts, including social justice, community relations and
charitable giving. Ms. Gates is also Chair of the Tapestry Governance
Committee, which also includes oversight of ESG responsibilities. These
experiences are of particular value to the Board in her role as an independent
director and member of the Corporate Governance Committee. Her financial
leadership and consumer products expertise is of particular value to the Board.
Ms. Gates has been designated an Audit Committee financial expert and serves
as Chair of the Audit Committee.

Age
63

Director Since

2015

Committees:
Audit1
Corporate Governance

Qualifications:
Business Management
Retail
Consumer
Financial Expertise
Risk Management
Operations & Technology
ESG
Manufacturing

1 Denotes Chair of Committee

Karen M. Hoguet

Ms. Hoguet served as the Chief Financial Officer of Macy’s, Inc. from
October 1997 until July of 2018 when she became a strategic advisor to the
Chief Executive Officer until her retirement in 2019. Previously, she served on
the boards of Nielsen Holdings plc, The Chubb Corporation and Cincinnati Bell
as the chairman of the audit committee and a member of the finance committee,
member of the Audit and Finance Committee and the Audit Committee,
respectively. She also serves on the board of UCHealth.

Ms. Hoguet has over 35 years of broad financial and operational leadership
experience within the omnichannel retail sector. She has a proven track record
of success in driving transformations, delivering strong financial performance,
and forming strong relationships with investors and industry analysts. She has
extensive knowledge across all areas of finance, including financial planning,
investor relations, M&A, accounting, treasury and tax, as well as strategic
planning, credit card services and real estate. Ms. Hoguet played a critical role
in the successful turnaround of Federated Department Stores, from bankruptcy
to an industry leading omnichannel retailer, which was accomplished through
acquisitions, divestiture and other strategic changes including building an
omnichannel model and developing a new strategic approach to real estate. Her
long tenure as a senior executive of a publicly traded company with financial,
audit, strategy, and risk oversight experience is of value to the Board as is her
public company experience, both as a long serving executive, and as a board
member. In addition, her strong business acumen, understanding of diverse
cross-functional issues, and ability to identify potential risks and opportunities
are also of value to the Board. Ms. Hoguet has been designated an Audit
Committee financial expert and serves as Chair of the Finance Committee.

W. Rodney McMullen

Mr. McMullen was elected Chairman of the Board in January 2015 and Chief
Executive Officer of Kroger in January 2014. He served as Kroger’s President
and Chief Operating Officer from August 2009 to December 2013. Prior to that,
Mr. McMullen was elected to various roles at Kroger including Vice Chairman
in 2003, Executive Vice President, Strategy, Planning, and Finance in 1999,
Senior Vice President in 1997, Group Vice President and Chief Financial
Officer in June 1995, and Vice President, Planning and Capital Management in
1989. He is a director of VF Corporation. In the past five years, he also served
as a director of Cincinnati Financial Corporation.

Mr. McMullen has broad experience in the supermarket business, having spent
his career spanning over 40 years with Kroger. He has a strong background in
finance, operations, and strategic partnerships, having served in a variety of
roles with Kroger, including as our CFO, COO, and Vice Chairman. His
previous service as chair of Cincinnati Financial Corporation’s Compensation
Committee and on its Executive and Investment Committees, as well as his
service on the Audit and Governance and Corporate Responsibilities
Committees of VF Corporation, adds depth to his extensive retail experience.

Age
66

Director Since

2019

Committees:
Audit
Finance1

Qualifications:
Business Management
Retail
Consumer
Financial Expertise
Risk Management
ESG

Age
62

Director Since

2003

Qualifications:
Business Management
Retail
Consumer
Financial Expertise
Risk Management
Operations & Technology
ESG

1 Denotes Chair of Committee

Clyde R. Moore

Mr. Moore was Chairman and Chief Executive Officer of First Service
Networks, a national provider of facility and maintenance repair services, from
2000 to 2014, and Chairman until his retirement in 2015. Previously, Mr. Moore
was President and CEO of Thomas & Betts, a global manufacturer of electric
connectors and components, and President and COO of FL Industries, Inc., an
electrical component manufacturing company. Mr. Moore is currently President
and CEO of Gliocas LLC, a management consulting firm serving small
businesses and non-profits. Mr. Moore was a leader in the founding of the
Industry Data Exchange Association (IDEA), which standardized product
identification data for the electrical industry, allowing the industry to make the
successful transition to digital commerce. Mr. Moore was Chairman of the
National Electric Manufacturers Association and served on the Executive
Committee of the Board of Governors. He served on the advisory board of
Mayer Electrical Supply for over 20 years, including time as lead director, until
the sale of the company in late-2021.

Mr. Moore has over 30 years of general management experience in public and
private companies. He has extensive experience as a corporate leader overseeing
all aspects of a facilities management firm and numerous manufacturing
companies. Mr. Moore’s expertise broadens the scope of the Board’s experience
to provide oversight to Kroger’s facilities, digital, and manufacturing
businesses, and he has a wealth of Fortune 500 experience in implementing
technology transformations. Additionally, his expertise and leadership as Chair
of the Compensation Committee is of particular value to the Board. Mr. Moore
presided over the Compensation Committee during the company’s introduction
of its Framework for Action: Diversity, Equity, & Inclusion plan. Additionally,
he was Chair of the Compensation Committee and led the inclusion of talent
development into the Committee’s name and charter.

Ronald L. Sargent

Mr. Sargent was Chairman and Chief Executive Officer of Staples, Inc., a
business products retailer, where he was employed from 1989 until his
retirement in 2017. Prior to joining Staples, Mr. Sargent spent 10 years with
Kroger in various positions. He is a director of Five Below, Inc. and Wells
Fargo & Company. Previously, he served as a director of The Home Depot, Inc.
and Mattel, Inc. Currently, Mr. Sargent is a member of the board of governors
of the Boys & Girls Clubs of America, the board of directors of City of Hope,
and the board of trustees of Northeastern University. He is also chairman of the
board of directors of the John F. Kennedy Library Foundation.

Mr. Sargent has over 35 years of retail experience, first with Kroger and then
with increasing levels of responsibility and leadership at Staples, Inc. His efforts
helped carve out a new market niche for the international retailer. In his role as
Chair of the Wells Fargo Human Resources Committee, he oversees human
capital management, including diversity, equity, and inclusion, human capital
risk, and culture and ethics. In his role as a member of the Five Below
Nominating and Corporate Governance Committee, he oversees social and
environmental governance, including corporate citizenship. These committee
experiences are of value to the Board in his role as a member of the Public
Responsibilities Committee and Lead Director of the Board. His understanding
of retail operations, consumer insights, and e-commerce are also of value to the
Board. Mr. Sargent has been designated an Audit Committee financial expert
and serves as Chair of the Corporate Governance Committee and Lead Director
of the Board. Mr. Sargent’s strong insights into corporate governance and his
executive leadership experience serve as the basis for his leadership role as
Lead Director.

Age
69

Director Since
1997

Committees:
Compensation & Talent
Development1
Corporate Governance

Qualifications:
Business Management
Financial Expertise
Risk Management
Operations & Technology
ESG
Manufacturing

Age
67

Director Since
2006

Committees:
Audit
Corporate Governance1
Public Responsibilities

Qualifications:
Business Management
Retail
Consumer
Financial Expertise
Risk Management
Operations & Technology
ESG

1 Denotes Chair of Committee

24Age
59

Director Since

2021

Committees:
Compensation & Talent
Development
Finance

Qualifications:
Business Management
Retail
Consumer
Financial Expertise
Risk Management
Operations & Technology
ESG

J. Amanda Sourry Knox (Amanda Sourry)

Ms. Sourry was President of North America for Unilever, a personal care,
foods, refreshment, and home care consumer products company, from 2018
until her retirement in December 2019. She held leadership roles of increasing
responsibility during her more than 30 years at Unilever, both in the U.S. and
Europe, including president of global foods, executive vice president of global
hair care, and executive vice president of the firm’s UK and Ireland business.
From 2015 to 2017, she served as President of their Global Foods Category.
Ms. Sourry currently serves on the board for PVH Corp., where she chairs the
Compensation Committee and serves on the Nominating, Governance &
Management Development Committee. She is also a non-executive director of
OFI, a provider of on-trend, natural and plant-based products, focused on
delivering sustainable and innovative solutions to consumers across the world,
and a member of their Remuneration and Talent Committee and the Audit and
Risk Committee. She is also a supervisory director of Trivium Packaging B.V.,
a sustainable packaging company, and a director of Beautycounter LLC.

Ms. Sourry has over thirty years of experience in the CPG and retail industry.
As a member of PVH Corp.’s Nominating, Governance, & Management
Development Committee, her experience with monitoring issues of corporate
conduct and culture, and providing oversight of diversity, equity and inclusion
policies and programs as it relates to management development, talent
assessment and succession planning programs and processes is of particular
value to her role as a member of the Compensation & Talent Development
Committee and the Board. She brings to the Board her extensive global
marketing and business experience in consumer-packaged goods as well as
customer development, including overseeing Unilever’s digital efforts.
Ms. Sourry was actively involved in Unilever’s global diversity, gender balance,
and sustainable living initiatives which is of value to the Board and to the
Compensation & Talent Development Committee. She also has a track record of
driving sustainable, profitable growth across scale operating companies and
global categories across both developed and emerging markets. Ms. Sourry’s
history in profit and loss responsibility and oversight, people and ESG
leadership and capabilities development is of value to the Board.

Mark S. Sutton

Mr. Sutton is Chairman and Chief Executive Officer of International Paper, a
leading global producer of renewable fiber-based packaging, pulp, and paper
products. Prior to becoming CEO in 2014, he served as President and Chief
Operating Officer with responsibility for running International Paper’s global
business. Mr. Sutton joined International Paper in 1984 as an Electrical
Engineer. He held roles of increasing responsibility throughout his career,
including Mill Manager, Vice President of Corrugated Packaging Operations
across Europe, the Middle East and Africa, Vice President of Corporate
Strategic Planning, and Senior Vice President of several business units,
including global supply chain. Mr. Sutton is a member of The Business Council,
serves on the American Forest & Paper Association board of directors, and on
the Business Roundtable. He also serves on the board of directors of Memphis
Tomorrow.

Mr. Sutton has over 30 years of leadership experience with increasing levels of
responsibility and leadership at International Paper. At International Paper, he
oversees their robust ESG disclosures which are aligned with GRI, and their
Vision 2030, which sets forth ambitious forest stewardship targets and plans to
transition to renewable solutions and sustainable operations. He also oversees
International Paper’s Vision 2030 goals pertaining to diversity and inclusion. He
brings to the Board the critical thinking that comes with an electrical
engineering background as well as his experience leading a global company
with labor unions. His strong strategic planning background, manufacturing and
supply chain and experience, and his ESG leadership are of value to the Board.

Age
61

Director Since

2017

Committees:
Compensation & Talent
Development
Finance

Qualifications:
Business Management
Financial Expertise
Risk Management
Operations & Technology
ESG
Manufacturing

Ashok Vemuri

Mr. Vemuri was Chief Executive Officer and a Director of Conduent
Incorporated, a global digital interactions company, from its inception as
a result of the spin-off from Xerox Corporation in January 2017 to 2019.
He previously served as Chief Executive Officer of Xerox Business
Services, LLC and as an Executive Vice President of Xerox Corporation
from July 2017 to December 2017. Prior to that, he was President, Chief
Executive Officer, and a member of the Board of Directors of IGATE
Corporation, a New Jersey-based global technology and services
company now part of Capgemini, from 2013 to 2015. Before joining
IGATE, Mr. Vemuri spent 14 years at Infosys Limited, a multinational
consulting and technology services company, in a variety of leadership
and business development roles and served on the board of Infosys from
2011 to 2013. Prior to joining Infosys in 1999, Mr. Vemuri worked in the
investment banking industry at Deutsche Bank and Bank of America. In
the past five years, he served as a director of Conduent Incorporated. Mr.
Vermuri is a member of the Board of Directors of Opal Fuels and is chair
of the Audit Committee.

Mr. Vemuri brings to the Board a proven track record of leading
technology services companies through growth and corporate
transformations. His experience as CEO of global technology companies
as well as his experience with cyber security and risk oversight are of
value to the Board as he brings a unique operational, financial, and client
experience perspective. Additionally, Mr. Vemuri served on our Public
Responsibilities Committee which gives him additional perspectives on
risk oversight that he brings to the Audit Committee. Mr. Vemuri has
been designated an Audit Committee financial expert.

Age
55

Director Since
2019

Committees:
Audit
Finance

Qualifications:
Business Management
Financial Expertise
Risk Management
Operations & Technology
ESG

YOUR VOTE IS EXTREMELY IMPORTANT. The Board of Directors unanimously recommends a vote
“FOR ALL” of Kroger’s director nominees.

Board Succession Planning and Refreshment Mechanisms

Board succession planning is an ongoing, year-round process. The Corporate Governance Committee
recognizes the importance of thoughtful Board refreshment and engages in a continuing process of identifying
attributes sought for future Board members. The Corporate Governance Committee takes into account the Board and
Committee evaluations regarding the specific qualities, skills, and experiences that would contribute to overall
Board and Committee effectiveness, as well as the future needs of the Board and its Committees in light of Kroger’s
current and long-term business strategies, and the skills and qualifications of directors who are expected to retire in
the future including as a result of our Board retirement policy, which requires directors to retire at the annual
meeting following their 72nd birthday.

Outside Board Service

No director who is an officer of the Company may serve as a director of another company without the approval
of the Corporate Governance Committee. Directors who are not officers of the Company may not serve as a director
of another company if in so doing such service would interfere with the director’s ability to properly perform his or
her responsibilities on behalf of the Company and its shareholders, as determined by the Corporate Governance
Committee. None of our current directors serve on more than three public company Boards, including Kroger’s
Board.

Board Diversity

Our director nominees reflect a wide array of experience, skills, and backgrounds. Each director is individually
qualified to make unique and substantial contributions to Kroger. Collectively, our directors’ diverse viewpoints and
independent-mindedness enhance the quality and effectiveness of Board deliberations and decision-making. Our
Board is a dynamic group of new and experienced members, which reflects an appropriate balance of institutional
knowledge and fresh perspectives about Kroger due to the varied length of tenure on the Board. We believe this
blend of qualifications, attributes, and tenure enables highly effective Board leadership.

The Corporate Governance Committee considers racial, ethnic, and gender diversity to be important elements

in promoting full, open, and balanced deliberations of issues presented to the Board. When evaluating potential
nominees to our Board, the Corporate Governance Committee considers director candidates who would help the
Board reflect the diversity of our shareholders, associates, customers, and the communities in which we operate,
including by considering their geographic locations to align directors’ physical locations with Kroger’s operating
areas where possible. In connection with the use of a third-party search firm to identify candidates for Board
positions, the Corporate Governance Committee instructs the third-party search firm to include in its initial list
qualified female and racially/ethnically diverse candidates. Four of our 11 director nominees self-identify as
racially/ethnically diverse: Mr. Brown and Ms. Gates self-identify as Black/African American and Ms. Chao and
Mr. Vemuri self-identify as Asian. Five of our 11 directors are women.

The Corporate Governance Committee believes that it has been successful in its efforts to promote gender and

ethnic diversity on our Board. Further, the Board aims to foster a diverse and inclusive culture throughout the
Company and believes that the Board nominees are well suited to do so. The Corporate Governance Committee and
Board believe that our director nominees for election at our 2023 Annual Meeting bring to our Board a variety of
different experiences, skills, and qualifications that contribute to a well-functioning diverse Board that effectively
oversees the Company’s strategy and management. The charts below show the diversity of our director nominees
and the skills and experience that we consider important for our directors in light of our current business, strategy,
and structure:

Nora
Aufreiter

Kevin
Brown

Elaine
Chao

Anne
Gates

Karen
Hoguet

Rodney
McMullen

Clyde
Moore

Ronald
Sargent

Amanda
Sourry

Mark
Sutton

Ashok
Vemuri

Total
(of 11)

Business

Management

Retail

Consumer

Financial

Expertise

Risk

Management

Operations &
Technology

ESG

Manufacturing

•

Information Concerning the Board of Directors

Board Leadership Structure and Independent Lead Director

Kroger has a governance structure in which independent directors exercise meaningful and rigorous oversight.
The Board’s leadership structure, in particular, is designed with those principles in mind and to allow the Board to
evaluate its needs and determine, from time to time, who should lead the Board. Our Corporate Governance
Guidelines (the “Guidelines”) provide the flexibility for the Board to modify our leadership structure in the future as
appropriate. We believe that Kroger is well-served by this flexible leadership structure.

In order to promote thoughtful oversight, independence, and overall effectiveness, the Board’s leadership
includes Mr. McMullen, our Chairman and CEO, and an independent Lead Director designated by the Board among
the independent directors. The Lead Director works with the Chairman to share governance responsibilities,
facilitate the development of Kroger’s strategy, and grow shareholder value. The Lead Director serves a variety of
roles, consistent with current best practices, including:






reviewing and approving Board meeting agendas, materials, and schedules to confirm that the appropriate
topics are reviewed, with sufficient information provided to directors on each topic and appropriate time is
allocated to each;
serving as the principal liaison between the Chairman, management, and the independent directors;
presiding at the executive sessions of independent directors and at all other meetings of the Board at which
the Chairman is not present;
calling meetings of independent directors at any time; and
serving as the Board’s representative for any consultation and direct communication, following a request,
with major shareholders.

The independent Lead Director carries out these responsibilities in numerous ways, including by:




facilitating communication and collegiality among the Board members;
soliciting direct feedback from independent directors;
overseeing the succession planning process, including meeting with a wide range of associates including
corporate and division management associates;
 meeting with the CEO frequently to discuss strategy;

serving as a sounding Board and advisor to the CEO;

leading annual CEO evaluation process; and

discussing Company matters with other directors between meetings.

Unless otherwise determined by the independent members of the Board, the Chair of the Corporate Governance

Committee is designated as the Lead Director. Ronald L. Sargent, an independent director and the Chair of the
Corporate Governance Committee, was appointed as our Board’s independent Lead Director in June 2018.
Mr. Sargent is an effective Lead Director for Kroger due to, among other things, his:








independence;
deep strategic and operational understanding of Kroger obtained while serving as a Kroger director;
insight into corporate governance;
experience as the CEO of an international ecommerce and brick and mortar retailer;
experience on the Boards of other large publicly traded companies; and
engagement and commitment to carrying out the role and responsibilities of the Lead Director.

With respect to the roles of Chairman and CEO, the Guidelines provide that the Board will determine whether

it is in the best interests of Kroger and its shareholders for the roles to be combined. The Board exercises this
judgment as it deems appropriate in light of prevailing circumstances. The Board believes that this leadership
structure improves the Board’s ability to focus on key policy and operational issues and helps the Company operate
in the long-term interest of shareholders. Additionally, this structure provides an effective balance between strong
Company leadership and appropriate safeguards and oversight by independent directors. Our CEO’s strong
background in finance, operations, and strategic partnerships is particularly important to the Board given Kroger’s
current growth strategy. Our CEO’s consistent leadership, deep industry expertise, and extensive knowledge of the
Company are also especially critical in the midst of the rapidly evolving retail and digital landscape. The Board
believes that the structure of the Chairman and independent Lead Director position should continue to be considered
as part of the succession planning process.

Annual Board Evaluation Process

The Board and each of its Committees conduct an annual evaluation to determine whether the Board is
functioning effectively both at the Board and at the Committee levels. As part of this annual evaluation, the Board
assesses whether the current leadership structure and function continues to be appropriate for Kroger and its
shareholders, including in consideration of director succession planning.

Every year, the Board’s goal is to increase the effectiveness of the Board and the results of these evaluations

are used for this purpose. The Board recognizes that a robust evaluation process is an essential component of strong
corporate governance practices and ensuring Board effectiveness. The Corporate Governance Committee oversees
an annual evaluation process led by either the Lead Independent Director or an independent third party.

Each director completes a detailed annual evaluation of the Board and the Committees on which he or she
serves and the Lead Director or an independent third-party conducts interviews with each of the directors. This year,
the annual evaluation was conducted by the Lead Director.

Topics covered include, among others:

 The effectiveness of the Board and Board Committees and the active participation of all directors

 The Board and Committees’ skills and experience and whether additional skills or experience are needed

 The effectiveness of Board and Committee meetings, including the frequency of the meetings

 Board interaction with management, including the level of access to management, and the responsiveness

of management

 The effectiveness of the Board’s evaluation of management performance

 Additional subject matters the Board would like to see presented at their meetings or Committee meetings

 Board’s governance procedures

 The culture of the Board to promote participation in a meaningful and constructive way

The results of this Board evaluation are discussed by the full Board and each Committee, as applicable, and

changes to the Board’s and its Committees’ practices are implemented as appropriate.

Over the past several years, this evaluation process has contributed to various enhancements in the way the
Board and the Committees operate, including increased focus on continuous Board refreshment and diversity of its
members as well as ensuring that Board and Committee agendas are appropriately focused on strategic priorities and
provide adequate time for director discussion and input.

30
Director Onboarding and Engagement

All directors are expected to invest the time and energy required to gain an in-depth understanding of our
business and operations in order to enhance their strategic value to our Board. We develop tailored onboarding plans
for each new director. We arrange meetings for each new director with appropriate officers and associates in order to
familiarize him or her with the Company’s strategic plans, financial statements, and key policies and practices. We
also provide training on fiduciary obligations of board members and corporate governance topics, as well as
committee-specific onboarding. From time to time, the Company will provide Board members with presentations
from experts within and outside of the Company on topics relevant to the Board’s responsibilities. Any member of
the Board may attend accredited third-party training and the expenses will be paid by the Company. Board meetings
are periodically held at a location away from our home office in a geography in which we operate. In connection
with these Board meetings, our directors learn more about the local business environment through meetings with our
regional business leaders and visits to our stores, competitors’ stores, manufacturing facilities, distribution facilities,
and/or customer fulfillment centers.

Committees of the Board of Directors

To assist the Board in undertaking its responsibilities, and to allow deeper engagement in certain areas of

company oversight, the Board has established five standing Committees: Audit, Compensation and Talent
Development (“Compensation”), Corporate Governance, Finance, and Public Responsibilities. All Committees are
composed exclusively of independent directors, as determined under the NYSE listing standards. Each Committee
has the responsibilities set forth in its respective charter, each of which has been approved by the Board. The current
charter of each Board Committee is available on our website at ir.kroger.com under Investors — Governance —
Corporate Governance Guidelines.

The current membership, 2022 meetings, and responsibilities of each Committee are summarized below.

Name of Committee, Number of
Meetings, and Current Members
Audit Committee

Meetings in 2022: 5

Members:

Anne Gates, Chair
Kevin M. Brown
Karen M. Hoguet
Ronald L. Sargent
Ashok Vemuri

Primary Committee Responsibilities
 Oversees the Company’s financial reporting and accounting

matters, including review of the Company’s financial
statements and the audit thereof, the Company’s financial
reporting and accounting process, and the Company’s
systems of internal control over financial reporting

 Selects, evaluates, and oversees the compensation and work
of the independent registered public accounting firm and
reviews its performance, qualifications, and independence

 Oversees and evaluates the Company’s internal audit

function, including review of its audit plan, policies and
procedures, and significant findings

 Oversees enterprise risk assessment and risk management,
including review of cybersecurity risks and regular reports
received from management and independent third parties

 Reviews significant legal and regulatory matters
 Reviews and monitors the Company’s operational and third-

party compliance programs and updates thereto

 Reviews Ethics Hotline reports and discusses material

matters

 Reviews and approves related party transactions
 Conducts executive sessions with independent registered

public accounting firm and Vice President, Internal Audit at
each meeting

 Conducts executive sessions with the Senior Vice President,
Secretary and General Counsel, Vice President and Chief
Ethics & Compliance Officer, and Senior Vice President and
Chief Financial Officer individually at least once per year

Name of Committee, Number of
Meetings, and Current Members
Compensation Committee

Meetings in 2022: 5

Members:

Clyde R. Moore, Chair
Amanda Sourry
Mark S. Sutton

Corporate Governance Committee

Meetings in 2022: 3

Members:

Ronald L. Sargent, Chair
Elaine L. Chao
Anne Gates
Clyde R. Moore

Primary Committee Responsibilities
 Recommends for approval by the independent directors the

compensation of the CEO and approves the compensation of
senior officers

 Administers the Company’s executive compensation policies
and programs, including determining grants of equity awards
under the plans

 Reviews annual incentive plans and long-term incentive plan

metrics and plan design

 Reviews emerging legislation and governance issues and

retail compensation trends

 Reviews the Company’s executive compensation peer group
 Reviews CEO pay analysis
 Reviews Human Capital Management, including Diversity,

Equity, & Inclusion

 Has sole authority to retain and direct the Committee’s

compensation consultant

 Assists the full Board with senior management succession

planning

 Conducts executive sessions with Senior Vice President and

Chief People Officer and independent compensation
consultant

 Oversees the Company’s corporate governance policies and

procedures

 Develops criteria for selecting and retaining directors,
including identifying and recommending qualified
candidates to be director nominees

 Designates membership and Chairs of Board Committees
 Oversees and administers Board evaluation process
 Reviews the Board’s performance
 Establishes and reviews the practices and procedures by

which the Board performs its functions

 Reviews director independence, financial literacy, and

designation of financial expertise

 Administers director nomination process
 Interviews and nominates candidates for director election
 Reviews compliance with share ownership guidelines
 Reviews and participates in shareholder engagement
 Reviews and establishes independent director compensation
 Oversees the annual CEO evaluation process conducted by

the full Board

Name of Committee, Number of
Meetings, and Current Members
Finance Committee

Meetings in 2022: 6

Members:

Karen M. Hoguet, Chair
Nora A. Aufreiter
Amanda Sourry
Mark Sutton
Ashok Vemuri

Public Responsibilities Committee

Meetings in 2022: 3

Members:

Nora A. Aufreiter, Chair
Kevin M. Brown
Elaine L. Chao
Ronald L. Sargent

Primary Committee Responsibilities
 Oversees the Company’s financial affairs and management

of the Company’s financial resources

 Reviews the Company’s annual and long-term financial

plans, capital spending plans, capital allocation strategy, and
use of cash

 Approves and recommends for approval to the Board certain

capital expenditures

 Reviews the Company’s dividend policy and share buybacks
 Reviews strategic transactions, capital structure, including

potential issuance of debt or equity securities, credit
agreements, and other financing transactions

 Monitors the investment management of assets held in
pension and profit-sharing plans administered by the
Company

 Oversees the Company’s policies and procedures on

hedging, swaps, risk management, and other derivative
transactions

 Oversees the Company’s engagement and relationships with,

and standing in, the financial community

 Reviews the practices of the Company affecting its

responsibility as a corporate citizen

 Examines and reviews the Company’s practices related to
environmental sustainability, and social impact, including
but not limited to

 climate impacts
 packaging



 supplier diversity
 people safety, food safety, and pharmacy safety

food and operational waste
food access
responsible sourcing

 Examines and reviews the Company’s ESG strategy
 Reviews the Company’s community engagement and

philanthropy

 Reviews the Company’s advocacy and public policy
 Reviews the Company’s communications and Corporate

Brand stewardship

 Assesses the Company’s effort in evaluating and responding
to changing public expectations and public issues that affect
the business

Shareholder Engagement

Maintaining ongoing relationships with our shareholders, and understanding our shareholders’ views, is a

priority for both our Board and management team. We have a longstanding history of engaging with our
shareholders and through our investor relations program and our year-round governance outreach program,
including participation for our independent directors. In 2022, under the direction of the Board, we requested
engagement meetings with 34 shareholders representing 48% of our outstanding shares and subsequently met with
18 shareholders representing 41% of our outstanding shares (many of those shareholders we met with more than
once). Some investors we contacted either did not respond or confirmed that a discussion was not needed at that
time.

We conduct shareholder outreach throughout the year to engage with shareholders on issues that are important
to them and us. During these engagements we discussed and solicited feedback on a range of topics, which informed
Board discussions and decisions, including but not limited to:

Business Strategy
 Kroger’s growth strategy, priorities, and value drivers
 Our strong value creation model and recent performance

ESG Practices & Disclosures
 Discussions with socially conscious investors and NGOs helped inform our new ESG strategy and long-

term commitments

 Thriving Together, Kroger’s ESG strategy, including long-term environmental sustainability, social impact,
and responsible sourcing commitments, progress updates, and steps being taken to achieve our ambitious
goals

 Board oversight of ESG strategy and updated Committee responsibilities
 Kroger’s ESG reporting and disclosures, including our alignment with the TCFD, SASB, and GRI

reporting frameworks

 The centerpiece of our ESG strategy is Zero Hunger | Zero Waste, an industry-leading platform for

collective action and systems change to end hunger in our communities and eliminate waste across our
company

Human Capital Management
 Our DE&I Framework for Action and steps we are taking to ensure our workforce reflects the communities

we serve

 Our focus on our associates’ well-being, including increasing our average hourly associate wage,

comprehensive benefits, and opportunities for internal progression and leadership development training

 Workforce diversity reporting, including EEO-1 demographic disclosure
 Robust Board oversight of human rights in our supply chain

Compensation Structure
 Overview of compensation program design and alignment of pay and performance
 Consideration of short- and long-term metrics, including financial and non-financial metrics, such as ESG

metrics

 The balance of equity and cash compensation, as well as fixed versus at risk compensation

Board and Board Oversight
 Our Board’s approach to board refreshment considering diversity, balance of tenure, and alignment of

board skills and experience with Kroger’s current and long-term business strategies

 Board and Committee responsibilities for oversight of ESG priorities, and approach to risk management

Discussions with socially conscious investors and NGOs helped inform our ESG strategy and long-term
commitments. Overall shareholders expressed appreciation for the opportunity to have an ongoing discussion and
were complementary of Kroger’s ESG practices. Specifically, shareholders recognized the actions we took to
formalize our ESG strategy, Thriving Together, and how our Board oversees this strategy, including our ESG targets
and initiatives. These conversations provided valuable insights into our shareholders’ evolving perspectives, which
were shared with our full Board.

Board’s Response to Shareholder Proposals

Accountability to our shareholders continues to be an important component of our success. We actively engage

with our shareholder proponents. Every year, following our Annual Shareholders’ Meeting, our Corporate
Governance Committee considers the voting outcomes for shareholder proposals. In addition, our Corporate
Governance Committee and other Committees, as appropriate, consider proposed courses of action in light of the
voting outcomes for shareholder proposals under their oversight, as well as feedback provided directly from our
shareholders.

Director Nominee Selection Process

The Corporate Governance Committee is responsible for recommending to the Board a slate of nominees for

election at each annual meeting of shareholders. The Corporate Governance Committee recruits candidates for
Board membership through its own efforts and through recommendations from other directors and shareholders. In
addition, the Corporate Governance Committee retains an independent, third-party search firm to assist in
identifying and recruiting director candidates who meet the criteria established by the Corporate Governance
Committee.

These criteria are:


demonstrated ability in fields considered to be of value to the Board, including business management,
retail, consumer, operations, technology, financial, sustainability, manufacturing, public service, education,
science, law, and government;



experience in high growth companies and nominees whose business experience can help the Company
innovate and derive new value from existing assets;

highest standards of personal character and conduct;

 willingness to fulfil the obligations of directors and to make the contribution of which he or she is capable,
including regular attendance and participation at Board and Committee meetings, and preparation for all
meetings, including review of all meeting materials provided in advance of the meeting; and



ability to understand the perspectives of Kroger’s customers, taking into consideration the diversity of our
customers, including regional and geographic differences.

35
Additionally, in connection with the use of an independent, third-party search firm to identify director
candidates, the Corporate Governance Committee will instruct the firm to include in its initial list qualified female
and racially/ethnically diverse candidates.

The Corporate Governance Committee also considers diversity, as discussed in detail under “Board Diversity”
above, and the specific experience and abilities of director candidates in light of our current business, strategy, and
structure, and the current or expected needs of the Board in its identification and recruitment of director candidates.

The criteria for Board membership applied by the Corporate Governance Committee in its evaluation of

potential Board members does not vary based on whether a candidate is recommended by our directors, a third-party
search firm, or shareholders.

Candidates Nominated by Shareholders

The Corporate Governance Committee will consider shareholder recommendations for director nominees for

election to the Board. If shareholders wish to nominate a person or persons for election to the Board at our 2024
annual meeting, written notice must be submitted to Kroger’s Secretary, and received at our executive offices, in
accordance with Kroger’s Regulations, not later than March 28, 2024. Such notice should include the name, age,
business address, and residence address of such person, the principal occupation or employment of such person, the
number of Kroger common shares owned of record or beneficially by such person and any other information relating
to the person that would be required to be included in a proxy statement relating to the election of directors. The
Secretary will forward the information to the Corporate Governance Committee for its consideration. The Corporate
Governance Committee will use the same criteria in evaluating candidates submitted by shareholders as it uses in
evaluating candidates identified by the Corporate Governance Committee, as described above. See “Director
Nominee Selection Process.”

Additionally, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of
director nominees other than our nominees must provide notice to Kroger’s Secretary that sets forth the information
required by Rule 14a-19 of the Exchange Act no later than April 23, 2024, and must comply with the additional
requirements of Rule 14a-19(b).

Eligible shareholders have the ability to submit director nominees for inclusion in our proxy statement for the

2024 annual meeting of shareholders. To be eligible, shareholders must have owned at least 3% of our common
shares for at least three years. Up to 20 shareholders are able to aggregate for this purpose. Nominations must be
submitted to our Corporate Secretary at our principal executive offices no earlier than December 14, 2023 and no
later than January 13, 2024.

Corporate Governance Guidelines

The Board has adopted the Guidelines, which provide a framework for the Board’s governance and oversight of

the Company. The Guidelines are available on our website at ir.kroger.com under Investors — Governance —
Corporate Governance Guidelines. Shareholders may also obtain a copy of the Guidelines, at no cost, by making a
written request to Kroger’s Secretary at our executive offices. Certain key principles addressed in the Guidelines are
summarized below.

Independence

The Board has determined that all of the current independent directors and nominees have no material
relationships with Kroger and satisfy the criteria for independence set forth in Rule 303A.02 of the NYSE Listed
Company Manual. Therefore, all independent directors and nominees are independent for purposes of the NYSE
listing standards. The Board made its determination based on information furnished to the Company by each of the
directors regarding their relationships with Kroger and its management, and other relevant information. The Board
considered, among other things, that



the value of any business transactions between Kroger and entities with which the directors are affiliated
falls below the thresholds identified by the NYSE listing standards, and
no directors had any material relationships with Kroger other than serving on our Board.

Audit Committee Independence and Expertise

The Board has determined that Anne Gates, Karen M. Hoguet, Ronald L. Sargent, and Ashok Vemuri,

independent directors, each of whom is a member of the Audit Committee, are “Audit Committee financial experts”
as defined by applicable Securities and Exchange Commission (“SEC”) regulations and that all members of the
Audit Committee are “financially literate” as that term is used in the NYSE listing standards and are independent in
accordance with Rule 10A-3 of the Securities Exchange Act of 1934.

Code of Ethics

The Board has adopted The Kroger Co. Policy on Business Ethics, applicable to all officers, associates, and
directors, including Kroger’s principal executive, financial, and accounting officers. The Policy on Business Ethics
is available on our website at ir.kroger.com under Investors — Governance — Policy on Business Ethics.
Shareholders may also obtain a copy of the Policy on Business Ethics by making a written request to Kroger’s
Secretary at our executive offices.

Communications with the Board

The Board has established two separate mechanisms for shareholders and interested parties to communicate
with the Board. Any shareholder or interested party who has concerns regarding accounting, improper use of Kroger
assets, or ethical improprieties may report these concerns via the toll-free hotline (800-689-4609) or website
(ethicspoint.com) established by the Board’s Audit Committee. The concerns are investigated by Kroger’s Vice
President, Chief Ethics and Compliance Officer, and the Vice President of Internal Audit and reported to the Audit
Committee as deemed appropriate.

Shareholders or interested parties also may communicate with the Board in writing directed to Kroger’s
Secretary at our executive offices. Communications relating to personnel issues, ordinary business operations, or
companies seeking to do business with us, will be forwarded to the business unit of Kroger that the Secretary deems
appropriate. Other communications will be forwarded to the Chair of the Corporate Governance Committee for
further consideration. The Chair of the Corporate Governance Committee will take such action as he or she deems
appropriate, which may include referral to the full Corporate Governance Committee or the entire Board.

Executive Officer Succession Planning

The Guidelines provide that the Compensation Committee will review Company policies and programs for

talent development and evaluation of executive officers, and will review management succession planning. In
connection with the use of a third-party search firm to identify external candidates for executive officer positions,
including the chief executive officer, the Board and/or the Company, as the case may be, will instruct the third-party
search firm to include in its initial list qualified female and racially/ethnically diverse candidates.

Attendance

The Board held 14 meetings in fiscal year 2022. During fiscal 2022, 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 Board members
attended last year’s virtual annual meeting.

37
Independent Compensation Consultants

The Compensation Committee directly engages a compensation consultant to advise the Compensation

Committee in the design of Kroger’s executive compensation. The Committee retained Korn Ferry Hay (US) (“Korn
Ferry”) beginning in December 2017. Retained by – and reporting directly to – the Compensation Committee, Korn
Ferry provided the Committee with assistance in evaluating Kroger’s executive compensation programs and
policies.

In fiscal 2022, Kroger paid Korn Ferry $402,007 for work performed for the Compensation Committee.
Kroger, on management’s recommendation, retained Korn Ferry to provide other services for Kroger in fiscal 2022
for which Kroger paid $69,500. These other services primarily related to salary surveys, benchmarking, integrated
reporting, and operational finance review. The Compensation Committee expressly approved Korn Ferry performing
these additional services. After taking into consideration the NYSE’s independence standards and the SEC rules, the
Compensation Committee determined that Korn Ferry was independent, and their work has not raised any conflict of
interest.

The Compensation Committee may engage an additional compensation consultant from time to time as it

deems advisable.

Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee was an officer or associate of Kroger during fiscal 2022, and no

member of the Compensation Committee is a former officer of Kroger or was a party to any related person
transaction involving Kroger required to be disclosed under Item 404 of Regulation S-K. During fiscal 2022, none of
our executive officers served on the Board of directors or on the compensation Committee of any other entity that
has or had executive officers serving as a member of Kroger’s Board of Directors or Compensation Committee of
the Board.

The Board’s Role in Risk Oversight

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

for strategic planning and overall supervision of our risk management activities. The Board’s oversight of the
material risks faced by Kroger occurs at both the full Board level and at the Committee level, each of which may
engage advisors and experts from time to time to provide advice and counsel on risk-related matters.

We believe that our approach to risk oversight optimizes our ability to assess inter-relationships among the
various risks, make informed cost-benefit decisions, and approach emerging risks in a proactive manner for Kroger.
We also believe that our risk oversight structure complements our current Board leadership structure, as it allows
our independent directors, through the five fully independent Board Committees, and in executive sessions of
independent directors led by the Lead Director, to exercise effective oversight of the actions of management’s
identification of risk and implementation of effective risk management policies and controls.

The Board receives presentations throughout the year from various department and business unit leaders that
include discussion of significant risks, including newly identified and evolving high priority risks. When new risks
are identified, management conducts, and either the full Board or the appropriate Board committee reviews and
discusses, an enterprise risk assessment related to such new risks which may include human capital, supply chain,
associate and customer health and safety, legal, regulatory, and other risks. Management and the Board then discuss
the relative severity of each category of risk as well as mitigating actions and considerations relating to disclosures
of material risks.

At each Board meeting, the CEO addresses matters of particular importance or concern, including any

significant areas of risk, such as newly identified risks, that require Board attention. Additionally, through dedicated
sessions focusing entirely on corporate strategy, the full Board reviews in detail Kroger’s short- and long-term
strategies, including consideration of significant risks facing Kroger – either immediately or longer term – and their
potential impact. The independent directors, in executive sessions led by the Lead Director, address matters of
particular concern, including significant areas of risk, that warrant further discussion or consideration outside the
presence of Kroger employees. At the committee level, reports are given by management subject matter experts to
each Committee on risks within the scope of their charters. Each Committee reports to the full Board at each
meeting, including any areas of risk discussed by the Committee.

The Audit Committee has oversight responsibility not only for financial reporting of Kroger’s major financial

exposures and the steps management has taken to monitor and control those exposures, but also for the effectiveness
of management’s processes that monitor and manage key business risks facing Kroger, as well as the major areas of
risk exposure, and management’s efforts to monitor and control the major areas of risk exposure. The Audit

38
Committee incorporates its risk oversight function into its regular reports to the Board and also discusses with
management its policies with respect to risk assessment and risk management.

Our Vice President, Chief Ethics and Compliance Officer provides regular updates to the Audit Committee on

our compliance risks and actions taken to mitigate that risk. In addition, the Audit Committee is charged with
oversight of data privacy and cybersecurity risks. Protection of our customers’ data is a fundamental priority for our
Board and management team. Our Chief Information Officer and our Chief Information Security Officer provide
updates at each quarterly Committee meeting on our cybersecurity risks and actions taken to mitigate that risk to the
Audit Committee and meet with the full Board at least annually. The Chief Information Security Officer reports on
compliance and regulatory issues, continuously evolving threats and mitigating actions, and presents a NIST
Cybersecurity Framework Scorecard to the Audit Committee. In overseeing cybersecurity risks, the Audit
Committee focuses on thematic issues within an aggregated strategic lens and uses a risk-based approach. Oversight
of cybersecurity risk incorporates strategy metrics, third party assessments, and internal audit and controls. Finally,
an independent third party also regularly reports to the Audit Committee/Board on cybersecurity and outside counsel
advises the Board about best practices for cybersecurity oversight by the Board, and the evolution of that oversight
over time. Management also reports on strategic key risk indicators, ongoing initiatives, and significant incidents
and their impact.

Board Oversight of Environmental, Sustainability, and Governance

We are aligned with the desire of our customers, associates, and shareholders to engage in our communities and

reduce our impacts on the environment while continuing to create positive economic value over the long-term.
Given the breadth of topics and their importance to us, all of our Board Committees have direct oversight of
environmental, social, and governance topics. ESG topics our Board Committees oversee are as follows:

Audit

Compensation & Talent
Development

Corporate Governance

 Legal & Regulatory
 Ethics
 Operational and Third-Party Compliance
 Data Privacy & Cyber Security
 Financial Integrity

 Human Capital Management
 Talent Development
 Executive Compensation
 Diversity, Equity & Inclusion

 Board recruitment/diversity
 Board succession
 Shareholder engagement program
 Shareholder advisory votes & shareholder proposals
 Independent director compensation

Finance

 Capital spending to ensure consistency with ESG strategy and goals

Public Responsibilities

 Environmental Sustainability
 Climate Impacts

Packaging

Food Waste (Zero Waste)

 Social Impact

Food Access and Affordability (Zero Hunger)


 Local Communities

Philanthropy
 Responsible Sourcing

 Human Rights
 Animal Welfare

 Safety




Food
People
Pharmacy
 Advocacy & Public Policy

 Government Relations


Political action (KroPAC)

 Communications & Brand Stewardship

 Associate & External Communications

 Stakeholder Relations

Our commitment to ESG matters is not new. Our Public Responsibilities Committee was established in 1977.

For the past 16 years, our Company has prepared and produced an annual report describing our progress and
initiatives regarding sustainability and other ESG matters. For the most recent information regarding our ESG
initiatives and related matters, please visit https://www.thekrogerco.com/esgreport/. The information on, or
accessible through, this website is not part of, or incorporated by reference into, this proxy statement.

In addition, our full Board oversees issues related to diversity and inclusion within the Kroger workplace.
Diversity and inclusion have been deeply rooted in Kroger’s values for decades. We are committed to fostering an
environment of inclusion in the workplace, marketplace, and workforce where the diversity of cultures,
backgrounds, experiences, perspectives, and ideas are valued and appreciated. Kroger’s corporate team and retail
divisions have strategic collaborations with universities, educational institutions, and community organizations to
improve how we attract candidates from all backgrounds and ethnicities for jobs at all levels. Diversity and inclusion
will continue to be a key ingredient in feeding Kroger’s innovation, long-term sustainability, and the human spirit.

The Kroger family of companies provides inclusion training to all management and all hourly associates. Most
work locations (stores, plants, distribution centers, and offices) have an inclusion-focused team, called Our Promise
team. The teams work on projects that reflect Kroger’s values, offer leaders valuable feedback and suggestions on
improving diversity and inclusion, and facilitate communication to champion business priorities.

Our Commitment to Diversity, Equity, & Inclusion

Kroger’s Chief People Officer leads Human Resources & Labor Relations, which includes our Diversity,
Equity & Inclusion team. This function — with human resources professionals in place across our lines of business
and retail divisions — advocates for and fosters an associate experience that reflects our Values. It also monitors and
measures progress toward goals and identifies potential opportunities for improvement.

Kroger publicly affirmed our commitment with our Framework for Action: Diversity, Equity, & Inclusion, a

10-point plan outlining short- and longer-term steps developed with associates and leaders to promote greater
change in the workplace and the communities we serve. This framework outlines five focus areas: Create More
Inclusive Culture, Develop Diverse Talent, Advance Diverse Partnerships, Advance Equitable Communities, and
Deeply Listen and Report Progress. More details about the plan are available here:
https://www.thekrogerco.com/community/standing-together/. The information on, or accessible through, this
website is not part of, or incorporated by reference into, this proxy statement.

Enabling Connections

As part of the framework, we committed to provide inclusion training for our associates. More than 661,000

leaders and associates have completed diversity and inclusion training since 2020. In 2020, Kroger formed an
internal Diversity, Equity, & Inclusion Advisory Council comprised of leaders from across the organization. The
Council works closely with our executive leadership team and other business leaders to identify opportunities and
action steps for improvement. We also created an Associate Influencer Group to facilitate representation and input
from all levels of the company.

Kroger also operates 15 internal Associate Resource Groups (ARGs), or affinity groups, some of which also

have local chapters. These groups enable stronger connections across our family of companies, lift up shared
experiences, promote personal and professional growth, and influence business decisions. Kroger leaders sponsor
and personally engage with the ARGs.

Workplace Equity

Kroger strives to attract, retain, and develop diverse leaders and associates who reflect the communities we

serve. We offer accessible employment for a wide range of people across the country. Because of our unique
business model, we help unlock economic opportunity for more than 430,000 people of all ages and aspirations,
from those wanting an entry-level part-time job to graduate-degree specialists across corporate functions.

Kroger strategically invests in our associates’ growth and movement across levels, lines of business, and
geographies. Our goal is to shift the demographic representation of women and people of color at company-wide
and local levels to reflect our changing country, communities, and neighborhoods. The Diversity, Equity, &
Inclusion Advisory Council helps define aspirations for our workforce of the future.

Community Engagement

As part of our Framework for Action, the Company also pledged to invest in advancing equitable communities.
Kroger directed a total of $10 million to establish and advance The Kroger Co. Foundation’s Racial Equity Fund in
2020. To date, the Foundation has directed $5.7 million in grants to organizations driving positive change at national
and local levels.

In 2022, the Foundation directed $1 million to The Asian American Foundation to support the Asian-American

community. As part of its continuing relationship with the Thurgood Marshall College Fund, the Foundation also
hosted its second annual Zero Hunger | Zero Waste Innovation Challenge. During the three-day business pitch
competition with 36 students from Historically Black Colleges and Universities across the U.S., the Foundation
awarded a total of $75,000 in scholarships. In collaboration with Proctor & Gamble, the Foundation also introduced
the Game Changers Scholarship program and awarded $25,000 in scholarships to five diverse female students in the
Greater Cincinnati area.

41
2022 Director Compensation

Director Compensation

The following table describes the fiscal year 2022 compensation for independent directors. Mr. McMullen does

not receive compensation for his Board service.

Name

Nora A. Aufreiter
Kevin M. Brown
Elaine L. Chao
Anne Gates
Karen M. Hoguet
Clyde R. Moore
Ronald L. Sargent
Amanda Sourry
Mark S. Sutton
Ashok Vemuri

Fees Earned or Paid in
Cash
$114,691
$109,704
$99,731
$134,637
$124,664
$119,677
$162,063
$99,731
$99,731
$109,704

Stock Awards(1)
$186,382
$186,382
$186,382
$186,382
$186,382
$186,382
$186,382
$186,382
$186,382
$186,382

Change in Pension
Value and Nonqualified
Deferred
Compensation(2)
$0
$0
$0
$0
$0
—
$5,282
$0
$0
$0

Total
$301,073
$296,086
$286,113
$321,019
$311,046
$306,059
$353,727
$286,113
$286,113
$296,086

(1) Amounts reported in the Stock Awards column represent the aggregate grant date fair value of the annual
incentive share award, computed in accordance with FASB ASC Topic 718. On July 13, 2022, each
independent director then serving received 3,887 incentive shares with a grant date fair value of $186,382.
(2) The amount reported for Mr. Sargent represents preferential earnings on nonqualified deferred compensation.
For a complete explanation of preferential earnings, please refer to footnote 4 to the Summary Compensation
Table. Mr. Moore’s pension value decreased by $210,996 which represents the change in actuarial present
value of his accumulated benefit under the pension plan for independent directors. This change in value of
accumulated pension benefits is not included in the Director Compensation Table because the value decreased.
Pension values may fluctuate significantly from year to year depending on a number of factors, including age,
average annual earnings, and the assumptions used to determine the present value, such as the discount rate.
The decrease in the actuarial present value of his accumulated pension benefit for 2022 is primarily due to the
increase in the discount rate as well as the change in value due to aging.

Annual Compensation

Each independent director receives an annual cash retainer of $100,000. The Lead Director receives an
additional annual retainer of $37,500 per year; the members of the Audit Committee each receive an additional
annual retainer of $10,000; the Chair of the Audit Committee receives an additional annual retainer of $25,000; the
Chair of the Compensation Committee receives an additional annual retainer of $20,000; and the Chair of each of
the other Committees receives an additional annual retainer of $15,000. Each independent director also receives an
annual grant of incentive shares (Kroger common shares) with a value of approximately $185,000.

The Board has determined that compensation of independent directors must be competitive on an ongoing basis

to attract and retain directors who meet the qualifications for service on the Board. Independent director
compensation was adjusted in 2021 and will be reviewed from time to time as the Corporate Governance Committee
deems appropriate.

Pension Plan

Independent directors first elected prior to July 17, 1997 receive an unfunded retirement benefit equal to the

average cash compensation for the five calendar years preceding retirement. Only Mr. Moore is eligible for this
benefit. Benefits begin at the later of actual retirement or age 65.

Nonqualified Deferred Compensation

We also maintain a deferred compensation plan for independent directors. Participants may defer up to 100% of

their cash compensation and/or the receipt of all (and not less than all) of the annual award of incentive shares.

Cash Deferrals

Cash deferrals are credited to a participant’s deferred compensation account. Participants may elect from either

or both of the following two alternative methods of determining benefits:

• interest accrues until paid out at the rate of interest determined prior to the beginning of the deferral year to

represent Kroger’s cost of ten-year debt; and/or

• amounts are credited in “phantom” stock accounts and the amounts in those accounts fluctuate with the price

of Kroger common shares.

In both cases, deferred amounts are paid out only in cash, based on deferral options selected by the participant

at the time the deferral elections are made. Participants can elect to have distributions made in a lump sum or in
quarterly installments, and may make comparable elections for designated beneficiaries who receive benefits in the
event that deferred compensation is not completely paid out upon the death of the participant.

Incentive Share Deferrals

Participants may also defer the receipt of all (and not less than all) of the annual award of incentive shares.
Distributions will be made by delivery of Kroger common shares within 30 days after the date which is six months
after the participant’s separation of service.

Director Stock Ownership Guidelines

Independent directors are required to own shares equivalent to five times their annual base cash retainer. For

more details on the Stock Ownership Guidelines, see page 60.

Beneficial Ownership of Common Stock

The following table sets forth the common shares beneficially owned as of April 24, 2023 by Kroger’s
directors, the NEOs, and the directors and executive officers as a group. The percentage of ownership is based on
723,532,073 of Kroger common shares outstanding on April 24, 2023. Shares reported as beneficially owned
include shares held indirectly through Kroger’s defined contribution plans and other shares held indirectly, as well
as shares subject to stock options exercisable on or before June 23, 2023. Except as otherwise noted, each beneficial
owner listed in the table has sole voting and investment power with regard to the common shares beneficially owned
by such owner. Unless otherwise indicated, the address of each of the beneficial owners listed below is c/o The
Kroger Co., Corporate Secretary, 1014 Vine Street, Cincinnati, OH 45202.

Name

Stuart W. Aitken(2)
Nora A. Aufreiter(3)
Kevin M. Brown
Elaine L. Chao(3)
Yael Cosset
Anne Gates(3)
Karen M. Hoguet(4)
Timothy A. Massa
W. Rodney McMullen
Gary Millerchip
Clyde R. Moore
Ronald L. Sargent(3)
Amanda Sourry
Mark S. Sutton(3)
Ashok Vemuri
Directors and executive officers as a group (22 persons, including
those named above)

Amount and Nature of
Beneficial Ownership(1)
441,766
48,543
11,004
8,036
399,835
43,125
19,552
506,660
6,353,306
540,043
121,423
180,871
11,004
38,452
24,900
9,988,204

Options Exercisable on or
before June 23, 2023 –
included in column (a)
260,420
—
—

248,377
—
—
311,704
2,772,130
354,620
—
—
—
—
—
4,579,577

(1) No director or officer owned as much as 1% of Kroger common shares. The directors and executive officers as

a group beneficially owned 1.4% of Kroger common shares.

(2) This amount includes 3,018 shares held by Mr. Aitken’s spouse. He disclaims beneficial ownership of these

shares.

(3) This amount includes incentive share awards that were deferred under the deferred compensation plan for

independent directors in the following amounts: Ms. Aufreiter, 10,037; Ms. Chao, 3,952; Ms. Gates, 12,100;
Mr. Sargent, 55,960; Mr. Sutton, 6,909.

(4) This amount includes 2,075 shares held by Ms. Hoguet’s spouse. She 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 April 24, 2023 based on reports on Schedule 13G filed with the SEC.

Name

Berkshire Hathaway Inc.

BlackRock, Inc.

The Vanguard Group

Address
3555 Farnam Street
Omaha, NE 68131
55 East 52nd Street
New York, NY 10055
100 Vanguard Blvd.
Malvern, PA 19355

Amount and Nature of
Ownership

Percentage of Class

50,000,000(1)

65,963,885(2)

82,426,702(3)

7.0%

9.2%

11.51%

(1) Reflects beneficial ownership by Berkshire Hathaway Inc. as of December 31, 2022, as reported on Schedule
13G filed with the SEC on February 14, 2023, reporting shared voting power with respect to 50,000,000
common shares, and shared dispositive power with regard to 50,000,000 common shares.

(2) Reflects beneficial ownership by BlackRock Inc., as of December 31, 2022, as reported on Amendment No. 15

to Schedule 13G filed with the SEC on January 24, 2023, reporting sole voting power with respect to
59,579,943 common shares, and sole dispositive power with regard to 65,963,885 common shares.

(3) Reflects beneficial ownership by The Vanguard Group as of December 30, 2022, as reported on Amendment
No. 8 to Schedule 13G filed with the SEC on February 9, 2023, reporting shared voting power with respect to
931,562 common shares, sole dispositive power of 79,719,502 common shares, and shared dispositive power of
2,707,200 common shares.

Related Person Transactions

The Board has adopted a written policy requiring that any Related Person Transaction may be consummated or
continue only if the Audit Committee approves or ratifies the transaction in accordance with the policy. A “Related
Person Transaction” is one (a) involving Kroger, (b) in which one of our directors, nominees for director, executive
officers, or greater than five percent shareholders, or their immediate family members, have a direct or indirect
material interest; and (c) the amount involved exceeds $120,000 in a fiscal year.

The Audit Committee will approve only those Related Person Transactions that are in, or not inconsistent with,
the best interests of Kroger and its shareholders, as determined by the Audit Committee in good faith in accordance
with its business judgment. No director may participate in any review, approval, or ratification of any transaction if
he or she, or an immediate family member, has a direct or indirect material interest in the transaction.

Where a Related Person Transaction will be ongoing, the Audit Committee may establish guidelines for

management to follow in its ongoing dealings with the related person and the Audit Committee will review and
assess the relationship on an annual basis to ensure it complies with such guidelines and that the Related Person
Transaction remains appropriate.

Compensation Discussion and Analysis

This Compensation Discussion and Analysis provides an overview of the elements and philosophy of our
executive compensation program as well as how and why the Compensation Committee and our Board of Directors
make specific compensation decisions and policies with respect to our Named Executive Officers (“NEOs”).

Executive Summary

Our Named Executive Officers for Fiscal 2022

Name

Title

W. Rodney McMullen

Chairman and Chief Executive Officer

Gary Millerchip

Stuart W. Aitken

Yael Cosset

Senior Vice President and Chief Financial Officer

Senior Vice President and Chief Merchandising & Marketing Officer

Senior Vice President and Chief Information Officer

Timothy A. Massa

Senior Vice President and Chief People Officer

Fiscal 2022 Financial and Strategic Performance Highlights

Driven by our unwavering purpose to Feed the Human Spirit, Kroger achieved exceptional results in 2022 as
we executed on our Leading with Fresh and Accelerating with Digital strategy, building on record years in 2020 and
2021. Our associates are customer-focused, delivering the products customers want, when and how they want them,
with zero compromise on quality, convenience, and selection.

In 2022, we achieved financial performance results of ID sales, without fuel, of 5.6%, and adjusted FIFO

operating profit of $5.1 billion. We have built a digital platform that offers a seamless shopping experience,
allowing customers to shift effortlessly between store, pickup and delivery solutions. In 2022, we increased delivery
sales, opened new customer fulfilment centers, increased digitally engaged households, and grew loyalty as our
customers more deeply engaged with personalized coupons and fuel rewards.

Our associates enable our success, and we are committed to investing in theirs by continuing to improve wages,

comprehensive benefits, and career development opportunities. We invested approximately $600 million in
incremental wages in 2022, for a total of $1.9 billion in incremental investments since 2018.

Continued strategic efforts to streamline our operations allowed us to achieve cost savings greater than
$1 billion for the fifth consecutive year to balance these investments without compromising food affordability for
our customers across our communities.

As part of our Zero Hunger | Zero Waste social and environmental impact plan, in 2022, we donated nearly

600 million meals to feed families across America.

Our proven go-to-market strategy enables us to successfully navigate many operating environments. We
believe that by delivering value for our customers, investing in our associates and serving our communities, we will
continue to achieve attractive and sustainable total returns for our shareholders.

2022 Advisory Vote to Approve Executive Compensation and Shareholder Engagement

At the 2022 annual meeting, we held our annual advisory vote on executive compensation. Approximately 92%
of the votes cast were in favor of the advisory vote. As part of our ongoing dialogue with our shareholders regarding
governance matters, in 2022, we requested meetings with 32 shareholders representing 49% of our outstanding
shares during proxy season and off-season engagement and 7 shareholders representing 24% of our outstanding
shares accepted our invitation to share feedback. Some investors we contacted either did not respond or confirmed
that a discussion was not needed at that time.

Conversations in these meetings included discussions about our NEO’s compensation program, with our
shareholders providing feedback that they appreciated the pay-for-performance structure of our executive pay
program. The Compensation Committee considers both the general and specific feedback received from
shareholders, and with the guidance of our independent compensation consultant, incorporates that input into pay
design.

During shareholder engagement, we specifically discuss our shareholders’ perspectives on ESG metrics in
executive compensation programs. Our investors are all supportive of companies’ decisions to incorporate ESG
metrics, but none are prescriptive about how to do so. Our investors share our view that a range of ESG matters are
essential to our current and future success, and acknowledge that ESG priorities are embedded into our strategic and
operational priorities. Management collects and reports the feedback to the Compensation Committee, and the
Committee decided, beginning in 2022, to integrate our core values of Diversity, Equity & Inclusion into
compensation decisions made for our associates who supervise a team of others, which range from store department
leaders through our NEOs. Specifically, one of several performance goals established for these associates and senior
officers relate to improvement in the Diversity, Equity, & Inclusion category score as measured by our annual
Associate Insights Survey and active mentorship and development of at least one other associate with a different

background. These performance goals are factored into compensation decisions for these associates and senior
officers, including salary increases and the amount of the annual grant of equity awards, consistent with our program
design as described herein.

2022 Compensation Program Overview

The fixed and at-risk pay elements of the NEO compensation program are reflected in the following table and

charts.

Fiscal Year 2022 CEO Compensation

The Compensation Committee establishes Mr. McMullen’s target direct compensation such that only 9% of his

compensation is fixed. The remaining 91% of target compensation is at-risk, meaning that the actual compensation
Mr. McMullen receives will depend on the extent to which the Company achieves the performance metrics set by
the Compensation Committee, and with respect to all of the equity vehicles, the future value of Kroger common
shares.

The table below compares fiscal 2022 to 2021 target direct compensation. Target total direct compensation is a
more accurate reflection of how the Compensation Committee benchmarks and establishes CEO compensation than
the disclosure provided in the Summary Compensation Table, which includes a combination of actual base salaries
and annual incentive compensation earned in the fiscal year, the grant date fair market value of at-risk equity
compensation to be earned in future fiscal years, and the actuarial value of future pension benefits.

Increases to Mr. McMullen’s pay elements shown below were based on our independent compensation
consultant’s examination of pay levels and the Committee’s intention to achieve median pay levels among our peer
group. Target total compensation, which is the sum of target annual compensation and target long term
compensation is positioned around market median.

($000s)

Annual

Target
Annual
Incentive
2,800
2,500

Year
2022
2021

Salary
1,400
1,355

Long-Term

Total
Annual
4,200
3,855

Performance
Units
5,750
5,500

Restricted
Stock
3,450
3,300

Stock
Options
2,300
2,200

Total
LTI
11,500
11,000

Target
TDC
15,700
14,855

Increase
+5.6%

CEO and Named Executive Officer Target Pay Mix

The amounts used in the charts below are based on 2022 target total direct compensation for the CEO and the

average of other NEOs. As illustrated below, 91% of the CEO’s target total direct compensation is at-risk. On
average, 84% of the other NEOs’ compensation is at risk.

*Total exceeds 100% due to rounding.

Our Compensation Philosophy and Objectives

Our executive compensation philosophy is to attract and retain the best management talent as well as motivate

these associates to achieve our business and financial goals. Kroger’s incentive plans are designed to reward the
actions that lead to long-term value creation. We believe our strategy creates value for shareholders in a manner
consistent with Kroger’s purpose: To Feed the Human Spirit. The Compensation Committee believes that there is a
strong link between our business strategy, the performance metrics in our short-term and long-term incentive
programs, and the business results that drive shareholder value.

To achieve our objectives, the Compensation Committee seeks to ensure that compensation is competitive and

that there is a direct link between pay and performance. To do so, it is guided by the following principles:

• Compensation must be designed to attract and retain those individuals who are best suited to be an NEO at

Kroger.

• A significant portion of pay should be performance-based, with the percentage of total pay tied to

performance increasing proportionally with an NEO’s level of responsibility.

• Compensation should include incentive-based pay to drive performance, providing superior pay for superior

performance, including both a short- and long-term focus.

• Compensation policies should include an opportunity for, and a requirement of, significant equity ownership

to align the interests of NEOs and shareholders.

• Components of compensation should be tied to an evaluation of business and individual performance

measured against metrics that directly drive our business strategy and progress toward our corporate ESG
priorities.

• Compensation plans should provide a direct line of sight to company performance.

• Compensation programs should be aligned with market practices.

• Compensation programs should serve to both motivate and retain talent.

Summary of Key Compensation Practices

What we do:

What we do not do:

✓ Alignment of pay and performance

× No employment contracts with executive officers

✓ Stock ownership guidelines for executives

✓ Multiple performance metrics under our short-
and long-term performance-based plans
discourage excessive risk taking and align with
our long-term value creation strategy

✓ Double-trigger change in control provisions in all

equity awards

✓ Double-trigger change in control provisions in

cash severance benefits

✓ All long-term compensation is equity-based

✓ Engagement of an independent compensation

consultant

✓ Robust clawback policy

✓ Ban on hedging, pledging, and short sales of

Kroger securities

✓ Minimal perquisites

× No special severance or change in control

programs applicable only to executive officers

× No cash component in long-term incentive plans

× No tax gross-up payments for executives

× No special executive life insurance benefit

× No re-pricing or backdating of stock options

without shareholder approval

× No guaranteed salary increases or bonuses

× No payment of dividends or dividend equivalents

until performance units are earned

× No evergreen or reload feature; no shares can be
added to stock plan without shareholder approval

Establishing Each Component of Executive Compensation

The Compensation Committee recommends, and the independent members of the Board determine, each
component of the CEO’s compensation. The CEO recommends, and the Compensation Committee determines, each
component of the other NEOs’ compensation. The Compensation Committee and the Board made changes to
compensation in March of 2022. Equity awards were granted in March and salary and annual incentive plan
increases were effective April 1, 2022.

The Compensation Committee determines the amount of each NEO’s salary, annual cash incentive plan target,

and long-term equity compensation by taking into consideration numerous factors including:

• An assessment of individual contribution and performance;
• Benchmarking with comparable positions at peer group companies;
• Level in organization and tenure in role; and
• Internal equity among executives.

The assessment of individual contribution and performance is a qualitative determination, based on the

following factors:

• Leadership;
• Contribution to the executive officer group;
• Achievement of established performance objectives;
• Decision-making abilities;
• Performance of the areas or groups directly reporting to the NEO;
• Support of company culture;
• Strategic thinking; and
• Demonstrated commitment to Kroger’s Values: Safety, Honesty, Integrity, Respect, Diversity, and Inclusion,
including improvement in the DE&I category score as measured by our annual Associate Insights Survey
and active mentorship and development of at least one other associate with a different background.

At the end of each year, individual performance is evaluated based on the NEO’s performance objectives listed
above, and the results of that evaluation are used in the determination of salary increases and the grant amount of all
annual equity awards: restricted stock and stock options, which are time-based, and performance units granted under
the long-term incentive plan, which are performance- based.

Elements of Compensation

Salary

Our philosophy with respect to salary is to provide a sufficient and stable source of fixed cash compensation

that is competitive with the market to attract and retain a high caliber leadership team. NEO salaries, effective April
1, 2021 and April 1, 2022 were as follows:

Name

2021 Base Salary

2022 Base Salary

W. Rodney McMullen

Gary Millerchip

Stuart W. Aitken

Yael Cosset

Timothy A. Massa

2022 Annual Incentive Plan

$1,355,000

$750,000

$885,000

$750,000

$800,000

$1,400,000

$825,000

$925,000

$825,000

$850,000

The NEOs participate in a corporate performance-based annual cash incentive plan. The value of annual cash
incentive awards that the NEOs earn each year is based upon Kroger’s overall company performance compared to
goals established by the Compensation Committee based on the business plan adopted by the Board of Directors.

A minimum level of performance must be achieved before any payout is earned, while a payout of up to 210%

of target incentive potential can be achieved for superior performance on the corporate plan metrics. There are no
guaranteed or minimum payouts; if none of the performance goals are achieved, then none of the incentive amount
is earned, and no payout is made.

The annual cash incentive plan is designed to encourage decisions and behavior that drive the annual operating

results and the long-term success of the Company. Kroger’s success is based on a combination of factors, and
accordingly the Compensation Committee believes that it is important to encourage behavior that supports multiple
elements of our business strategy. The corporate annual cash incentive plan is a broad-based plan used across the
Kroger enterprise. Approximately 53,000 associates are eligible to receive incentive payouts based all or in part on
the incentive plan described below.

NEO target incentive potentials for fiscal years 2021 and 2022, were as follows:

Name

2021 Target Annual Incentive

2022 Target Annual Incentive

W. Rodney McMullen

Gary Millerchip

Stuart W. Aitken

Yael Cosset

Timothy A. Massa

$2,500,000

$825,000

$650,000

$2,800,000

$850,000

$775,000

2022 Annual Incentive Plan Metrics

Metric

Rationale for Use

Sales and Profit Grid, maximum payout of 200%

ID Sales, excluding Fuel

Adjusted FIFO Operating Profit, including Fuel

E-commerce Kicker

 Identical Sales (“ID Sales”) represent sales, excluding fuel, at our supermarkets that
have been open without expansion or relocation for five full quarters, excluding
supermarket fuel sales, plus sales growth at all other customer-facing non-
supermarket businesses.

 We believe that ID Sales are the best measure of real growth of our sales across the

enterprise. A key driver of our model is ID Sales growth.

 This financial metric equals gross profit, excluding the LIFO charge, minus

OG&A, minus rent, and minus depreciation and amortization.

 Adjusted FIFO Operating Profit, including fuel, is a key measure of company

success as it tracks our earnings from operations, and it measures our day-to-day
operational effectiveness. It is a useful measure to investors because it reflects the
revenue and expense that a company can control.

Kicker, worth an additional 10%

 E-commerce sales are key drivers of our overall digital strategy – meeting

customers where and how they choose to shop. E-commerce is a key component of
our strategic pillar of Seamless.

 Up to an additional 10% is earned if Kroger achieves certain pre-determined goals

with respect to e-commerce sales.

Potential payouts under the plan are based on Company performance on two primary metrics, ID Sales,
excluding Fuel, and Adjusted FIFO Operating Profit, including Fuel. The performance objectives are shown in the
grids below, with payouts interpolated for actual performance between levels.

The goals established by the Compensation Committee were as follows:

ID Sales, excluding Fuel and Adjusted FIFO Operating Profit, including Fuel

Adjusted FIFO Operating Profit,
including Fuel ($ in millions)

≥3,934
≥4,134
≥4,334
≥4,534
≥4,734

0%
0
20
40
70
110

ID Sales, excluding Fuel
3.0%
20
80
100
120
140

1.5%
14
65
85
105
125

4.5%
29
95
115
135
170

6.0%
40
115
160
180
200

2022 Annual Incentive Plan – Actual Results and Payout Percentage

Corporate Plan Metric

Identical Sales, excluding fuel
Adjusted FIFO Operating Profit, including fuel
Ecommerce Total Sales Kicker(2)

Total Payout

(1) See grid above.

2022 Performance(1)
5.62%
$5.08B

Payout

192.40%

0%
192.40%

(2) Up to an additional 10% would have been earned if Kroger had achieved a certain goal with respect to e-
commerce. That challenging goal was established by the Compensation Committee but was not achieved.
The goal is not disclosed because it is competitively sensitive.

Following the close of the 2022 fiscal year, the Compensation Committee reviewed Kroger’s performance
against each of the metrics outlined above and determined the extent to which Kroger achieved those objectives. Our
performance compared to the goals established by the Compensation Committee resulted in a payout of 192.40% of
the participant’s incentive plan target for the NEOs, with the exception of Mr. Aitken.

Mr. Aitken’s annual bonus payout equaled 190.98% of his bonus potential because it included the corporate
annual plan described above and a team metric as follows. The merchandising team metric measured supermarket
ID sales excluding pharmacy and fuel, and supermarket selling gross dollars less shrink dollars for all departments
excluding pharmacy and fuel.

Corporate Annual Bonus Plan

Merchandising Team Metric

Total Earned

Payout Percentage

192.40%

188.86%

Weight

60 %

40 %

(192.40% x 0.6) + (188.86% x 0.4%) = 190.98%

The Compensation Committee maintains the ability to reduce the annual cash incentive payout for all executive

officers, including the NEOs, and the independent directors retain that discretion for the CEO’s incentive payout if
they determine for any reason that the incentive payouts were not appropriate given their assessment of Company or
individual performance. No adjustments were made to the incentive payout amount in 2022. The annual incentive
plan is typically an all-cash plan. While performance was achieved at 192.40%, in light of macroeconomic
conditions, including inflation, as well as the Compensation Committee’s desire to create ongoing alignment with
shareholders and reward sustained performance beyond 2022, the Compensation Committee determined to structure
the payout to the NEOs as follows: 150% in cash and the remaining 42.4% (41.0% for Mr. Aitken) in restricted
stock vesting in one year.

As described above, the corporate annual incentive payout percentage is applied to each NEO’s incentive plan
target which is determined by the Compensation Committee, and the independent directors in the case of the CEO.
The actual amounts of performance-based annual incentive paid to the NEOs for 2022 are reported in the Summary
Compensation Table in the “Non-Equity Incentive Plan Compensation” column and the “Stock Awards” column.

Long-Term Compensation Program

The Compensation Committee believes in the importance of providing an incentive to the NEOs to achieve the

long-term goals established by the Board. As such, a majority of NEO compensation is dependent on the
achievement of those goals. Long-term compensation promotes long-term value creation and discourages the over-
emphasis of attaining short-term goals at the expense of long-term growth.

The long-term incentive program is structured to be a combination of performance- and time-based

compensation that reflects elements of financial and common share performance to provide both retention value and
alignment with company performance. The Compensation Committee determined that all long-term compensation
would be equity-based as follows: 50% of equity granted under the program would be performance-based and the
remaining 50% of equity would be time-based, consisting of 30% in restricted stock and 20% in stock options.

Each year, NEOs receive grants under the long-term compensation program, which is structured as follows:
• Performance-Based (50% of NEO long-term target compensation)

• Long-term performance-based compensation is provided under a Long-Term Incentive Plan adopted by
the Compensation Committee. The Committee adopts a new plan every year, measuring improvement
on the Company’s long-term goals over successive three-year periods. Accordingly, at any one time
there are three plans outstanding, which are summarized below.

• Under the Long-Term Incentive Plans, NEOs receive grants of equity called performance units. A target
number of performance units based on level and individual performance is awarded to each participant
at the beginning of the three-year performance period.

• Payouts under the plan are contingent on the achievement of certain strategic performance and financial

measures and incentivize recipients to promote long-term value creation and enhance shareholder
wealth by supporting the Company’s long-term strategic goals.

• The payout percentage, based on the extent to which the performance metrics are achieved, is applied to
the number of performance units awarded. Then, a modifier based on Relative Total Shareholder Return
compared to the S&P 500 is applied, which can increase or decrease the payout.

• Performance units are paid out in Kroger common shares based on actual performance, along with

dividend equivalents for the performance period on the number of issued common shares.

• Time-Based (50% of NEO long-term target compensation)

• Long-term time-based compensation consists of 20% stock options and 30% restricted stock, which are
linked to common share performance, creating alignment between the NEOs’ and our shareholders’
interests. Grants vest ratably over four years.

• Stock options have no initial value and recipients only realize benefits if the value of our common

shares increases following the date of grant, further aligning the NEOs’ and our shareholders’ interests.

Amounts of long-term compensation awards issued and outstanding for the NEOs are set forth in the Executive

Compensation Tables section.

Summary of Three Long-Term Incentive Plans Outstanding During 2022

With respect to our long-term performance-based compensation, in November 2019, Kroger committed to
investors an 8 – 11% Total Shareholder Return (TSR) target over time. The Compensation Committee redesigned
plan metrics to align with Kroger’s long-term business plans and growth model that we communicated to
shareholders. These metrics are the key elements in driving Kroger’s TSR.

The Compensation Committee adopts a new Long-Term Incentive Plan each year, which provides for

overlapping three-year performance periods. Additional detail regarding each of the three plans is provided below,
and a summary of the design of the plans outstanding during 2022 is as follows:

Performance Units and
Dividend Equivalents

Performance Metrics

2020 – 2022 LTIP

2021 – 2023 LTIP
Performance units are equity grants which are paid out in Kroger common shares, based on actual performance at
the end of the 3-year performance period, along with dividend equivalents for the performance period on the
number of issued common shares ultimately earned.
 Total Sales without Fuel + Fuel Gallons;
 Growth in Adjusted FIFO Operating Profit, including Fuel
 Cumulative Adjusted Free Cash Flow;
 Fresh Equity metric; and
 Relative Total Shareholder Return modifier

 Fresh Equity metric; and
 Relative Total Shareholder Return

 Total Sales without Fuel + Fuel

 Value Creation Metric (iTSR)

2022 – 2024 LTIP

Percentage

Gallons;

Determination of Payout

The payout percentage, based on the extent to which the performance metrics are achieved, is applied to number
of performance units awarded.

Maximum Payout
Payout Date

125%
March 2023

187.5%
March 2024

187.5%
March 2025

modifier

2020-2022 and 2021-2023 Long-Term Incentive Plan – Metrics

Both the 2020 – 2022 and the 2021-2023 Long-Term Incentive Plans have the following components which support
our long-term business plans, each accounting for 25% of the payout calculation:

Metric

Total Sales without Fuel + Fuel Gallons

Growth in Adjusted FIFO Operating
Profit, including Fuel

Cumulative Adjusted Free Cash Flow

Fresh Equity metric

Rationale for Use
 This metric represents total revenue dollars without fuel + the number of fuel
gallons sold over the three-year term of the plan. It represents the important
metric of top line growth of the business from all channels.

 This financial metric equals gross profit, excluding the LIFO charge, minus

OG&A, minus rent, and minus depreciation and amortization.

 Adjusted FIFO Operating Profit, including fuel, is a key measure of company
success as it tracks our earnings from operations, and it measures our day-to-
day operational effectiveness. It is a useful measure to investors because it
reflects the revenue and expense that a company can control. It is particularly
important to focus on growth of this financial measure over time.

 Adjusted Free Cash Flow is an adjusted free cash flow measure calculated as
net cash provided by operating activities minus payments for property and
equipment, including payments for lease buyout, plus or minus adjustments
for certain items.

 It is an important measure for the business because it reflects the cash left over

after the company pays for operating expenses and capital expenditures.
 Fresh is a key element of how people decide where to shop. It drives trips and

therefore delivers business results. Fresh is the core focus of how we
differentiate and drive great engagement with customers and it will be a key
driver of our growth.

Weighting

25%

After the calculation of the four metrics above, a modifier based on Relative Total Shareholder Return
compared to the S&P 500 will be applied which can increase or decrease the payout, as follows, interpolated for
actual results between thresholds:

TSR Relative to S&P 500

25th percentile
50th percentile
75th percentile

Modifier

75%

100%

125%

The payout percentage, as modified by the Relative TSR modifier, will be applied to the number of

performance units granted under the plan to determine the payout amount. The maximum payout under the 2020-
2022 Long-Term Incentive Plan is 125% and the maximum payout under the 2021-2023 Long Term Incentive Plan
is 187.5% as further described below.

2020-2022 Long-Term Incentive Plan – Results and Payout

The results and payout of the 2020-2022 Long-Term Incentive Plan are as follows.

Metric

Total Sales without Fuel + Fuel Gallons
Growth in Adjusted FIFO Operating Profit,
including Fuel
Cumulative Adjusted Free Cash Flow
Fresh Equity metric

Performance

$134.3B

$5.1B

$9.6B
43.3
Payout Before Modifier

Goal

$123.6B

$3.47B

$5.7B
45.4

Relative TSR Modifier

75th Percentile

>50th Percentile

Total Payout

Payout Percentage

100%

100%
0%
75%
125%
93.75%

The NEOs were issued the number of Kroger common shares equal to 93.75% of the number of

performance units awarded to that executive, along with dividend equivalents for the three-year performance period
on the number of issued common shares.

The dividend equivalents paid on common shares earned under the 2020 – 2022 Long-Term Incentive Plan are
reported in the “All Other Compensation” column of the Summary Compensation Table and footnote 5 to that table,
and the common shares issued under the plan are reported in the 2022 Option Exercises and Stock Vested Table and
footnote 2 to that table.

The annual and long-term performance-based compensation awards described herein were made pursuant to
our 2019 Long-Term Incentive Plan, which was approved by our shareholders in June 2019, and the 2019 Amended
and Restated Long-Term Incentive Plan, which was approved by our shareholders in June 2022.

Additional Features of the 2021-2023 Long-Term Incentive Plan

Going into 2021, there were an extraordinary number and degree of unknowns that could have impacted our

financial results. The Compensation Committee considered, among other factors, the course of the pandemic,
including new COVID variants, availability and outcomes of vaccine programs, continuing sales trends, food at
home and food away from home trends, inflation/deflation, and other potential market influencing events. To
account for these unknowns, the Compensation Committee designed the 2021 long-term plan with an incremental
goal setting approach due to our inability to forecast reliable long-term performance targets against the background
of the market uncertainty at the time. The Committee designed the plan to take into account the extraordinary
uncertainties going into the three-year plan, while aligning to our identical sales and operating profit growth and
productivity improvement goals, all in support of our long-term value creation model. Under the incremental goal
setting approach, the plan was designed with clearly defined financial performance goals for 2021, and a mechanism
for setting the 2022-2023 goals based on actual 2021 results.

This approach does not change the timing of the payout. The payout for the three-year plan will be calculated

following the close of fiscal year 2023 and, if earned, will be paid out to participants in the form of common shares,
and corresponding accrued dividend equivalents, in March of 2024.

For the 2021-2023 Long-Term Incentive Plan, the Compensation Committee aligned the plan with market

practices, increasing the maximum payout potential on the four metrics from 100% to 150%. The highest payout
from the four metrics alone equals 100%. However, the payout may exceed 100%, if for years 2 and 3 of the plan:
(1) the Total Sales without Fuel + Fuel Gallons metric, the Growth in Adjusted FIFO Operating Profit, including
Fuel, metric, and the Cumulative Adjusted Free Cash Flow metric all achieve 100%, and (2) the 2-year compound
annual growth rate of Total Sales without Fuel + Fuel Gallons exceeds 3.5%. The plan payout will increase
incrementally from 100%, up to 150% maximum if the 2-year compound annual growth rate on the Total Sales
without Fuel + Fuel Gallons metric is 5.0%. With the potential application of the relative TSR modifier, the total
maximum payout would be 187.5%.

2022 – 2024 Long-Term Incentive Plan Metrics

The 2022-2024 Long-Term Incentive Plan metrics have been designed to reflect commitments made to our
investors and other stakeholders regarding long-term sales growth, our Value Creation algorithm (through intrinsic
Total Shareholder Return, or iTSR) and our commitment to Fresh as a strategic differentiator. The plan also includes
a modifier based on our shareholder return relative to the S&P 500 shareholder return.

Metric

Total Sales without Fuel + Fuel Gallons

Value Creation Metric (iTSR) Percentage

Fresh Equity metric

Rationale for Use
 This metric represents total revenue dollars without fuel + the number of
fuel gallons sold over the three-year term of the plan. It represents the
important metric of top line growth of the business from all channels.
 This financial metric equals Adjusted Earnings per diluted share (EPS)

growth plus Dividend Yield.

 Fresh is a key element of how people decide where to shop. It drives
trips and therefore delivers business results. Fresh is the core focus of
how we differentiate and drive great engagement with customers and it
will be a key driver of our growth.

Weighting

25%

50%

25%

The highest payout from the three metrics alone equals 100%. However, the payout may exceed 100% if: (1)

both the Total Sales without Fuel + Fuel Gallons metric and the iTSR metric achieve 100%, and (2) the 3-year
compound annual growth rate of Total Sales without Fuel + Fuel Gallons exceeds 3.5%. The plan payout will
increase incrementally from 100%, up to 150% maximum if the 3-year compound annual growth rate on the Total
Sales without Fuel + Fuel Gallons metric is 5.0%.

After the calculation described above, a modifier based on Relative Total Shareholder Return compared to the

S&P 500 will be applied, as follows, interpolated for actual results between the 25th percentile and 75th percentile
thresholds:

TSR Relative to S&P 500

25th percentile
50th percentile
75th percentile

Modifier

75%

100%

125%

The payout percentage, as modified by the Relative TSR modifier, will be applied to the number of

performance units granted under the plan to determine the payout amount. If all three metrics are achieved at the
maximum level and the Relative Total Shareholder Return modifier is maximized, the total plan payout would be
187.5%.

Stock Options and Restricted Stock

Stock options and restricted stock continue to play an important role in rewarding NEOs for the achievement of

long-term business objectives and providing incentives for the creation of shareholder value. Awards based on
Kroger’s common shares are granted annually to the NEOs. Kroger historically has distributed time-based equity
awards widely, aligning the interests of associates with interests of shareholders.

The options permit the holder to purchase Kroger common shares at an option price equal to the closing price

of Kroger common shares on the date of the grant. Options are granted only on one of the four dates of Board
meetings conducted after Kroger’s public release of its quarterly earnings results.

The Compensation Committee determines the vesting schedule for stock options and restricted stock. During
2022, the Compensation Committee granted to the NEOs stock options and restricted stock, each with a four-year
ratable vesting schedule.

Restricted stock awards are reported in the “Stock Awards” column of the Summary Compensation Table and

footnote 1 to the table and the 2022 Grants of Plan Based Awards Table. Stock option awards are reported in the
“Option Awards” column of the Summary Compensation Table and the “All other Option Awards” column of the
2022 Grants of Plan Based Awards Table.

Retirement and Other Benefits

Kroger maintains several defined benefit and defined contribution retirement plans for its associates. The NEOs

participate in one or more of these plans, as well as one or more excess plans designed to make up the shortfall in
retirement benefits created by limitations under the Internal Revenue Code (the “Code”) on benefits to highly
compensated individuals under qualified plans. Additional details regarding certain retirement benefits available to
the NEOs can be found below in footnote 5 to the Summary Compensation Table and the 2022 Pension Benefits
Table and the accompanying narrative.

Kroger also maintains an executive deferred compensation plan in which the CEO has elected to participate.
This plan is a nonqualified plan under which participants can elect to defer up to 100% of their cash compensation
each year. Additional details regarding our nonqualified deferred compensation plans available to the NEOs can be
found below in the 2022 Nonqualified Deferred Compensation Table and the accompanying narrative.

Kroger also maintains The Kroger Co. Employee Protection Plan (“KEPP”), which covers all of our
management associates who are classified as exempt under the federal Fair Labor Standards Act and certain
administrative or technical support personnel who are not covered by a collective bargaining agreement, with at least
one year of service. KEPP has a double trigger change in control provision, and it provides for severance benefits
and extended Kroger-paid health care, as well as the continuation of other benefits as described in the plan, when an
associate is actually or constructively terminated without cause within two years following a change in control of
Kroger (as defined in KEPP). Participants are entitled to severance pay of up to 24 months’ salary and annual
incentive target. The actual amount is dependent upon pay level and years of service. KEPP can be amended or
terminated by the Board at any time prior to a change in control.

Stock option and restricted stock grant agreements with award recipients provide that those awards “vest,” with

options becoming immediately exercisable, and restrictions on restricted stock lapsing upon a change in control as
described in the grant agreements, but only if an associate is actually or constructively terminated without cause
within two years following a change in control of Kroger (as defined in the grant agreement, and consistent with
KEPP).

None of the NEOs are party to an employment agreement.

Perquisites

Our NEOs receive limited perquisites as the Compensation Committee does not believe that it is necessary for
the attraction or retention of management talent to provide executives a substantial amount of compensation in the
form of perquisites.

Process for Establishing Executive Compensation

The Compensation Committee of the Board has the primary responsibility for establishing the compensation of

our executive officers, including the NEOs, with the exception of the CEO. The Compensation Committee’s role
regarding the CEO’s compensation is to make recommendations to the independent members of the Board; those
members of the Board establish the CEO’s compensation.

The Compensation Committee directly engaged Korn Ferry as a compensation consultant to advise the
Compensation Committee in the design of compensation for executive officers and to advise with respect to the
unique circumstances of the 2022 compensation cycle.

Korn Ferry conducted an annual competitive assessment of executive positions at Kroger for the Compensation

Committee. The assessment is one of several factors, as described above, on which the Compensation Committee
determines compensation. The consultant assessed:

• base salary;

• target performance-based annual cash incentive;

• target annual cash compensation (the sum of salary and annual cash incentive potential);

• long-term incentive compensation, comprised of performance units, stock options and restricted stock; and

• total direct compensation (the sum of target annual cash compensation and long-term compensation).

In addition to the factors identified above, the consultant also reviewed actual payout amounts against the

targeted amounts.

58
The consultant compared these elements against those of other companies in a group of publicly traded

companies selected by the Compensation Committee. For 2022, our peer group consisted of:

Albertsons
AmerisourceBergen
Best Buy
Cardinal Health
Costco Wholesale

CVS Health
Home Depot
Johnson & Johnson
Lowe’s
Procter & Gamble

Sysco
Target
TJX Companies
Walgreens Boots Alliance
Walmart

The make-up of the compensation peer group is reviewed annually and modified as circumstances warrant. In

addition, the Compensation Committee considered supplemental data provided by its independent compensation
consultant from “general industry” companies, a representation the Fortune 40, excluding financial services
companies. This data provided reference points, particularly for senior executive positions where competition for
talent extends beyond the retail sector. The peer group includes a combination of food and drug retailers, other large
retailers based on revenue size, and large consumer-facing companies. Median 2022 revenue for the peer group was
$119.3 billion, compared to our 2022 revenue of $148.3 billion.

Considering the size of Kroger in relation to other peer group companies, the Compensation Committee
believes that salaries paid to our NEOs should be competitively positioned relative to amounts paid by peer group
companies for comparable positions. The Compensation Committee also aims to provide an annual cash incentive
potential to our NEOs around the market median. Actual payouts may be as low as zero if performance does not
meet the baselines established by the Compensation Committee while superior financial performance is rewarded
with compensation falling above the median.

The independent members of the Board have the exclusive authority to determine the amount of the CEO’s
compensation. In setting total compensation, the independent directors consider the median compensation of the
peer group’s CEOs. With respect to the annual incentive plan, the independent directors make two determinations:
(1) the annual cash incentive potential that will be multiplied by the corporate annual cash incentive
payout percentage earned that is applicable to the NEOs and (2) the annual cash incentive amount paid to the CEO
by retaining discretion to reduce the annual cash incentive percentage payout the CEO would otherwise receive
under the formulaic plan. The independent directors also retain discretion to determine the form of payout, to
include a portion in equity in place of cash.

The Compensation Committee performs the same function and exercises the same authority as to the other

NEOs. In its annual review of compensation for the NEOs, the Compensation Committee:

• Conducts an annual review of all components of compensation, quantifying total compensation for the NEOs

including a summary for each NEO of salary; performance-based annual cash incentive; and long-term
performance-based equity comprised of performance units, stock options and restricted stock.

• Considers internal pay equity at Kroger to ensure that the CEO is not compensated disproportionately. The
Compensation Committee has determined that the compensation of the CEO and that of the other NEOs
bears a reasonable relationship to the compensation levels of other executive positions at Kroger taking into
consideration performance and differences in responsibilities.

• Reviews a report from the Compensation Committee’s compensation consultant reflecting a comprehensive
review of each element of pay, both annual and long-term and comparing NEO compensation with that of
other companies, including both our peer group of competitors and a larger general industry group, to ensure
that the Compensation Committee’s objectives of competitiveness are met.

• Takes into account a recommendation from the CEO for salary, annual cash incentive potential and long-

term compensation awards for each of the senior officers including the other NEOs. The CEO’s
recommendation takes into consideration the objectives established by and the reports received by the
Compensation Committee as well as his assessment of individual job performance and contribution to our
management team.

The Compensation Committee does not make use of a formula, but both qualitatively and quantitatively

considers each of the factors identified above in setting compensation.

Stock Ownership Guidelines

To more closely align the interests of our officers and directors with your interests as shareholders, the Board

has adopted stock ownership guidelines. These guidelines require independent directors, executive officers, and
other key executives to acquire and hold a minimum dollar value of Kroger common shares as set forth below:

Position

Chief Executive Officer

President and Chief Operating Officer

Executive Vice Presidents and Senior Vice Presidents

5 times base salary

4 times base salary

3 times base salary

Multiple

Independent Directors

5 times annual base cash retainer

All covered individuals are expected to achieve the target level within five years of appointment to their
positions. Until the requirements are met, covered individuals, including the NEOs, must hold 100% of common
shares issued pursuant to performance units earned, shares received upon the exercise of stock options and upon the
vesting of restricted stock, except those necessary to pay the exercise price of the options and/or applicable taxes,
and must retain all Kroger common shares unless the disposition is approved in advance by the CEO, or by the
Board or Compensation Committee for the CEO.

Executive Compensation Recoupment Policy (Clawback)

Under the 2019 Amended and Restated Long-Term Incentive Plan (the “2019 Plan”), unless an award

agreement provides otherwise, if a participant’s employment or service is terminated for cause, or if after
termination the Compensation Committee determines either that (i) prior to termination, the participant engaged in
an act or omission that would have warranted termination for cause or (ii) after termination, the participant violates
any continuing obligation or duty of the participant with respect to Kroger, any gain realized by the participant from
the exercise, vesting or payment of any award may be cancelled, forfeited or recouped in the sole discretion of the
Committee. Under the 2019 Plan, any gain realized by the participant from the exercise, vesting or payment of any
award may also be recouped if, within one year after such exercise, vesting or payment, (i) a participant is
terminated for cause, (ii) the Compensation Committee determines that the participant is subject to recoupment
pursuant to any Kroger policy, or (iii) after a participant’s termination for any reason, the Compensation Committee
determines either that (1) prior to termination the participant engaged in an act or omission that would have
warranted termination for cause, or (2) after termination the participant violates any continuing obligation or duty of
the participant with respect to Kroger. Unless otherwise defined under 2019 Plan award agreement, “cause” has the
meaning as defined in The Kroger Co. Employee Protection Plan, as amended from time to time.

Additionally, if an award based on financial statements that are subsequently restated in a way that would
decrease the value of such award, the participant will, to the extent not otherwise prohibited by law, upon the written
request of Kroger, forfeit and repay to Kroger the difference between what was received and what should have been
received based on the accounting restatement, which will be repaid in accordance with any applicable Kroger policy
or applicable law, including Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and
any rules or regulations adopted thereunder. We intend our policy to comply with the NYSE listing rules regarding
recoupment of incentive compensation when those rules become effective. Kroger also has a recoupment policy,
which provides that if a material error of facts results in the payment to an executive officer at the level of Group
Vice President or higher of an annual cash incentive or a long-term cash incentive in an amount higher than
otherwise would have been paid, as determined by the Compensation Committee, then the officer, upon demand
from the Compensation Committee, will reimburse Kroger for the amounts that would not have been paid if the
error had not occurred. This recoupment policy applies to those amounts paid by Kroger within 36 months prior to
the detection and public disclosure of the error. In enforcing the policy, the Compensation Committee will take into
consideration all factors that it deems appropriate, including:

• the materiality of the amount of payment involved;

• 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.

Prohibition on Hedging and Pledging

The Board adopted a policy prohibiting Kroger directors and executive officers from engaging, directly or

indirectly, in the pledging of, hedging transactions in, or short sales of, Kroger securities.

Section 162(m) of the Internal Revenue Code

Prior to the effective date of the Tax Cuts and Jobs Act of 2017, Section 162(m) of the Code generally

disallowed a federal tax deduction to public companies for compensation greater than $1 million paid in any tax year
to specified executive officers unless the compensation was “qualified performance-based compensation” under that
section. Pursuant to the Tax Cuts and Jobs Act of 2017, the exception for “qualified performance-based
compensation” under Section 162(m) of the Code was eliminated with respect to all remuneration in excess of
$1 million other than qualified performance-based compensation pursuant to a written binding contract in effect on
November 2, 2017 or earlier which was not modified in any material respect on or after such date (the legislation
providing for such transition rule, the “Transition Rule”).

As a result, performance-based compensation that the Compensation Committee structured with the intent of

qualifying as performance-based compensation under Section 162(m) prior to the change in the law may or may not
be fully deductible, depending on the application of the Transition Rule. In addition, compensation arrangements
structured following the change in law will be subject to the Section 162(m) limitation (without any exception for
performance-based compensation). Consistent with its past practice, the Committee will continue to retain flexibility
to design compensation programs that are in the best long-term interests of the Company and our shareholders, with
deductibility of compensation being one of a variety of considerations taken into account.

Compensation Committee Report

The Compensation Committee has reviewed and discussed with Kroger’s management the Compensation
Discussion and Analysis contained in this proxy statement. Based on its review and discussions with management,
the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be
included in Kroger’s proxy statement and incorporated by reference into its Annual Report on Form 10-K.

Compensation Committee:
Clyde R. Moore, Chair
Amanda Sourry
Mark Sutton

61Executive Compensation Tables

Summary Compensation Table

The following table and footnotes provide information regarding the compensation of the NEOs for the

fiscal years presented.

Name and Principal
Position

Fiscal
Year

Salary
($)

Bonus
($)

Stock
Awards
($)(1)

Option
Awards
($)(2)

Non-Equity
Incentive Plan
Compensation
($)(3)

W. Rodney McMullen
Chairman and Chief
Executive Officer

Gary Millerchip
Senior Vice President
and Chief Financial Officer

Stuart W. Aitken
Senior Vice President and
Chief Merchandising &
Marketing Officer

Yael Cosset
Senior Vice President
and Chief Information Officer

Timothy A. Massa
Senior Vice President
and Chief People Officer

2022
2021
2020

2022
2021

2020

2022
2021
2020

2022

2021

1,388,495
1,351,358
1,341,060

809,879
726,815
601,050

915,632
878,387

769,231

312,426

10,367,639
8,800,023
10,900,041

2,299,636
2,199,162
2,101,581

3,358,792
2,800,022
2,498,469

749,879
699,735
540,409

3,346,838
2,800,022

749,879
699,735

4,130,769
4,647,750
4,888,929

1,269,231
1,498,006
1,092,959

1,269,231
1,527,013

849,484

323,077

3,010,038

540,409

1,586,363

809,879
739,685
689,567

839,113

780,914

3,358,792
2,800,022
2,998,473

749,879
699,735
540,409

1,269,231
1,498,006
1,338,239

312,426

2,320,484

499,919

1,133,654

1,760,033

439,836

1,194,114

Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(4)

All Other
Compensation
($)(5)

Total
($)

175,750
159,640
1,795,455

847,554
1,010,797
577,277

19,209,843
18,168,730
22,373,574

265,342
261,842
122,377

277,694
300,214

177,900

267,548
265,342
121,168

208,794

210,350

6,453,123
5,986,420
5,167,690

6,559,274
6,205,371

6,487,271

6,455,329
6,002,790
6,000,282

5,001,964

4,385,247

(1) Amounts reflect the grant date fair value of restricted stock and performance units granted each fiscal year, as
computed in accordance with FASB ASC Topic 718. The following table reflects the value of each type of
award granted to the NEOs in 2022:

Name

Restricted Stock

Performance Units

Mr. McMullen

Mr. Millerchip

Mr. Aitken

Mr. Cosset

Mr. Massa

$4,617,648

$1,483,785

$1,471,831

$1,483,785

$1,070,498

$5,749,991

$1,875,007

$1,875,007
$1,249,986

The Restricted Stock values include the annual grant of restricted stock in 2022 as well as the grant in 2023,
which was granted with respect to a portion of the 2022 Annual Incentive Plan as further described in the
Compensation Discussion and Analysis and in the Grants of Plan Based Awards Table.
The grant date fair value of the performance units reflected in the stock awards column and in the table above is
computed based on the probable outcome of the performance conditions as of the grant date. This amount is
consistent with the estimate of aggregate compensation cost to be recognized by the Company over the three-
year performance period of the award determined as of the grant date under FASB ASC Topic 718, excluding
the effect of estimated forfeitures. The assumptions used in calculating the valuations are set forth in Note 11 to
the consolidated financial statements in Kroger’s Form 10-K for fiscal year 2022.

(cid:3)

Assuming that the highest level of performance conditions is achieved, the aggregate fair value of the 2022
performance unit awards at the grant date is as follows:

Name

Mr. McMullen
Mr. Millerchip
Mr. Aitken
Mr. Cosset
Mr. Massa

Value of Performance Units
Assuming Maximum Performance
$10,781,233
$3,515,638
$3,515,638
$3,515,638
$2,343,724

(2) These amounts represent the aggregate grant date fair value of option awards computed in accordance with

FASB ASC Topic 718. The assumptions used in calculating the valuations are set forth in Note 11 to the
consolidated financial statements in Kroger’s Form 10-K for fiscal year 2022.

(3) Non-equity incentive plan compensation earned for 2022 consists of amounts earned under the 2022 Annual
Incentive Plan. The 2022 Annual Incentive Plan was calculated at 192.40.% and was applied to each NEO’s
annual incentive plan target, except for Mr. Aitken. Mr. Aitken’s payout of 190.98% of his annual incentive
target was calculated based on the Annual Incentive Plan metrics and the merchandising team metrics. For the
2022 Annual Incentive Plan, the payout consisted of 150% cash and the remainder in restricted shares which
are included in footnote (1) above. See “2022 Annual Incentive Plan Results” in the Compensation Discussion
and Analysis for more information on this plan.

(4) The amount reported consists of preferential earnings on nonqualified deferred compensation, which only

applies to Mr. McMullen. The remainder of the NEOs do not participate in a defined benefit pension plan or in
a nonqualified deferred compensation plan.

Change in Pension Value. The actuarial present value of Mr. McMullen’s accumulated pension benefits

decreased by $4,395,890. This change in value of accumulated pension benefits is not included in the Summary
Compensation Table because the value decreased. The value of accrued benefits decreased primarily due to the
change in value of the benefit due to aging. The Company froze the compensation and service periods used to
calculate pension benefits for active associates who participate in the affected pension plans, including
Mr. McMullen’s, as of December 31, 2019. Beginning January 1, 2020, the affected active associates will no
longer accrue additional benefits for future service and eligible compensation received under these plans.
Please see the 2022 Pension Benefits section for further information regarding the assumptions used in
calculating pension benefits.

Preferential Earnings on Nonqualified Deferred Compensation. Mr. McMullen participates in The Kroger Co.
Executive Deferred Compensation Plan (the “Deferred Compensation Plan”) and received preferential earnings
of $175,750. Under the plan, deferred compensation earns interest at a rate representing Kroger’s cost of ten-
year debt, as determined by the CFO, and approved by the Compensation Committee prior to the beginning of
each deferral year. For each participant, a separate deferral account is created each year and the interest rate
established for that year is applied to that deferral account until the deferred compensation is paid out. If the
interest rate established by Kroger for a particular year exceeds 120% of the applicable federal long-term
interest rate that corresponds most closely to the plan rate, the amount by which the plan rate exceeds 120% of
the corresponding federal rate is deemed to be above-market or preferential. For each of the deferral accounts
in which the plan rate is deemed to be above-market, Kroger calculates the amount by which the actual annual
earnings on the account exceed what the annual earnings would have been if the account earned interest at
120% of the corresponding federal rate, and discloses those amounts as preferential earnings.

(5) Amounts reported in the “All Other Compensation” column for 2022 include Company contributions to defined
contribution retirement plans, dividend equivalents paid on earned performance units, and dividends paid on
unvested restricted stock. In 2022, the total amount of perquisites and personal benefits for each of the NEOs
was less than $10,000. The following table identifies the value of each element of All Other Compensation:

Name

Mr. McMullen

Mr. Millerchip

Mr. Aitken

Mr. Cosset

Mr. Massa

Payment of
Dividend
Equivalents
on Earned
Performance
Units

405,648

104,310

77,267

Dividends
Paid on
Unvested
Restricted
Stock

246,406

71,575

74,196

72,831

45,604

Retirement Plan
Contributions(a)

195,500

89,457

99,188

90,407

85,923

(a) Retirement plan contributions. The Company makes automatic and matching contributions to NEOs’

accounts under the applicable defined contribution plan on the same terms and using the same formulas as
other participating associates. The Company also makes contributions to NEOs’ accounts under the
applicable defined contribution plan restoration plan, which is intended to make up the shortfall in
retirement benefits caused by the limitations on benefits to highly compensated individuals under the
defined contribution plans in accordance with the Code.

2022 Grants of Plan-Based Awards

The following table provides information about equity and non-equity incentive awards granted to the NEOs in

2022.

Estimated Possible Payouts
Under Non-Equity
Incentive Plan Awards

Estimated Future
Payouts Under
Equity Incentive
Plan Awards

Name

Grant
Date

Target
($)(1)

Maximum
($)(1)

Target
(#)(2)

Maximum
(#)(2)

W. Rodney
McMullen

2,800,000

5,880,000

All Other
Stock
Awards:
Number
of
Shares of
Stock or
Units
(#)(3)

All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(4)

Exercise
or Base
Price of
Option
Awards
($/Sh)

Gary Millerchip

Stuart W. Aitken

Yael Cosset

Timothy A.
Massa

3/10/2022
3/10/2022
3/10/2022
3/9/2023

850,000

1,785,000

850,000

1,785,000

850,000

1,785,000

775,000

1,627,500

100,718

188,846

32,843

61,581

32,843

61,581

32,843

61,581

21,895

41,053

60,431

24,712

19,706

7,593

19,706

7,340

19,706

7,593

13,138

6,782

142,858

$57.09

46,584

$57.09

46,584

$57.09

46,584

$57.09

31,056

$57.09

Grant
Date Fair
Value of
Stock
and
Option
Awards

3,450,006
2,299,636
5,749,991
1,167,642

1,125,016
749,879
1,875,007
358,769

1,125,016
749,879
1,875,007
346,815

1,125,016
749,879
1,875,007
358,769

750,048
499,919
1,249,986
320,450

(1) These amounts relate to the 2022 performance-based annual incentive plan. The amount listed under “Target”
represents the annual incentive potential of the NEO. By the terms of the plan, payouts are limited to no more
than 210% of a participant’s annual incentive potential; accordingly, the amount listed under “Maximum” is
210% of that officer’s annual incentive potential amount. The amounts actually earned under this plan were
paid out in March 2023; are described in the Compensation Discussion and Analysis; and are included in the
Summary Compensation Table for 2022 in the “Non-Equity Incentive Plan Compensation” column and the
“Stock Awards” column, and described in footnotes 1 and 3 to that table. See “2022 Annual Cash Incentive
Plan” in CD&A for more information about the program for 2022.

(2) These amounts represent performance units awarded under the 2022 Long-Term Incentive Plan, which covers
performance during fiscal years 2022, 2023, and 2024. The amount listed under “Maximum” represents the
maximum number of common shares that can be earned by the NEO under the award or 187.5% of the target
amount. This amount is consistent with the estimate of aggregate compensation cost to be recognized by the
Company over the three-year performance period of the award determined as of the grant date under FASB
ASC Topic 718, excluding the effect of estimated forfeitures. The grant date fair value reported in the last
column is based on the probable outcome of the performance conditions as of the grant date. The aggregate
grant date fair value of these awards is included in the Summary Compensation Table for 2022 in the “Stock
Awards” column and described in footnote 1 to that table.

(3) These amounts represent the number of shares of restricted stock granted in 2022 as well as the number of
shares of restricted stock granted in 2023 with respect to a portion of the 2022 Annual Incentive Plan. 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 2022 in the “Stock Awards” column and described in footnote 1 to that table.

(4) These amounts represent the number of stock options granted in 2022. 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 2022 in the “Option Awards”
column and described in footnote 2 to that table.

The Compensation Committee, and the independent members of the Board in the case of the CEO, established
the incentive potential amounts for the performance-based annual incentive awards (shown in this table as “Target”)
and the number of performance units awarded for the long-term incentive awards (shown in this table as “Target”).
Amounts are payable to the extent that Kroger’s actual performance meets specific performance metrics established
by the Compensation Committee at the beginning of the performance period. There are no guaranteed or minimum
payouts; if none of the performance metrics are achieved, then none of the award is earned and no payout is made.
As described in the CD&A, actual earnings under the performance-based annual incentive plan may exceed the
target amount if the Company’s performance exceeds the performance goals, but are limited to 210% of the target
amount. The potential values for performance units awarded under the 2022-2024 Long-Term Incentive Plan are
more particularly described in the CD&A.

The annual restricted stock and nonqualified stock options awards granted to the NEOs vest in equal amounts
on each of the first four anniversaries of the grant date, so long as the officer remains a Kroger associate, except for
the restricted stock granted in March 2023 with respect to a portion of the 2022 Annual Incentive Plan which vests
on the first anniversary of the grant date. Any dividends declared on Kroger common shares are payable on unvested
restricted stock.

2022 Outstanding Equity Awards at Fiscal Year-End

The following table provides information about outstanding equity-based incentive compensation awards for

the NEOs as of the end of 2022. 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 $45.05 on January 27, 2023, the last trading day of fiscal 2022.

Option Awards

Stock Awards

Name

W. Rodney McMullen

Gary Millerchip

Stuart W. Aitken

Yael Cosset

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
($)

194,880

300,000

235,415

358,091

573,127

349,293

261,194

164,577

65,243

9,600

13,992

27,972

34,905

30,251

66,335

38,337

42,320

20,759

11,149

33,124

78,773

42,320

20,759

10,611

8,704

29,499

66,335

42,320

20,759

$18.88

$24.67

$38.33

$37.48

$22.92

$28.05

$24.75

$29.12

$34.94

$57.09

$24.67

$38.33

$37.48

$22.92

$28.05

$24.75

$22.08

$29.12

$34.94

$57.09

$22.92

$28.05

$24.75

$29.12

$34.94

$57.09

$28.83

$22.92

$28.05

$24.75

$29.12

$34.94

$57.09

7/15/2023

7/15/2024

7/15/2025

7/13/2026

7/13/2027

7/13/2028

3/14/2029

3/12/2030

3/11/2031

3/10/2032

7/15/2024

7/15/2025

7/13/2026

7/13/2027

7/13/2028

3/14/2029

7/15/2029

3/12/2030

3/11/2031

3/10/2032

7/13/2027

7/13/2028

3/14/2029

3/12/2030

3/11/2031

3/10/2032

3/9/2027

7/13/2027

7/13/2028

3/14/2029

3/12/2030

3/11/2031

3/10/2032

31,819(6)
54,087(7)
70,836(8)
60,431(9)

$1,433,446

$2,436,619

$3,191,162

$2,722,417

6,061(6)
5,945(10)
13,908(7)
22,539(8)
19,706(9)

$273,048

$267,822

$626,555

$1,015,382

$887,755

7,576(6)
13,908(7)
5,127(11)
22,539(8)
19,706(9)

$341,299

$626,555

$230,971

$1,015,382

$887,755

6,061(6)
13,908(7)
5,127(11)
22,539(8)
19,706(9)

$273,048

$626,555

$230,971

$1,015,382

$887,755

87,065(1)
164,577(2)
195,730(3)
142,858(4)

16,584(1)
12,779(5)
42,320(2)
62,278(3)
46,584(4)

20,730(1)
42,320(2)
62,278(3)
46,584(4)

16,584(1)
42,320(2)
62,278(3)
46,584(4)

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
($)

118,060(12)
100,718(13)

$5,644,448

$4,841,514

37,565(12)
32,843(13)

$1,795,981

$1,578,763

37,565(12)
32,843(13)

$1,795,981

$1,578,763

37,565(12)
32,843(13)

$1,795,981

$1,578,763

Timothy A. Massa

46,000

29,970

25,889

45,065

40,561

53,898

31,348

13,048

$24.67

$38.33

$37.48

$22.92

$28.05

$24.75

$29.12

$34.94

$57.09

7/15/2024

7/15/2025

7/13/2026

7/13/2027

7/13/2028

3/14/2029

3/12/2030

3/11/2031

3/10/2032

12,438(1)
31,348(2)
39,147(3)
31,056(4)

4,546(6)
10,303(7)
14,168(8)
13,138(9)

$204,797

$464,150

$638,268

$591,867

23,612(12)
21,895(13)

$1,128,891

$1,052,493

(1) Stock options vest on 3/14/2023.
(2) Stock options vest in equal amounts on 3/12/2023 and 3/12/2024.
(3) Stock options vest in equal amounts on 3/11/2023, 3/11/2024, and 3/11/2025.
(4) Stock options vest in equal amounts on 3/10/2023, 3/10/2024, 3/10/2025, and 3/10/2026.
(5) Stock options vest on 7/15/2023.
(6) Restricted stock vests on 3/14/2023.
(7) Restricted stock vests in equal amounts on 3/12/2023 and 3/12/2024.
(8) Restricted stock vests in equal amounts on 3/11/2023, 3/11/2024, and 3/11/2025.
(9) Restricted stock vests in equal amounts on 3/10/2023, 3/10/2024, 3/10/2025, and 3/10/2026.
(10) Restricted stock vests on 7/15/2023.
(11) Restricted stock vests on 9/17/2023.
(12) Performance units granted under the 2021 long-term incentive plan are earned as of the last day of fiscal 2023,
to the extent performance conditions are achieved. Because the awards earned are not currently determinable,
in accordance with SEC rules, the number of units and the corresponding market value reflect a representative
amount based on performance through 2022, including cash payments equal to projected dividend equivalent
payments.

(13) Performance units granted under the 2022 long-term incentive plan are earned as of the last day of fiscal 2024,
to the extent performance conditions are achieved. Because the awards earned are not currently determinable,
in accordance with SEC rules, the number of units and the corresponding market value reflect a representative
amount based on performance in 2022, including cash payments equal to projected dividend equivalent
payments.

2022 Option Exercises and Stock Vested

The following table provides information regarding 2022 stock options exercised, restricted stock vested, and

common shares issued pursuant to performance units earned under long-term incentive plans.

Option Awards(1)

Stock Awards(2)

Number of
Shares
Acquired on
Exercise
(#)

194,880

—

101,747

73,566

16,000

Value
Realized on
Exercise
($)

8,661,442

—

2,768,087

2,079,679

627,275

Number
of Shares
Acquired on
Vesting
(#)

Value
Realized
on
Vesting
($)

376,876

19,160,902

87,809

90,240

90,012

65,961

4,438,529

4,566,794

4,550,119

3,342,585

Name

W. Rodney McMullen

Gary Millerchip

Stuart W. Aitken

Yael Cosset

Timothy A. Massa

(1) Stock options have a ten-year life and expire if not exercised within that ten-year period. The value

realized on exercise is the difference between the exercise price of the option and the closing price of
Kroger’s common shares on the exercise date.

(2) The Stock Awards columns include vested restricted stock and earned performance units, as follows:

Name

Vested Restricted Stock

Earned Performance Units

Number of
Shares

Value
Realized

Number of
Shares

Value
Realized

W. Rodney McMullen

207,856

$11,174,707

169,020

$7,986,195

Gary Millerchip

Stuart W. Aitken

Yael Cosset

Timothy A. Massa

44,346

46,777

46,549

33,766

$2,384,902

$2,513,167

$2,496,492

$1,821,371

43,463

32,195

$2,053,627

$1,521,214

Restricted stock. The table includes the number of shares acquired upon vesting of restricted stock and the
value realized on the vesting of restricted stock, based on the closing price of Kroger common shares on the vesting
date.

Performance Units. Participants in the 2020-2022 Long-Term Incentive Plan were awarded performance units
that were earned based on performance criteria established by the Compensation Committee as described in “2020-
2022 Long-Term Incentive Plan — Results and Payout” in the CD&A. Actual payouts were based on the level of
performance achieved and were paid in common shares. The number of common shares issued, and the value
realized based on the closing price of Kroger common shares of $47.25 on March 9, 2023, the date of deemed
delivery of the shares, are reflected in the table above.

2022 Pension Benefits

The following table provides information regarding pension benefits for the NEOs as of the last day of fiscal

2022. Only Mr. McMullen participates in a pension plan.

Name

W. Rodney McMullen

Gary Millerchip

Stuart W. Aitken

Yael Cosset

Timothy A. Massa

Number of
Years Credited
Service
(#)(1)

Present Value of
Accumulated
Benefit
($)(2)

Payments during
Last fiscal year
($)

—

1,610,951

18,009,437

—

Plan Name

Pension Plan

Excess Plan

Pension Plan

Excess Plan

Pension Plan

Excess Plan

Pension Plan

Excess Plan

Pension Plan

Excess Plan

(1) In 2018, the Company froze the service periods used to calculate pension benefits and thus, Mr. McMullen’s

number of years of credited service is less than his actual 44 years of service.

(2) The discount rate used to determine the present values was 4.89% for The Kroger Consolidated Retirement
Benefit Plan Spin Off (the “Pension Plan”) and 4.92% for The Kroger Co. Consolidated Retirement Excess
Benefit Plan (the “Excess Plan”), which are the same rates used at the measurement date for financial reporting
purposes. Additional assumptions used in calculating the present values are set forth in Note 14 to the
consolidated financial statements in Kroger’s 10-K for fiscal year 2022.

Pension Plan and Excess Plan

In 2022, Mr. McMullen was a participant in the Pension Plan, which is a qualified defined benefit pension plan.
Mr. McMullen also participates in the Excess Plan, which is a nonqualified deferred compensation plan as defined in
Section 409A of the Code. The purpose of the Excess Plan is to make up the shortfall in retirement benefits caused
by the limitations on benefits to highly compensated individuals under the qualified defined benefit pension plans in
accordance with the Code.

Although participants generally receive credited service beginning at age 21, certain participants in the Pension

Plan and the Excess Plan who commenced employment prior to 1986, including Mr. McMullen, began to accrue
credited service after attaining age 25 and one year of service. The Pension Plan and the Excess Plan generally
determine accrued benefits using a cash balance formula but retain benefit formulas applicable under prior plans for
certain “grandfathered participants” who were employed by Kroger on December 31, 2000. Mr. McMullen is
eligible for these grandfathered benefits.

Grandfathered Participants

Benefits for grandfathered participants are determined using formulas applicable under prior plans, including
the Kroger formula covering service to The Kroger Co. As a “grandfathered participant,” Mr. McMullen will receive
benefits under the Pension Plan and the Excess Plan, determined as follows:

• 11∕2% times years of credited service multiplied by the average of the highest five years of total earnings

(base salary and annual cash incentive) during the last ten calendar years of employment, reduced by 11∕4%
times years of credited service multiplied by the primary social security benefit;

• normal retirement age is 65; and

• unreduced benefits are payable beginning at age 62.

In 2018, we announced changes to these company-sponsored pension plans. The Company froze the compensation
and service periods used to calculate pension benefits for active associates who participate in the affected pension
plans, including the NEO participants, as of December 31, 2019. Beginning January 1, 2020, the affected active
associates no longer accrue additional benefits for future service and eligible compensation received under these
plans.

2022 Nonqualified Deferred Compensation

The following table provides information on nonqualified deferred compensation for the NEOs for 2022. Only

Mr. McMullen participates in a nonqualified deferred compensation plan.

Name

Executive Contributions
in Last FY

Aggregate Earnings
in Last FY(1)

Aggregate Balance
at Last FYE(2)

W. Rodney McMullen

Gary Millerchip

Stuart W. Aitken

Yael Cosset

Timothy A. Massa

—

$895,310

$14,106,653

—

(1) These amounts include the aggregate earnings on all accounts for each NEO, including any above-market or
preferential earnings. The following amounts earned in 2022 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 2022: Mr. McMullen, $175,750.

(2) The following amounts in the Aggregate Balance column were reported in the Summary Compensation Tables

covering fiscal years 2006 – 2021: Mr. McMullen, $4,012,771.

Executive Deferred Compensation Plan

Mr. McMullen participates in the Deferred Compensation Plan, which is a nonqualified deferred compensation

plan. Participants may elect to defer up to 100% of the amount of their salary that exceeds the sum of the FICA
wage base and pre-tax insurance and other Code Section 125 plan deductions, as well as up to 100% of their annual
and long-term cash incentive compensation. Kroger does not match any deferral or provide other contributions.
Deferral account amounts are credited with interest at the rate representing Kroger’s cost of ten-year debt as
determined by Kroger’s CFO and approved by the Compensation Committee prior to the beginning of each deferral
year. The interest rate established for deferral amounts for each deferral year will be applied to those deferral

amounts for all subsequent years until the deferred compensation is paid out. Participants can elect to receive lump
sum distributions or quarterly installments for periods up to ten years. Participants also can elect between lump sum
distributions and quarterly installments to be received by designated beneficiaries if the participant dies before
distribution of deferred compensation is completed.

Participants may not withdraw amounts from their accounts until they leave Kroger, except that Kroger has

discretion to approve an early distribution to a participant upon the occurrence of an unforeseen emergency.
Participants who are “specified associates” under Section 409A of the Code, which includes the NEOs, may not
receive a post-termination distribution for at least six months following separation. If the associate dies prior to or
during the distribution period, the remainder of the account will be distributed to his or her designated beneficiary in
lump sum or quarterly installments, according to the participant’s prior election.

Potential Payments upon Termination or Change in Control

Kroger does not have employment agreements that provide for payments to the NEOs in connection with a

termination of employment or a change in control of Kroger. However, KEPP and award agreements for stock
options, restricted stock and performance units provide for certain payments and benefits to participants, including
the NEOs, in the event of a termination of employment or a change in control of Kroger, as defined in the applicable
plan or agreement. Our pension plans and nonqualified deferred compensation plan also provide for certain
payments and benefits to participants in the event of a termination of employment, as described above in the 2022
Pension Benefits section and the 2022 Nonqualified Deferred Compensation section, respectively.

The Kroger Co. Employee Protection Plan

KEPP applies to all management associates who are classified as exempt under the federal Fair Labor
Standards Act and to certain administrative or technical support personnel who are not covered by a collective
bargaining agreement, with at least one year of service, including the NEOs. KEPP provides severance benefits
when a participant’s employment is terminated actually or constructively within two years following a change in
control of Kroger, as defined in KEPP. The actual amount of the severance benefit is dependent on pay level
and years of service. Exempt associates, including the NEOs, are eligible for the following benefits:

• a lump sum severance payment equal to up to 24 months of the participant’s annual base salary and target

annual incentive potential;

• a lump sum payment equal to the participant’s accrued and unpaid vacation, including banked vacation;

• continued medical and dental benefits for up to 24 months and continued group term life insurance coverage

for up to six months; and

• up to $10,000 as reimbursement for eligible outplacement expenses.

In the event that any payments or benefits received or to be received by an eligible associate in connection with

a change in control or termination of employment (whether pursuant to KEPP or any other plan, arrangement or
agreement with Kroger or any person whose actions result in a change in control) would constitute parachute
payments within the meaning of Section 280G of the Code and would be subject to the excise tax under
Section 4999 of the Code, then such payments and benefits will either be (i) paid in full or (ii) reduced to the
minimum extent necessary to ensure that no portion of such payments or benefits will be subject to the excise tax,
whichever results in the eligible associate receiving the greatest aggregate amount on an after-tax basis.

70
Long-Term Incentive Awards

The following table describes the treatment of long-term incentive awards following a termination of
employment or change in control of Kroger, as defined in the applicable agreement. In each case, the continued
vesting, exercisability or eligibility for the incentive awards will end if the participant provides services to a
competitor of Kroger.

Triggering Event
Involuntary Termination

Voluntary
Termination/Retirement
 Prior to minimum age and
five years of service(1)

Voluntary Termination/
Retirement
 After minimum

age and five years of service(1)

Death

Disability

Change in Control(3)
 For awards prior to 2019

Change in Control(3)
 For awards in March 2019

and thereafter

Stock Options

Forfeit all unvested options.
Previously vested options
remain exercisable for the
shorter of one year after
termination or the remainder of
the original 10-year term
Forfeit all unvested options.
Previously vested options
remain exercisable for the
shorter of one year after
termination or the remainder of
the original 10-year term
Unvested options held greater
than one year continue vesting
on the original schedule. All
options are exercisable for
remainder of the original 10-
year term
Unvested options are
immediately vested. All options
are exercisable for the
remainder of the original 10-
year term

Unvested options are
immediately vested. All options
are exercisable for remainder of
the original 10-year term
Unvested options are
immediately vested and
exercisable
Unvested options only vest and
become exercisable upon an
actual or constructive
termination of employment
within two years following a
change in control

Restricted Stock
Forfeit all unvested shares

Performance Units

Forfeit all rights to units for which
the three-year performance period
has not ended

Forfeit all unvested shares

Forfeit all rights to units for which
the three-year performance period
has not ended

Unvested shares held
greater than one year
continue vesting on the
original schedule

Unvested shares
immediately vest

Unvested shares only vest
upon an actual or
constructive termination of
employment within
two years following a
change in control

Pro rata portion(2) of units earned
based on performance results over
the full three-year period

Pro rata portion(2) of units earned
based on performance results
through the end of the fiscal year in
which death occurs. Award will be
paid following the end of such fiscal
year
Pro rata portion(2) of units earned
based on performance results over
the full three-year period

50% of the units granted at the
beginning of the performance period
earned immediately
50% of the units granted at the
beginning of the performance period
earned upon an actual or
constructive termination of
employment within two years
following a change in control

(1) The minimum age requirement is age 62 for stock options and restricted stock and age 55 for

performance units.

(2) The prorated amount is equal to the number of weeks of active employment during the performance period

divided by the total number of weeks in the performance period.

(3) These benefits are payable upon an actual or constructive termination of employment within two years after a

change in control, as defined in the applicable agreements.

Quantification of Payments upon Termination or Change in Control

The following table provides information regarding certain potential payments that would have been made to
the NEOs if the triggering event occurred on the last day of the fiscal year, January 28, 2023, given compensation,
age and service levels as of that date and, where applicable, based on the closing market price per Kroger common
share on the last trading day of the fiscal year ($45.05 on January 27, 2023). Amounts actually received upon the
occurrence of a triggering event will vary based on factors such as the timing during the year of such event, the
market price of Kroger common shares, and the officer’s age, length of service and compensation level.

Name

W. Rodney McMullen
Accrued and Banked
Vacation
Severance
Continued Health and
Welfare Benefits(1)
Stock Options(2)
Restricted Stock(3)
Performance Units(4)
Executive Group Life
Insurance

Gary Millerchip

Accrued and Banked
Vacation
Severance
Continued Health and
Welfare Benefits(1)
Stock Options(2)
Restricted Stock(3)
Performance Units(4)
Executive Group Life
Insurance

Stuart W. Aitken

Accrued and Banked
Vacation
Severance
Continued Health and
Welfare Benefits(1)
Stock Options(2)
Restricted Stock(3)
Performance Units(4)
Executive Group Life
Insurance
Yael Cosset

Accrued and Banked
Vacation
Severance
Continued Health and
Welfare Benefits(1)
Stock Options(2)
Restricted Stock(3)
Performance Units(4)
Executive Group Life
Insurance

Timothy A. Massa

Accrued and Banked
Vacation
Severance
Continued Health and
Welfare Benefits(1)
Stock Options(2)
Restricted Stock(3)
Performance Units(4)
Executive Group Life
Insurance

Involuntary
Termination

Voluntary
Termination/
Retirement

Death

Disability

Change
in Control
without
Termination

Change in
Control with
Termination

$638,750

–

$0
$0
$0

–

$0
$0
$0

–

$0
$0
$0

–

$0
$0
$0

–

$0
$0
$0

–

$0
$0
$5,058,176

–

$0
$0
$0

–

$0
$0
$0

–

$0
$0
$0

–

$6,367,962
$9,783,644
$5,058,176

$2,000,000

–

$1,933,978
$3,070,563
$1,621,380

$1,237,500

–

$1,724,608
$3,101,963
$1,621,380

$1,387,500

–

$1,640,444
$3,033,712
$1,621,380

$1,237,500

–

$6,367,962
$9,783,644
$5,058,176

–

$1,933,978
$3,070,563
$1,621,380

–

$1,724,608
$3,101,963
$1,621,380

–

$1,640,444
$3,033,712
$1,621,380

–

$0
$0
$1,037,944

–

$1,147,641
$1,899,083
$1,037,944

$1,275,000

$1,147,641
$1,899,083
$1,037,944

–

$0
$0
$0

–

$0
$0
$0

–

$0
$0
$0

–

$0
$0
$0

–

$0
$0
$0

–

$8,400,000

$49,101

$6,367,962
$9,783,644
$5,814,401

–

$3,210,432

$57,269

$1,933,978
$3,070,563
$1,867,976

–

$3,550,008

$59,895

$1,724,608
$3,101,963
$1,867,976

–

$3,350,016

$44,303

$1,640,444
$3,033,712
$1,867,976

–

$3,250,008

$48,839

$1,147,641
$1,899,083
$1,202,339

–

(1) Represents the aggregate present value of continued participation in the Company’s medical, dental and

executive term life insurance plans, based on the premiums payable by the Company during the eligible period.
The eligible period for continued medical and dental benefits is based on the level and length of service, which
is 24 months for all NEOs. The eligible period for continued executive term life insurance coverage is
six months for the NEOs. The amounts reported may ultimately be lower if the NEO is no longer eligible to
receive benefits, which could occur upon obtaining other employment and becoming eligible for substantially
equivalent benefits through the new employer.

(2) Amounts reported in the “Death,” “Disability,” and “Change in Control” columns represent the intrinsic value
of the accelerated vesting of unvested stock options, calculated as the difference between the exercise price of
the stock option and the closing price per Kroger common share on January 27, 2023. A value of $0 is
attributed to stock options with an exercise price greater than the market price on the last day of the fiscal year.
In accordance with SEC rules, no amount is reported in the “Voluntary Termination/Retirement” column
because vesting is not accelerated, but the options may continue to vest on the original schedule if the
conditions described above are met.

(3) Amounts reported in the “Death,” “Disability,” and “Change in Control” columns represent the aggregate value

of the accelerated vesting of unvested restricted stock. In accordance with SEC rules, no amount is reported in
the “Voluntary Termination/Retirement” column because vesting is not accelerated, but the restricted stock
may continue to vest on the original schedule if the conditions described above are met.

(4) Amounts reported in the “Voluntary Termination/Retirement,” “Death” and “Disability” columns represent the
aggregate value of the performance units granted in 2021 and 2022, based on performance through the last day
of fiscal 2022 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 2021 and 2022. Awards under the 2020 Long-Term Incentive Plan were earned as of the last day of
2022 so each NEO age 55 or over was entitled to receive (regardless of the triggering event) the amount
actually earned, which is reported in the Stock Awards column of the 2022 Option Exercises and Stock Vested
Table.

Pay Versus Performance

As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item
402(v) of Regulation S-K, we are providing the following information about the relationship between executive
“compensation actually paid,” or “CAP,” and certain financial performance of the Company. For further
information concerning the Company’s pay-for-performance philosophy and how the Company aligns executive
compensation with the Company’s performance, refer to the CD&A beginning on page 46.

PAY VERSUS PERFORMANCE TABLE*

(a)

(b)

(c)

(d)

(e)

Year

Summary
Compensation
Table Total for
PEO
($)1

Compensation
Actually Paid
to PEO
($)2

Average
Summary
Compensation
Table Total for
Non-PEO
NEOs
($)3

Average
Compensation
Actually Paid
to Non-PEO
NEOs
($)4

2022
2021
2020

19,209,843
18,168,730
22,373,574

23,325,794
36,111,316
29,840,084

6,117,423
5,644,957
6,932,437

6,281,085
9,323,327
9,191,933

(f)
Value of Initial Fixed
$100 Investment Based
on5

Total
Share-
holder
Return
($)

178.23
168.66
131.19

Peer
Group
Total
Share-
holder
Return
($)
140.77
145.25
123.01

(g)

(h)

Net
Income
($)6
(in millions)

Adjusted
FIFO
Operating
Profit
($)7
(in millions)

2,244
1,655
2,585

5,079
4,310
4,056

*Totals in the above table might not equal the summation of the columns due to rounding amounts to the nearest dollar.

1. During fiscal 2020, 2021, and 2022, Mr. McMullen served as our Principal Executive Officer (“PEO”).
The dollar amounts reported in column (b) are the amounts of total compensation reported for each
corresponding year in the Total column of the Summary Compensation Table (“SCT”).

2. The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr.

McMullen as computed in accordance with Item 402(v) of Regulation S-K. The amounts do not reflect the
actual amount of compensation earned by or paid to Mr. McMullen during the applicable year. In
accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made
to Mr. McMullen’s total compensation for each year to determine the CAP:

PEO SCT Total to CAP Reconciliation

Reported
Summary
Compensation
Table for PEO
($)

Reported
Summary
Compensation
Table Value of
Equity
Awards(a)
($)

Equity Award
Adjustments(b)
($)

19,209,843
18,168,730
22,373,574

12,667,275
10,999,185
13,001,622

16,783,226
28,941,771
22,126,697

Reported
Change in the
APV of
Pension
Benefits in
Summary
Compensation
Table (c)
($)
-
-
1,658,565

Year

2022
2021
2020

Plus: Pension
Benefit
Adjustments(b)(c)
($)

Compensation
Actually Paid to
PEO
($)

-
-
-

23,325,794
36,111,316
29,840,084

a) The amounts included in this column are the amounts reported in “Stock Awards” and “Option
Awards” column of the SCT for each applicable year and are subtracted from the Reported
Summary Compensation Table for PEO.

b) The equity award and pension benefit adjustments for each applicable year were calculated in

accordance with the methodology required by Item 402(v) of Regulation S-K as follow: the equity
award adjustments for each applicable year include the addition (or subtraction, as applicable) of
the following: (i) the year-end fair value of any equity awards granted in the applicable year that
are outstanding and unvested as of the end of the year; (ii) the amount equal to the change as of the
end of the applicable year (from the end of the prior fiscal year) in the fair value of any awards
granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii)
for awards that are granted and vest in the same applicable year, the fair value as of the vesting
date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the
change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards
granted in prior years that are determined to fail to meet the applicable vesting conditions during
the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal
year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in
the applicable year prior to the vesting date that are not otherwise reflected in the fair value of
such award or included in any other component of total compensation for the applicable year. The
valuation assumptions used to calculate fair values did not materially differ from those disclosed
at the time of grant. The amounts deducted or added in calculating the equity award adjustments
for the PEO are provided in the table below:

PEO Equity Award Adjustments

Year End Fair Value
of Awards Granted in
the Year
($)
9,214,146
17,014,361
12,561,917

YoY Change in Fair
Value of Outstanding
& Unvested Awards
($)
(855,562)
2,769,331
6,145,551

Year
2022
2021
2020

Fair Value as of
Vesting Date of
Awards Granted
and Vested in the
Year
($)
-
-
-

Year over Year
Change in Fair Value
of Awards Granted
in Prior Years that
Vested in the Year
($)
8,424,642
9,158,079
3,419,229

Total Equity Award
Adjustments
($)
16,783,226
28,941,771
22,126,697

c) The amounts included in this column are the amounts reported in “Change in Pension and

Nonqualifed Deferred Compensation” of the SCT for each applicable year. Total Pension Benefit
Adjustments are equal to the Pension Service Costs incurred during the relevant period. No Prior
Service Costs were incurred as no modifications were made to the pension plan during the relevant
period.

3. The dollar amounts reported in column (d) represent the average of the amounts reported for our non-PEO
NEOs as a group in the Total column of the SCT in each applicable year. The names of each of these
NEOs included for purposes of calculating the average amounts in each applicable year are as follows: (i)

for Fiscal 2022 and 2021, Mr. Millerchip, Mr. Aitken, Mr. Cosset, and Mr. Massa; and (ii) for Fiscal 2020,
Mr. Millerchip, Mr. Aitken, Mr. Cosset, and Mr. Donnelly.

4. The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to
the Non-PEO NEOs as a group as identified in footnote 3 above, as computed in accordance with Item
402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation
earned by or paid to these NEOs as a group during the applicable year. In accordance with the requirements
of Item 402(v) of Regulation S-K, the following adjustments were made to the average total compensation
for these NEOs as a group for each year to determine the CAP using the same methodology as described in
footnote 2:

Average Non-PEO NEOs Summary Compensation Table Total to CAP Reconciliation

Average
Reported
Summary
Compensation
Table for Non-
PEO NEOs
($)

6,117,423
5,644,957
6,932,437

Average
Reported
Summary
Compensation
Table Value of
Equity Awards
for non-PEO
NEOs
($)
3,783,616
3,174,785
3,807,225

Average Equity
Award
Adjustments(a)
($)

3,947,278
6,853,155
6,291,210

Average
Reported
Change in the
APV of
Pension
Benefits in
SCT(b)
($)

-
-
224,490

Year

2022
2021
2020

Plus: Average
Pension Benefit
Adjustments
($)

Average
Compensation
Actually Paid to
non-PEO NEOs
($)

-
-
-

6,281,085
9,323,327
9,191,933

(a) The amounts deducted or added in calculating the total average equity award adjustments are

provided in the table below:

Equity Award Adjustments for Non-PEO NEOs

Average Year End
Fair Value of
Awards Granted
in the Year
($)
2,606,281
4,424,764
4,033,879

Year over Year
Average Change in
Fair Value of
Outstanding &
Unvested Awards
($)
(259,317)
667,315
1,507,771

Average Fair Value
as of Vesting Date
of Awards Granted
and Vested in the
Year
($)
-
-
-

Year
2022
2021
2020

Year over Year
Average Change in
Fair Value of Awards
Granted in Prior
Years that Vested in
the Year
($)
1,600,314
1,761,076
749,561

Total Average
Equity Award
Adjustment
($)
3,947,278
6,853,155
6,291,210

(b) Total Pension Benefit Adjustments are equal to the Pension Service Costs incurred during the
relevant period. No Prior Service Costs were incurred as no modifications were made to the
pension plan during the relevant period. Only Mr. Donnelly participated in the pension plan.

5. Cumulative TSR is calculated by dividing (a) the sum of the cumulative amount of dividends for the

measurement period, assuming dividend reinvestment, and the difference between the Company’s share
price at the end and the beginning of the measurement period by (b) the Company’s share price at the
beginning of the measurement period. The peer group selected by the Company for purposes of the TSR
benchmarking for the pay versus performance disclosures is the same peer group the Company uses for its
performance graph in the Annual Report on Form 10-K pursuant to Item 201(e) of Regulation S-K. The
Peer Group consists of Albertsons Companies, Inc. (included from June 26, 2020 when it began trading),
Costco Wholesale Corporation, CVS Health Corporation, Koninklijke Ahold Delhaize N.V., Target Corp.,
Walgreens Boots Alliance Inc. and Walmart Inc. The cumulative TSR depicts a hypothetical $100
investment in Kroger common shares on February 1, 2020, and shows the value of that investment over
time (assuming the reinvestment of dividends) for each calendar year. A hypothetical $100 investment in
the Peer Group using the same methodology is shown for comparison.

6. Net income is as reported in the Company’s audited financial statements for the applicable year in

accordance with U.S. GAAP.

7. Adjusted FIFO Operating Profit equals gross profit, excluding the LIFO charge, minus OG&A, minus rent,
and minus depreciation and amortization. For a reconciliation of non-GAAP information, see pages 27 – 33
of our Annual Report on Form 10-K for the fiscal year ended January 28, 2023, filed with the SEC on
March 28, 2023.

Most Important Performance Measures

The three measures listed below represent the most important financial performance measures used by the Company
to link CAP to Company performance for the 2022 fiscal year,

 Adjusted FIFO Operating Profit

 Adjusted net earnings per diluted share attributable to The Kroger Co.

ID sales, without fuel

For a reconciliation of non-GAAP information, see pages 27 – 33 of our Annual Report on Form 10-K for the fiscal
year ended January 28, 2023, filed with the SEC on March 28, 2023.

COMPANY SELECTED METRIC – Adjusted FIFO Operating Profit

NET INCOME GRAPHICAL REPRESENTATION

KROGER TSR GRAPHICAL REPRESENTATION

CEO Pay Ratio

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and
Item 402(u) of Regulation S-K, we are providing the following information regarding the ratio of the annual total
compensation of our Chairman and CEO, Mr. McMullen, to the annual total compensation of our median associate.

As reported in the Summary Compensation Table, our CEO had annual total compensation for 2022 of
$19,209,843. Using this Summary Compensation Table methodology, the annual total compensation of our median
associate for 2022 was $28,644. As a result, we estimate that the ratio of our CEO’s annual total compensation to
that of our median associate for fiscal 2022 was 671 to 1. Our median employee is a full-time associate in the
Southeast region. Over half of Kroger’s associates are part-time workers.

This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll

records and the methodology described below. The SEC rules for identifying the median compensated associate and
calculating the pay ratio based on that associate’s annual total compensation allow companies to adopt a variety of
methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their
compensation practices. As such, other companies may have different employment and compensation practices and
may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
Therefore, the estimated pay ratio reported above may not be comparable to the pay ratios reported by other
companies and should not be used as a basis for comparison between companies.

We then determined the median associate’s annual total compensation using the Summary Compensation Table
methodology as detailed in Item 402(c)(2)(x) of Regulation S-K and compared it to the annual total compensation of
Mr. McMullen as detailed in the “Total” column of the Summary Compensation Table for 2022, to arrive at the pay
ratio disclosed above. Due to a material increase in salary of our median associate in fiscal 2022, we identified a
substitute median associate as permitted under SEC rules on April 3, 2023 because we reasonably believed that
continuing to use the prior median associate would have significantly affected our CEO pay ratio disclosure and the
CEO pay ratio would not reflect the actual ratio that was used to calculate the pay ratio.

Compensation Policies as They Relate to Risk Management

As part of the Compensation Committee’s review of our compensation practices, the Compensation Committee
considers and analyzes the extent to which risks arise from such practices and their impact on Kroger’s business. As
discussed in this Compensation Discussion and Analysis, our policies and practices for compensating associates are
designed to, among other things, attract and retain high quality and engaged associates. In this process, the
Compensation Committee also focuses on minimizing risk through the implementation of certain practices and
policies, such as the executive compensation recoupment policy, which is described above. Accordingly, we do not
believe that our compensation practices and policies create risks that are reasonably likely to have a material adverse
effect on Kroger.

Item No. 2 Advisory Vote to Approve Executive Compensation

You are being asked to vote, on an advisory basis, to approve the compensation of our NEOs.

FOR

The Board recommends a vote FOR the approval of compensation of our NEOs.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in July 2010, requires that we give our
shareholders the right to approve, on a nonbinding, advisory basis, the compensation of our NEOs as disclosed
earlier in this proxy statement in accordance with the SEC’s rules.

As discussed earlier in the CD&A, our compensation philosophy is to attract and retain the best management

talent and to motivate these associates to achieve our business and financial goals. Our incentive plans are designed
to reward the actions that lead to long-term value creation. To achieve our objectives, we seek to ensure that
compensation is competitive and that there is a direct link between pay and performance. To do so, we are guided by
the following principles:

 Compensation must be designed to retract and retain the individuals to be an executive at Kroger;

 A significant portion of pay should be performance-based, with the percentage of total pay tied to

performance increasing proportionally with an executive’s level of responsibility;

 Compensation should include incentive-based pay to drive performance, providing superior pay for

superior performance, including both a short- and long-term focus;

 Compensation policies should include an opportunity for, and a requirement of, significant equity

ownership to align the interests of executives and shareholders;

 Components of compensation should be tied to an evaluation of business and individual performance

measured against metrics that directly drive our business strategy;

 Compensation plans should provide a direct line of sight to company performance;
 Compensation programs should be aligned with market practices; and
 Compensation programs should serve to both motivate and retain talent.

The vote on this resolution is not intended to address any specific element of compensation. Rather, the vote

relates to the compensation of our NEOs as described in this proxy statement. The vote is advisory. This means that
the vote is not binding on Kroger. The Compensation Committee of the Board is responsible for establishing
executive compensation. In so doing, the Compensation Committee will consider, along with all other relevant
factors, the results of this vote.

We ask our shareholders to vote on the following resolution:

“RESOLVED, that the compensation paid to the Company’s NEOs, as disclosed pursuant to Item 402 of
Regulation S-K, including the Compensation Discussion and Analysis, compensation tables, and the related
narrative discussion, is hereby APPROVED.”

The next advisory vote will occur at our 2024 Annual Meeting subject to shareholders approving one year as

the frequency of the advisory vote in Item No. 3 below.

Item No. 3 Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation

You are being asked to vote, on an advisory basis, on the frequency of future advisory votes on executive
compensation. The Board of Directors recommends a vote of ONE YEAR for the frequency of future
advisory votes on executive compensation.

The Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Securities

Exchange Act also require that shareholders be given the right to vote, again on a nonbinding, advisory basis, for
their preference as to how frequently we should seek future advisory votes on the compensation of our named
executive officers.

When the advisory vote was last held in 2017, shareholders indicated a preference to hold the advisory vote
on executive compensation each year and the Board implemented this standard. The Board of Directors believes that
an advisory vote on executive compensation that occurs every year is the most appropriate alternative for Kroger
and it therefore recommends that you vote for the one year alternative.

The vote is advisory. This means that the vote is not binding on Kroger. Our Board of Directors will

determine the actual voting frequency for approval of executive compensation. In so doing the Board will consider,
along with all other relevant factors, the results of this vote. The Board may decide to hold an advisory vote on
executive compensation more or less frequently than the frequency receiving the most votes cast by shareholders.

The proxy card provides shareholders the opportunity to choose among four options for the frequency of

the advisory vote: every one, two, or three years, or abstain from casting a vote. Shareholders will not be voting to
approve or to disapprove the recommendation of the Board of Directors. The option receiving the most affirmative
votes will be the outcome of the advisory vote. Broker non-votes and abstentions will have no effect on the outcome
of this vote.

The Board of Directors Recommends a Vote of One Year for this Proposal.

Item No. 4 Ratification of the Appointment of Kroger’s Independent Auditor

You are being asked to ratify the appointment of Kroger’s independent auditor, PricewaterhouseCoopers
LLC.

FOR

The Board recommends a vote FOR the ratification of PricewaterhouseCoopers LLP as our

independent registered public accounting firm.

The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight
responsibilities regarding the Company’s financial reporting and accounting practices including the integrity of the
Company’s financial statements; the Company’s compliance with legal and regulatory requirements; the
independent public accountants’ qualifications and independence; the performance of the Company’s internal audit
function and independent public accountants; and the preparation of the Audit Committee Report. The Audit
Committee performs this work pursuant to a written charter approved by the Board of Directors. The Audit
Committee charter most recently was revised during fiscal 2012 and is available on the Company’s website at
ir.kroger.com under Investors — Governance — Committee Composition. The Audit Committee has implemented
procedures to assist it during the course of each fiscal year in devoting the attention that is necessary and appropriate
to each of the matters assigned to it under the Audit Committee’s charter. The Audit Committee held 5 meetings
during fiscal year 2022.

Selection of Independent Auditor

The Audit Committee of the Board of Directors is directly responsible for the appointment, compensation,
retention, and oversight of Kroger’s independent auditor, as required by law and by applicable NYSE rules. On
March 8, 2023, the Audit Committee appointed PricewaterhouseCoopers LLP as Kroger’s independent auditor for
the fiscal year ending January 27, 2024. PricewaterhouseCoopers LLP or its predecessor firm has been the
Company’s independent auditor since 1929.

In determining whether to reappoint the independent auditor, our Audit Committee:

 Reviews PricewaterhouseCoopers LLP’s independence and performance;

 Considers the tenure of the independent registered public accounting firm and safeguards around auditor

independence;

 Reviews, in advance, all non-audit services provided by PricewaterhouseCoopers LLP, specifically with

regard to the effect on the firm’s independence;

 Conducts an annual assessment of PricewaterhouseCoopers LLP’s performance, including an internal

survey of their service quality by members of management and the Audit Committee;

 Conducts regular executive sessions with PricewaterhouseCoopers LLP;

 Conducts regular executive sessions with the Vice President of Internal Audit;

 Considers PricewaterhouseCoopers LLP’s familiarity with our operations, businesses, accounting policies

and practices and internal control over financial reporting;

 Reviews candidates for the lead engagement partner in conjunction with the mandated rotation of the public

accountants’ lead engagement partner;

 Reviews recent Public Company Accounting Oversight Board reports on PricewaterhouseCoopers LLP and

its peer firms; and

 Obtains and reviews a report from PricewaterhouseCoopers LLP describing all relationships between the
independent auditor and Kroger at least annually to assess the independence of the internal auditor.

As a result, the members of the Audit Committee believe that the continued retention of

PricewaterhouseCoopers LLP to serve as our independent registered public accounting firm is in the best interests of
our Company and its shareholders.

While shareholder ratification of the selection of PricewaterhouseCoopers LLP as our independent auditor is

not required by Kroger’s Regulations or otherwise, the Board of Directors is submitting the selection of
PricewaterhouseCoopers LLP to shareholders for ratification, as it has in past years, as a good corporate governance
practice. If the shareholders fail to ratify the selection, the Audit Committee may, but is not required to, reconsider
whether to retain that firm. Even if the selection is ratified, the Audit Committee in its discretion may direct the
appointment of a different auditor at any time during the year if it determines that such a change would be in the best
interests of our Company and our shareholders.

A representative of PricewaterhouseCoopers LLP is expected to participate in the meeting to respond to

appropriate questions and to make a statement if he or she desires to do so.

Audit and Non-Audit Fees

The following table presents the aggregate fees billed for professional services performed by

PricewaterhouseCoopers LLP for the annual audit and quarterly reviews of our consolidated financial statements for
fiscal 2022 and 2021, and for audit-related, tax and all other services performed in 2022 and 2021.

Audit Fees(1)
Audit-Related Fees
Tax Fees(2)
All Other Fees(3)
Total

Fiscal Year Ended

January 28,
2023
($)
5,886,900
982,000
153,000
5,850
7,027,750

January 29,
2022
($)
5,427,500
0
25,000
3,150
5,455,650

(1) Includes annual audit and quarterly reviews of Kroger’s consolidated financial statements, the issuance
of comfort letters to underwriters, consents, and assistance with review of documents filed with the
SEC.

(2) Includes pre-approved assistance with tax compliance and assistance in connection with tax audits.
(3) Includes use of accounting research tool.

The Audit Committee requires that it approve in advance all audit and non-audit work performed by

PricewaterhouseCoopers LLP. Pursuant to the Audit Committee audit and non-audit service pre-approval policy, the
Committee will annually pre-approve certain defined services that are expected to be provided by the independent
auditors. If it becomes appropriate during the year to engage the independent accountant for additional services, the
Audit Committee must first approve the specific services before the independent accountant may perform the
additional work.

PricewaterhouseCoopers LLP has advised the Audit Committee that neither the firm, nor any member of the

firm, has any financial interest, direct or indirect, in any capacity in Kroger or its subsidiaries.

The Board of Directors Recommends a Vote For This Proposal.

Audit Committee Report

Management of the Company is responsible for the preparation and presentation of the Company’s financial
statements, the Company’s accounting and financial reporting principles and internal controls, and procedures that
are designed to provide reasonable assurance regarding compliance with accounting standards and applicable laws
and regulations. The independent public accountants are responsible for auditing the Company’s financial
statements and expressing opinions as to the financial statements’ conformity with generally accepted accounting
principles and the effectiveness of the Company’s internal control over financial reporting.

In performing its functions, the Audit Committee:

 Met separately with the Company’s internal auditor and PricewaterhouseCoopers LLP with and

without management present to discuss the results of the audits, their evaluation and
management’s assessment of the effectiveness of Kroger’s internal controls over financial
reporting and the overall quality of the Company’s financial reporting;

 Met separately with the Company’s Chief Financial Officer or the Company’s General Counsel

when needed;

 Met regularly in executive sessions;

 Reviewed and discussed with management the audited financial statements included in our Annual

Report;

 Discussed with PricewaterhouseCoopers LLP the matters required to be discussed under the

applicable requirements of the Public Company Accounting Oversight Board and the SEC; and

 Received the written disclosures and the letter from PricewaterhouseCoopers LLP required by the
applicable requirements of the Public Accounting Oversight Board regarding the independent
public accountant’s communication with the Audit Committee concerning independence and
discussed the matters related to their independence.

Based upon the review and discussions described in this report, the Audit Committee recommended to the
Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report
on Form 10-K for the year ended January 28, 2022, as filed with the SEC.

This report is submitted by the Audit Committee.
Anne Gates, Chair
Kevin M. Brown
Karen M. Hoguet
Ronald L. Sargent
Ashok Vemuri

Items 5 – 9

SHAREHOLDER PROPOSALS

Included in this proxy statement are five separate shareholder proposals that have been submitted under SEC

rules by shareholders who notified the company of their intention to present the proposals for voting at the 2023
Annual Shareholders’ Meeting. Some shareholder proposals and supporting statements may contain assertions
about Kroger that we believe are incorrect, and we have not tried to refute all such inaccuracies in the company’s
responses. All statements and citations contained in a shareholder proposal and its supporting statements are the sole
responsibility of the proponent of that shareholder proposal. Our company will provide the names, addresses, and
shareholdings (to our company’s knowledge) of the proponents of any shareholder proposal upon oral or written
request made to Corporate Secretary, The Kroger Co., 1014 Vine Street, Cincinnati, Ohio 45202-1100. The
information on, or accessible through, Kroger’s websites or report links included in this proxy statement, including
the statements that follow, is not part of, or incorporated by reference into, this proxy statement.

AGAINST The Board recommends a vote AGAINST each of the following shareholder proposals, in each

case if properly presented at the meeting, for the reasons stated in Kroger’s statements in
opposition following each shareholder proposal.

Item No. 5

Shareholder Proposal – Report on Public Health Costs from Sale of Tobacco Products

We have been advised that The Sisters of St. Francis of Philadelphia or an appointed representative, along with nine
co-filers, will present the following proposal for consideration during the 2023 Annual Shareholders’ Meeting.

“RESOLVED, shareholders ask that the board commission and disclose a report on the external public health costs
created by the sale of tobacco products by our company (the “Company”) and the manner in which such costs affect
the vast majority of its shareholders who rely on overall market returns.

The negative health and productivity impacts from the consumption of tobacco products impose $1.2 trillion in
social damage; tobacco’s unpriced social burden amounts to almost 3 percent of global GDP annually.1

Yet, in spite of the Company dedicating an entire division, Kroger Health, to addressing its customers’ healthcare
needs2, as well as the overwhelming evidence that tobacco – a known carcinogen that impairs respiratory function –
significantly prejudices the health outcomes of smokers, and particularly smokers infected with COVID-19, the
Company continues to sell tobacco products in its stores.

These public health costs, year after year, are devastating to economic growth and further compound the financial
devastation wrought by the COVID-19 pandemic. Yet Kroger does not disclose any methodology to address the
public health costs of its tobacco sales. Thus, shareholders have no guidance as to costs the Company is
externalizing and consequent economic harm. This information is essential to shareholders, the majority of whom
are beneficial owners with broadly diversified interests.

But Kroger undermines its commitments to promoting good health and ultimately the interests of its diversified
shareholders by not disclosing the social and environmental costs and risks imposed on stakeholders, even when
these costs and risks threaten society, the economy and the performance of other companies. All stakeholders are
unalterably harmed when companies impose costs on the economy that lower GDP, which reduces equity value.3
While the Company may profit by ignoring costs it externalizes, diversified shareholders will ultimately pay these
costs, and they have a right to ask what they are.

The Company’s disclosures do not address the issue, because they do not address the public health costs that
Kroger’s tobacco sales impose on shareholders as diversified investors who must fund retirement, education, public
goods and other critical social needs. This is a separate social issue of great importance. A report would help
shareholders determine whether these externalized costs and the economic harm they may create ultimately serve
their interests.”

1 https://www.cdc.gov/tobacco/data_statistics/fact_sheets/economics/econ_facts/index.htm
2 Kroger Health – Business & Community Health Solutions
3 https://www.unepfi.org/fileadmin/documents/universal_ownership_full.pdf

83The Board of Directors Recommends a Vote Against This Proposal for the Following Reasons:

Kroger takes the responsibility of selling tobacco products very seriously and has established policies and processes
to limit the sale of these items only to customers who are legally permitted to purchase them. We offer customers a
wide range of choices across all product categories to meet wide-ranging tastes and preferences, including food and
discretionary items.

The Company has the management systems and governance to limit the sale of tobacco products and to
support choices for better health.

The Kroger family of companies is committed to ethical and responsible behavior in all parts of our business. Our
behavior is rooted in Our Purpose – to Feed the Human Spirit™ – and our promise to our customers. This includes
upholding Our Values, which have been the foundation of Kroger’s culture for decades.

The Audit Committee and Public Responsibilities Committee of the board of directors oversee progress in
regulatory compliance and pharmacy safety measures.

We recognize our responsibility as a business to support our communities and help families by making it easier for
them to live healthier lives. We also believe in our customers’ freedom of choice, and adult customers can choose to
purchase tobacco products understanding fully the potential health impacts. The Company continually reviews its
product assortment, including tobacco and tobacco cessation products.

Notably, recent studies that show the percentage of U.S. adults who smoke cigarettes has reached a new low, driven
by sharply lower smoking rates among young adults.1 Sales for both tobacco products and tobacco cessation
products at Kroger have similarly decreased in recent years.

How We Limit Tobacco Sales
Tobacco sales, like the sales of many products, are governed by regulations, which we strictly follow. The
Company’s Tobacco Sales Policy is designed to comply with these regulations and affirm our commitment to the
health and welfare of our nation’s youth by reducing adolescent access to tobacco. The Policy outlines internal
business procedures and best practices to maintain compliance at retail stores.

How We Promote Health and Healthier Choices
We aim to serve and improve health for millions of people across the country through our business operations,
Environmental, Social and Governance Strategy – Thriving Together – and Kroger Health’s strategy and services.

Kroger Health leads the company’s health and nutrition strategy, services and programs. It includes retail, mail
order, central fill and specialty pharmacy operations; retail health clinics; nutrition and dietitian services; and health
advocacy. A team of 22,000 healthcare practitioners, including pharmacists, nurse practitioners, dietitians and
technicians, serves more than 14 million customers annually.

We aim to support our customers and communities with tools, resources and services that advance population health
for all. We inform our Customers and Associates about the importance of healthy lifestyles, and we equip our
pharmacy and health clinic teams to support people trying to quit tobacco. Specifically related to the use of tobacco
products, we:

 Offer smoking cessation coaching programs that are available to all, including coaching through telehealth

services;

1 https://news.gallup.com/poll/405884/cigarette-smoking-rates-down-sharply-among-young-
adults.aspx#:~:text=U.S.%20Cigarette%20Smoking%20Rates%2C%20by%20Age%20Group&text=That%20dropped%20to%20an%20average,t
hose%20ages%2065%20and%20older

 Offer affordable prescription and over-the-counter smoking cessation products that are available to all; and
 Encourage Associates not to use tobacco through Company health plan incentives, coverage for

smoking cessation products, and employee assistance programs for smoking cessation.

Kroger continues to make a wide range of health and wellness services more affordable and convenient for millions
of customers and for local communities across the U.S. As a trusted local partner, we also provided essential support
and services during the COVID-19 pandemic, rapidly scaling testing and vaccine distributions when needed most.

Assessing the external public health costs related to the Company’s sale of a single category of products is not
reasonable or practicable given the resources and expertise required to consider all externalities and related topics
outside of our control. In light of the above, we do not believe an additional report would add meaningfully to the
extensive body of research currently available on this subject and therefore do not believe such an additional report
is necessary.

For the foregoing reasons, we urge you to vote AGAINST this proposal.

Item No. 6 – Listing of Charitable Contributions of $10,000 or more

We have been advised that The Louis B & Diana R Eichold Trust or an appointed representative will present the
following proposal for consideration during the 2023 Annual Shareholders’ Meeting.

“Whereas the Company's charitable contributions, properly managed, are likely to enhance the reputation of the
Company:

Whereas increased disclosure regarding appropriate charitable contributions can create goodwill for our Company .

Whereas making the benefits of our Company's philanthropic programs better known is likely to promote the
Company's interests:

Whereas feedback from employees, shareholders, and customers could help guide the Company's future charitable
giving process.

Resolved: The Proponent requests that the Board of Directors consider listing on the Company website any
recipient of $10,000 or more of direct contributions, excluding employee matching gifts.

Supporting Statement

Absent a system of accountability and transparency; some charitable contributions may be made unwisely,
potentially harming the Company's reputation and shareholder value. Corporate philanthropic gifts should be given
as much exposure as possible, lest their intended impact on goodwill is diminished. For example, if we gave to the
American Cancer Society, thousands of our stakeholders might potentially approve of our interest in challenging this
disease. Likewise, our support of Planned Parenthood could win the praise of millions of Americans who have had
an abortion at one of their facilities. Educational organizations like the Southern Poverty Law Center have seen an
increase in funding since they included several conservative Christian organizations on their list of hate groups. Our
stakeholders and customers might be similarly enthused if we supported them. Be it the Girl Scouts, American Heart
Association, Boys and Girls Club of America, Red Cross, or countless other possible recipients, our support should
be publicly noted. Those who might disagree with our decisions can play a valuable role also.

Some charities may be controversial. Charitable contributions come from the fruit of our employee's labor and
belong to our shareholders. Both groups represent a wide diversity of opinions. More importantly, we market
ourselves to the general public and should avoid offending segments of this most critical group. It would be
unfortunate if a charitable contribution resulted in lower employee morale and shareholder interest, much less a loss
of potential revenue.

Fuller disclosure would provide enhanced feedback opportunities from which our Company could make more
beneficial choices.”

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

Kroger has a long history of giving back meaningfully in the communities we serve. Charitable giving is central to
Our Purpose – to Feed the Human Spirit – and strategically aligned to our mission – Kroger’s Zero Hunger | Zero
Waste social and environmental impact plan. This plan empowers Kroger to pursue our goal to help create
communities free of hunger and waste across the country. Additionally, we provide annual public disclosures related
to charitable giving areas of focus and annual grant-making.

Every year, we direct charitable contributions at the national, regional and local levels to advance positive impacts
for people and our planet. This giving includes funds, in-kind product donations, and retail store donations of
surplus fresh food that our associates recover for local food bank partners through our leading Zero Hunger | Zero
Waste Food Rescue program. For example, in 2022, 100% of our retail stores participated in the Food Rescue
program, donating more than 100 million pounds of fresh food to our communities.

Through corporate giving and the work of our two nonprofit foundations – The Kroger Co. Foundation and The
Kroger Co. Zero Hunger | Zero Waste Foundation – we direct more than $300 million annually to partners and
causes that align with our mission. Of this, more than 75% supports hunger relief programs to feed individuals and
families where we live and work. These totals include generous support from our associates and customers through
in-store fundraising programs at checkout. The largest share of corporate funds, in-kind product donations, and
customer donations is directed to the Feeding America-affiliated network of local food banks, pantries and agencies
in our communities.

Other national organizations receiving significant charitable funds from Kroger include No Kid Hungry, American
Red Cross, United Service Organizations (USO), American Heart Association and World Wildlife Fund. Notably,
Kroger is the largest cumulative corporate donor to the USO in the organization’s history, showing our long-
standing support for the nation’s active-duty military service men and women and their families. At the regional and
local levels, we support other nonprofit organizations and causes that matter most to our associates and customers.

Foundation Grants

Kroger provides detailed annual disclosures on the work of our two foundations. The Kroger Co. Foundation, the
company’s private foundation established in 1987, which focuses grant-making on causes that support hunger relief;
sustainability; disaster relief; diversity and inclusion; and education and youth development. The Foundation’s 2022
Report, including grantee highlights and specific grant funding levels across the country, is available here:
https://www.thekrogerco.com/wp-content/uploads/2022/08/Kroger-Co-Foundation-2022-Report.pdf.

In 2021, the Foundation directed $12.7 million in grants, of which 58% aligned with hunger relief and sustainability
causes, and 24% supported emergency assistance and disaster relief efforts. Specific grants and grant recipients are
highlighted in the annual The Kroger Co. Foundation report.

The Kroger Co. Zero Hunger | Zero Waste Foundation, a nonprofit public charity established in 2018, is
designed to advance collective action and innovation to build a better food system for the future. More about the
Zero Hunger | Zero Waste Foundation is available on its website:
https://thekrogercozerohungerzerowastefoundation.com/. More details about the Foundation’s general grant-making
and signature program, the Zero Hunger | Zero Waste Innovation Fund, are disclosed in its annual report:
https://www.thekrogerco.com/wp-content/uploads/2022/08/Kroger-Co-Zero-Hunger-Zero-Waste-Foundation-2022-
Report.pdf.

In 2021, the Zero Hunger | Zero Waste Foundation directed $18 million in grants; of these, 97% aligned to hunger
relief and sustainability causes. Grants included $11.7 million in funds to improve food access and food security and
$4.5 million to advance more sustainable food systems. Grant highlights are included in the Zero Hunger | Zero
Waste Foundation report.

Guidelines & Policies:

We follow best practices and specific guidelines when reviewing grant requests. Our Donation Guidelines provide
direction on the types of organizations that Kroger supports and, importantly, make clear the types of organizations
to which donations will not be granted. We accept and consider donation requests from 501(c)(3) registered
nonprofit organizations through an online grant management platform. We use the Guidestar Charity Check to
confirm they meet all Internal Revenue Service requirements to receive grants and donations. The Donation
Guidelines are publicly available on our corporate website: https://thekrogerco.versaic.com/login?Select-A-
Store=Enabled&ReturnTo=/default.aspx

We do not make charitable donations to individuals, political campaigns, sectarian or religious organizations for
projects that serve only its own members or supporters, or organizations that discriminate based on race, color, sex,
pregnancy, disability, age, national origin, religion, sexual orientation, gender identity, genetic information or any
other characteristic protected by applicable law.

The Company has adequate public disclosures related to its charitable giving areas of focus and annual
grant-making.

Kroger recognizes that disclosure of its corporate philanthropic efforts is important and provides stakeholders with
an opportunity to review Kroger charitable programs. We believe the extensive information and other disclosures
provided in Kroger’s annual ESG Report, The Kroger Co. Foundation annual report, The Kroger Co. Zero Hunger |
Zero Waste Foundation annual report and our website provide ample disclosures related to our approach to
charitable giving, which supports Our Purpose, ESG Strategy, and Zero Hunger | Zero Waste impact plan.

For the foregoing reasons, we urge you to vote AGAINST this proposal.

Item No. 7 Shareholder Proposal — Recyclability of Packaging

We have been advised that As You Sow on behalf of the Michael Monteiro 2016 Trust or an appointed
representative, along with one co-filer, will present the following proposal for consideration during the 2023 Annual
Shareholders’ Meeting.

“WHEREAS: The growing plastic pollution crisis poses increasing risks to Kroger. Corporations could face an
annual financial risk of approximately $100 billion should governments require them to cover the waste
management costs of the packaging they produce.1 New laws to this effect were recently passed in Maine, Oregon,
Colorado, and California,2 while the European Union has enacted a $1 per kilogram tax on all non-recycled plastic
packaging waste.3

Pew Charitable Trusts released a groundbreaking study, Breaking the Plastic Wave ("Pew Report"), concluding that
improved recycling is insufficient and at least one-third of overall plastic use must be eliminated to stem the global
plastic pollution crisis. It finds that plastic use reduction is the most viable solution from environmental, economic,
and social perspectives . Without immediate and sustained new commitments, annual flows of plastics into oceans
could nearly triple by 2040.4

Kroger has fallen behind its peers in plastic packaging reductions. Kroger is notably absent from the Ellen
MacArthur Foundation's Global Commitment to reduce plastic pollution, in which brand signatories have committed
to reduce virgin plastic use by an average of 20% by 2025.5 The majority of signatories have already reduced their
use of plastic packaging over a 2018 baseline.6

1 https://www.pewtrusts.org/‐/media/assets/2020/07/breakingtheplasticwave_report.pdf
2 https://www.packworld.com/news/sustainability/article/22419036/four‐states‐enact‐packaging‐epr‐laws
3 https://commission.europa.eu/strategy‐and‐policy/eu‐budget/long‐term‐eu‐budget/2021‐2027/revenue/own‐resources/plastics‐own‐
resource_en
4 https://www.pewtrusts.org/‐/media/assets/2020/07/breakingtheplasticwave_report.pdf
5 https://emf.thirdlight.com/link/f6oxost9xeso‐nsjoqe/@/#id=2
6 https://emf.thirdlight.com/link/f6oxost9xeso‐nsjoqe/@/#id=2, p. 11

Unilever has taken the most significant action to date, agreeing to cut virgin plastic use by 50% by 2025, including
an absolute elimination of 100,000 tons of plastic packaging. At least sixty other consumer goods and retail
companies currently have goals to reduce use of virgin plastic packaging, including competitors Walmart and
Target.7 Kroger has no plastic reduction goal.

Starbucks, Coca-Cola, and Pepsi are leading the industry in reducing disposable packaging, each having set new
goals to expand use of zero-waste reusable packaging. As a retail partner of the global reuse platform Loop, Kroger
is poised to increase use of reusable packaging, yet has made no commitment to make reusable packaging
permanent.

Our company could avoid regulatory, environmental, and competitive risks, and keep up with its peers by, for
example, setting new commitments to reduce use of disposable virgin plastic and invest in reusable packaging.

RESOLVED: Shareholders request that the Kroger Board issue a report, at reasonable expense and excluding
proprietary information, describing how the Company could reduce its plastics use in alignment with the one-third
reduction findings of the Pew Report, or other authoritative sources, to reduce its contribution to ocean plastics
pollution.

SUPPORTING STATEMENT: The report should, at Board discretion:

•

Assess the reputational, financial, and operational risks associated with continuing to use substantial
amounts of single-use plastic packaging while plastic pollution grows;
Evaluate dramatically reducing the amount of plastic used in our packaging through transitioning to
reusables; and
Describe how the Company can further reduce single-use packaging, including any planned reduction
strategies or goals, materials redesign, substitution, or reductions in use of virgin plastic.”

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

The Kroger family of companies is committed to protecting people and our planet by advancing positive change in
our company and our communities. Through our Zero Hunger | Zero Waste social and environmental impact plan,
we are on a journey to help create communities free of hunger and waste.

Our sustainable packaging commitments

Kroger has focused on improving the environmental attributes of product packaging for many years through a series
of ambitious sustainable packaging goals. Our goals demonstrate Kroger’s continued commitment to help create a
more circular economy and reduce plastics found in nature by using more sustainable packaging options where
feasible; supporting reusable packaging models; using recyclable packaging and incorporating recycled content; and
increasing consumer awareness about reuse and recycling.

We are also committed to upholding the highest standards of food safety and quality for our customers. Decisions
about Our Brands food packaging consider critical attributes needed to protect and preserve food safety, quality,
freshness, and affordability as well as to reduce greenhouse gas emissions related to the manufacture and
transportation of items.

Kroger’s 2030 sustainable packaging commitments include the following elements:








Complete an Our Brands baseline product packaging footprint to fully understand current packaging
impacts.
Seek to achieve 100% recyclable, compostable and/or reusable packaging for Our Brands products.
Increase recycled content in packaging so that the Our Brands product portfolio collectively contains at
least 10% recycled content in packaging.
Reduce unnecessary packaging.

7 https://gc‐
22.emf.org/ppu/?_gl=1*1p3bi1c*_ga*nzEwMDEwNTU0LjE2Njl1NjQ4MTY.*_ga_V32N675KJX*MTY3MTlyMTM1OS4xMS4xLjE2NzEyMjE0OTMuN
jAuMC4w

88

Increase awareness among Kroger customers about how to properly manage Our Brands product packaging
at end of life.

Taking Action to Achieve our 2030 Goals
In 2022, we developed our baseline packaging footprint with guidance from a consultant and input from our
suppliers and internal subject matter experts. We found that 40% of Our Brands product packaging meets our
definition of recyclable, when measured by weight of packaging material. In addition, the packaging portfolio
captured in our baseline includes 14% post-consumer recycled content (PCR) material. We plan to update and refine
our packaging baseline over time to track goal progress and inform goal achievement.

In 2023, we are continuing our work to build a roadmap to achieving our goals by 2030 and prioritize opportunities
to adjust our packaging and/or support infrastructure changes. Our roadmap will also accommodate changes
required by packaging legislation in the states and municipalities in which Kroger operates. In addition, the
packaging baseline will inform any adjustments or refinements to our current goals.

More detailed information about our packaging baseline and key action steps to increase packaging

sustainability is available in our 2022 Environmental, Social & Governance (ESG) report
(https://www.thekrogerco.com/wp-content/uploads/2022/08/Kroger-Co-2022-ESG-Report.pdf).

We continue to evaluate and implement opportunities to reduce plastic use and improve end-of-life management
opportunities for product packaging. Examples include:

Plastic Reduction & Circularity:

 In 2022, Kroger added 50% post-consumer recycled content (PCR) PET plastic to a new line of Our Brands

spice products. We continue to pilot different levels of PCR material in our product packaging, particularly in
those products that are subject to packaging legislation, evaluating factors such as function, shelf-life, and
aesthetic.

• Kroger-operated manufacturing plants continue to reduce plastic use and packaging weights for Our Brands
items, where feasible. Last year, we reduced the amount of plastic used in our carbonated soft drinks and
cultured dairy tub product packages, saving approximately 450,000 pounds of plastic annually.

• Kroger was the first U.S. grocery retail partner for the innovative Loop reusable packaging platform. In

2022, Kroger conducted a pilot at 25 Fred Meyer stores in the Portland, OR, area, selling more than 20 items
representing popular brands, to gauge consumer response to this alternative to single-use packaging. Our
pilot collected valuable insights on what may be needed to scale reusable packaging solutions in our
industry.

End-of-Life Solutions:

• We continue to offer the Kroger Our Brands packaging recycling program so our customers can collect

flexible plastic packaging and mail it free of charge to TerraCycle for recycling. Kroger is the first retailer to
offer this type of recycling program across an entire private-label portfolio. Program engagement and
recycling volume continues to grow, with Kroger customers returning more than 1 million packages—the
equivalent of more than 22,000 pounds of plastic—to date.

• Kroger continued adding the How2Recycle logo to Our Brands items to increase our customers’ awareness
of how to recycle product packaging, including those items eligible for front-of-store plastic film recycling
programs—which we offer across the enterprise.

• The Kroger Co. Zero Hunger | Zero Waste Foundation supports the multi-stakeholder Polypropylene

Recycling Coalition, facilitated by The Recycling Partnership, which aims to improve community-level
infrastructure to enable curbside polypropylene collection and recycling. In 2022, the Foundation expanded
this support to help fund the PET Recycling Coalition, which aims to increase the recyclability of PET
(polyethylene terephthalate) plastic packaging.

89
• Kroger is the Grocery Sector Lead partner for Closed Loop Partners’ Beyond the Bag Initiative, launched by

the Consortium to Reinvent the Retail Bag. This multi-year collaboration across retail sectors aims to
identify, test and implement innovative new design solutions to replace the single-use plastic retail shopping
bag.

Given the above progress on our sustainable packaging roadmap, including detailed reporting available in Kroger’s
2022 ESG Report, we don’t believe additional reporting on packaging and plastics use is additive at this time.

For the foregoing reasons, we urge you to vote AGAINST this proposal.

Item No. 8 Report on Racial and Gender Pay Gaps

We have been advised that Arujna Capital on behalf of Susan Silver or an appointed representative along with one
co-filer will present the following proposal for consideration during the 2023 Annual Shareholders’ Meeting.

“Whereas: Pay inequities persist across race and gender and pose substantial risks to companies and society. Black
workers' hourly median earnings represent 64 percent of white wages. The median income for women working full
time is 83 percent that of men. Intersecting race, Black women earn 63 percent, Native women 60 percent, and
Latina women 55 percent. At the current rate, women will not reach pay equity until 2059, Black women in 2130,
and Latina women in 2224 .1

Citigroup estimates closing minority and gender wage gaps 20 years ago could have generated 12 trillion dollars in
additional national income. PwC estimates closing the gender pay gap could boost Organization for Economic
Cooperation and Development (OECD) countries' economies by 2 trillion dollars annually.2

Actively managing pay equity is associated with improved representation. Diversity in leadership is linked to
superior stock performance and return on equity.3 Minorities represent 38.5 percent of Kroger's workforce and 26
percent of Store Leaders. Women represent 50.5 percent of the workforce and 33 percent of Store Leaders.4

Best practice pay equity reporting consists of two parts:

1. unadjusted median pay gaps, assessing equal opportunity to high paying roles,
2. statistically adjusted gaps, assessing whether minorities and non-minorities, men and women, are paid the

same for similar roles.

Kroger does not report quantitative unadjusted or adjusted pay gaps. Over 20 percent of the 100 largest U.S.
employers currently report adjusted gaps, and an increasing number of companies disclose unadjusted gaps to
address the structural bias women and minorities face regarding job opportunity and pay.5

Racial and gender unadjusted median pay gaps are accepted as the valid way of measuring pay inequity by the
United States Census Bureau, Department of Labor, OECD, and International Labor Organization. The United
Kingdom and Ireland mandate disclosure of median pay gaps, and the United Kingdom is considering racial pay
reporting.6

Resolved: Shareholders request The Kroger Co. report on both quantitative median and adjusted pay gaps across
race and gender, including associated policy, reputational, competitive, and operational risks, and risks related to
recruiting and retaining diverse talent. The report should be prepared at reasonable cost, omitting proprietary
information, litigation strategy and legal compliance information.

1https://static1.squarespace.com/static/5bc65db67d0c9102cca54b74/t/622f4567fae4ea772ae60492/1647265128087/Racial+Gender+Pay+Scoreca
rd+2022+-+Arjuna+Capital.pdf
2 Ibid.
3 Ibid.
4 https://www.thekrogerco.com/wp-content/uploads/2022/08/Kroger-Co-2022-ESG-Report.pdf
5 https://diversiq.com/which-sp-500-companies-disclose-gender-pay-equity-data/
6 https://static1.squarespace.com/static/5bc65db67d0c9102cca54b74/t/622f4567fae4ea772ae60492/1647265128087/Racial+Gender+Pay+Scorecar
d+2022+-+Arjuna+Capital.pdf

Racial/gender pay gaps are defined as the difference between non-minority and minority/male and female median
earnings expressed as a percentage of non-minority/male earnings (Wikipedia/OECD, respectively).

Supporting Statement: An annual report adequate for investors to assess performance could, with board discretion,
integrate base, bonus and equity compensation to calculate:

•
•

percentage median and adjusted gender pay gap, globally and/or by country, where appropriate
percentage median and adjusted racial/minority/ethnicity pay gap, US and/or by country, where
appropriate”

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

Kroger welcomes associates from every race, culture, gender and ability, and is actively creating and maintaining an
equitable workplace where every associate is empowered, supported, and feels valued and a sense of belonging. Our
aspiration is for the demographic representation of women and people of color to reflect our communities, at both
the organization-wide and local levels.

Kroger already has an established approach to pay equity. Kroger has been performing an annual pay equity
analysis since 2016, which takes into consideration gender and race for all salaried roles. We review our pay equity
analysis annually with the Compensation and Talent Development Committee of the Board of Directors. The
organization also equips and enables our leaders to promote pay equity and transparency. We have robust and
comprehensive pay administration guidelines for non-bargaining-unit employees, enabling our managers to effectively
manage compensation throughout the year to reward performance and address progression within pay ranges. In
addition to these guidelines, we provide additional training to managers in preparation for annual compensation
planning.

Kroger provides robust disclosure of representation annually. Kroger consistently discloses and discusses its
diverse associate representation in the organization’s annual ESG Report. We publish our annual EEO-1 reports as
filed with the EEOC (https://www.thekrogerco.com/wp-content/uploads/2022/08/EEO-1-2021.pdf). In addition,
Kroger provides a detailed discussion of our workforce strategy and total rewards and benefits approach in our
Annual Report and Form 10-K. The organization also discusses its approach to Human Capital Management in its
annual ESG report. The report, available on www.thekrogerco.com/esgreport, includes disclosures related to
associate health and safety; Kroger’s Framework for Action: Diversity, Equity & Inclusion plan; talent attraction and
retention; and labor relations.

The majority of Kroger’s workforce is covered under collective bargaining agreements, which facilitate pay
equity for frontline associates. Kroger’s compensation structure supports fair pay. Wages, health care and pensions
are included in more than 354 collective bargaining agreements that cover approximately 64% of our associates. The
negotiated pay structures within those agreements facilitate standard and consistent pay progression based on tenure
and experience. Pay is determined using structured wage progressions where an associate moves through the
progression based on time in role or hours worked. Associates move through the wage progression based on the same
definitions and criteria as other associates working in the same roles. Pay parity is promoted within the model because
of the structured wage grids and inherent progression framework.

Non-union hourly roles follow similar wage progressions. Where we use a pay-for-performance model for non-union,
hourly roles, those workplaces follow compensation guidelines that provide for a framework of tying pay to
performance and using pay levels.

Kroger provides comprehensive benefits for associates. The organization has invested an incremental $1.9 billion
in associate wages and training since 2018. This has increased our national average hourly rate of pay from $13.66
to $18, or $23.50 per hour with comprehensive benefits.
Kroger has announced plans to continue investing in wages, with plans for a more than $770 million incremental
investment in associates during 2023.

In addition to market-competitive wages, our associates have access to a wide variety of benefits that provide value
in their lives today and in the future. We invest in the whole person with a benefits package that generally includes:

91quality, affordable healthcare; retirement savings plans and pension plans; on-demand access to mental health
assistance and free counseling to support emotional wellness; career advancement opportunities; financial education
programs to help associates manage their day-to-day finances; and an industry-leading continuing education benefit
that provides up to $21,000 for associates, part-time and full-time alike, which, along with scholarships for children
of associates — most of whom are first-generation college attendees — provide pathways to social mobility to
associates who choose to participate. We also offer associates a variety of grocery discounts, volunteer
opportunities, and other perks and rewards.

Diversity and inclusion are part of Kroger’s core organizational values, and the organization has strong
programs in place to create and maintain an equitable workplace and inclusive culture.
Diversity and inclusion have been longstanding Kroger values. In 2020, we introduced Kroger’s Framework for
Action to further advance diversity, equity and inclusion in our culture and communities. The plan’s action steps
include creating a DE&I advisory council reporting to senior leadership, providing diversity training to our associate
population, improving diverse talent recruiting through expanded partnerships with HBCUs and Hispanic-serving
institutions, establishing two-way mentorship and advocacy programs, increasing spend with diverse suppliers, and
more. We report progress against these goals in Kroger’s annual ESG report.

Kroger strives to attract, retain and develop leaders and associates who best reflect our communities. Because of our
unique business model, we help unlock economic opportunity for nearly half a million people of various ages and
aspirations, from those wanting an entry-level part-time job to graduate-degree specialists across corporate
functions. We also aim to develop and promote diverse leaders to roles with increasing levels of responsibility. For
open leadership positions, we assemble a diverse slate of candidates for consideration.

In 2022, every manager across the organization was expected to actively mentor and develop an associate who has a
different background than them. This, along with other objectives, is used to assess the manager’s performance and
ultimately affects their compensation. Currently, over 80% of retail division executive leadership teams have at least
one diverse leader.

We believe that Kroger’s current compensation practices promote diversity, inclusion and fair pay across our
workforce. While Kroger welcomes continued engagement with shareholders on these issues, we believe that the
adoption of this proposal is not necessary in light of our existing practices.

For the foregoing reasons, we urge you to vote AGAINST this proposal.

Item No. 9 – Report on EEO Policy Risks

We have been advised that the National Center for Public Policy Research or an appointed representative will
present the following proposal for consideration during the 2023 Annual Shareholders’ Meeting. We will promptly
provide the shareholdings upon written or oral request to Kroger’s Secretary at our executive offices.

“RESOLVED

Shareholders request the Kroger Company ("Kroger") issue a public report detailing the potential risks associated
with omitting "viewpoint" and "ideology" from its written equal employment opportunity (EEO) policy. The report
should be available within a reasonable timeframe, prepared at a reasonable expense and omit proprietary
information.

SUPPORTING STATEMENT

Kroger does not explicitly prohibit discrimination based on viewpoint or ideology in its written EEO policy.

Kroger's lack of a company-wide best practice EEO policy sends mixed signals to company employees and
prospective employees and calls into question the extent to which individuals are protected due to inconsistent state
policies and the absence of a relevant federal protection. Approximately half of Americans live and work in a
jurisdiction with no legal protections if their employer takes action against them for their political activities or
discriminates on the basis of viewpoint in the workplace.

Companies with inclusive policies are better able to recruit the most talented employees from a broad labor pool,
resolve complaints internally to avoid costly litigation or reputational damage, and minimize employee turnover.
Moreover, inclusive policies contribute to more efficient human capital management by eliminating the need to
maintain different policies in different locations.

There is ample evidence that individuals with conservative viewpoints may face discrimination at Kroger.

Kroger recently kowtowed to leftwing social media criticism by removing patriotic and Second Amendment related
paraphernalia from store shelves. For instance, after someone complained on Twitter about a drink sleeve that stated,
"Arms Change, Rights Don't", the Company reportedly recalled the items.1 Kroger's subsidiary grocery store, Harris
Teeter, likewise complied with liberal demands to pull "Freedom Series" items from its shelves, removing items that
read, "Give me liberty or give me death" and "America, love it or leave it."2

While removing patriotic items from its stores, Kroger has simultaneously pushed a leftwing social agenda.
Published in2021, the Company released an "allyship guide" that told employees to use "inclusive language" and
celebrate transgender holidays.3 Defining terms such as "non-binary," "transgender," and "pansexual," the guide
asserts that, "Some people's morality can be a barrier to accepting LGBTQ+ people."4

Removing pro-America items from store shelves while publishing "allyship" training guides for staff certainly raise
concerns over how Kroger treats employees with diverse points of view, particularly those who disagree with the
Company's blatant leftwing actions. This places the Company in reputational, legal, and financial risk, as evidenced
by a recent settlement with fired employees who refused to wear a Company issued apron adorning a rainbow on
account of it violating their religious beliefs.5

Presently, shareholders are unable to evaluate how Kroger prevents discrimination towards employees based on their
ideology or viewpoint, mitigates employee concerns of potential discrimination, and ensures a respectful and
supportive work atmosphere that bolsters employee performance.

We recommend that the report evaluate risks including, but not limited to, negative effects on employee hiring and
retention, as well as litigation risks from conflicting state and company anti-discrimination policies.”

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

Kroger strives to reflect the communities we serve and foster a culture that empowers everyone to be their
true self, inspires collaboration, and feeds the human spirit.

We are committed to a policy of equal opportunity for all associates without regard to race, color, religion, sex,
national origin, age, disability, sexual orientation, or gender identity. In implementing our policy, we seek and
embrace differences in the backgrounds, cultures, and perspectives of all associates, and we encourage and expect
all of our associates to collaborate and actively work together regardless of these differences. Moreover, as we
identify in our ESG Report, our diversity, equity and inclusion (DE&I) programs demonstrate our commitment to
building a diverse and inclusive workforce, fostering an environment where diversity is a competitive advantage and
providing equal opportunities for associates.

We are focused on creating a culture of fairness and respect.

Our formal DE&I Framework for Action, launched in 2020, is focused on creating a more inclusive culture and
advancing equitable communities, among other goals, underscoring Kroger’s commitment to standing together and
mobilizing our people, passion, scale and resources to transform our culture and our communities. The framework is

1 https://www.bizpacreview.com/2022/06/21/harris‐teeter‐kroger‐remove‐pro‐america‐items‐from‐shelves‐after‐woke‐complaints‐backlash‐
is‐swift‐1252599/; https://www.foxbusiness.com/retail/harris‐teeter‐kroger‐backlash‐pro‐america‐items‐complaints
2 https://www.bizpacreview.com/2022/06/21/harris‐teeter‐kroger‐remove‐pro‐america‐items‐from‐shelves‐after‐woke‐complaints‐backlash‐
is‐swift‐1252599/; https://www.foxbusiness.com/retail/harris‐teeter‐kroger‐backlash‐pro‐america‐items‐complaints
3 https://www.breitbart.com/social‐justice/2022/08/31/kroger‐allyship‐guide‐tells‐employees‐to‐celebrate‐trans‐holidays‐support‐bail‐fund/
4 https://www.thekrogerco.com/wp‐content‐uploads/2021/03/AAPI‐Allyship‐Guide_v3.2‐External‐merged.pdf
5 https://news.yahoo.com/kroger‐pay‐180K‐lawsuit‐over‐162047710.html

93built around pillars focused on creating a more inclusive culture, developing diverse talent, advancing diverse
partnerships, advancing equitable communities and deeply listening and reporting progress.

In particular, we understand that our associates have a wide range of viewpoints. We are committed to a culture of
fairness, respect and inclusion that drives us to value and embrace differences. As part of our Framework for Action,
we are engaging with external and internal stakeholders to seek perspectives and provide associates with platforms
to continue sharing their stories and feedback. To that end, Kroger launched an internal DEI Advisory Council made
up of cross-functional leaders who are committed to advancing this progress, working closely with senior officers
and business leaders to identify opportunities and specific actions for improvement, as well as the Board’s
Compensation & Talent Development Committee overseeing progress on our human capital efforts, including DEI.

Diverse viewpoints are respected and encouraged.

Our policies and practices demonstrate that diverse viewpoints are respected and encouraged and are an essential
part of advancing our business. In light of our demonstrated commitment to our core values of diversity and
inclusion for all stakeholders, we do not believe that issuing a public report detailing the potential risks associated
with omitting ‘viewpoint’ and ‘ideology’ from our equal employment opportunity policy, as contemplated by this
proposal, is necessary or in the best interests of Kroger or our shareholders.

For the foregoing reasons, we urge you to vote AGAINST this proposal.

Shareholder Proposals and Director Nominations — 2024 Annual Meeting

Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, shareholder proposals intended

for inclusion in the proxy material relating to Kroger’s annual meeting of shareholders in June 2024 should be
addressed to Kroger’s Secretary and must be received at our executive offices not later than January 13, 2024. These
proposals must comply with Rule 14a-8 and the SEC’s proxy rules. If a shareholder submits a proposal outside of
Rule 14a-8 for the 2023 annual meeting and such proposal is not delivered within the time frame specified in the
Regulations, Kroger’s proxy may confer discretionary authority on persons being appointed as proxies on behalf of
Kroger to vote on such proposal.

In addition, Kroger’s Regulations contain an advance notice of shareholder business and director nominations
requirement, which generally prescribes the procedures that a shareholder of Kroger must follow if the shareholder
intends, at an annual meeting, to nominate a person for election to Kroger’s Board of Directors or to propose other
business to be considered by shareholders. These procedures include, among other things, that the shareholder give
timely notice to Kroger’s Secretary of the nomination or other proposed business, that the notice contain specified
information, and that the shareholder comply with certain other requirements. In order to be timely, this notice must
be delivered in writing to Kroger’s Secretary, at our principal executive offices, not later than 45 calendar days prior
to the date on which our proxy statement for the prior year’s annual meeting of shareholders was mailed to
shareholders. If a shareholder’s nomination or proposal is not in compliance with the procedures set forth in the
Regulations, we may disregard such nomination or proposal. Accordingly, if a shareholder intends, at the 2024
Annual Meeting, to nominate a person for election to the Board of Directors or to propose other business, the
shareholder must deliver a notice of such nomination or proposal to Kroger’s Secretary not later than March 28,
2024 and comply with the requirements of the Regulations.

Furthermore, in addition to the requirements of SEC Rule 14a-8 or our Regulations, as applicable, as described

above, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director
nominees other than our nominees must provide notice to Kroger’s Secretary that sets forth the information required
by Rule 14a-19 of the Exchange Act no later than April 23, 2024, and must comply with the additional requirements
of Rule 14a-19(b).

Eligible shareholders may also submit director nominees for inclusion in our proxy statement for the 2024
annual meeting of shareholders. To be eligible, shareholders must have owned at least three percent of our common
shares for at least three years. Up to 20 shareholders will be able to aggregate for this purpose. Nominations must be
submitted to our Corporate Secretary at our principal executive offices no earlier than December 14, 2023 and no
later than January 13, 2024.

Shareholder proposals, director nominations, including, if applicable pursuant to proxy access, and advance

notices must be addressed in writing, and addressed and delivered timely to: Corporate Secretary, The Kroger Co.,
1014 Vine Street, Cincinnati, Ohio 45202-1100.

95
Householding of Proxy Materials

We have adopted a procedure approved by the SEC called “householding.” Under this procedure, shareholders
of record who have the same address and last name will receive only one copy of the proxy materials unless one or
more of these shareholders notifies us that they wish to continue receiving individual copies. This procedure will
reduce our printing costs and postage fees. Householding will not in any way affect dividend check mailings.

If you are eligible for householding, but you and other shareholders of record with whom you share an address
currently receive multiple copies of our proxy materials or if you hold in more than one account, and in either case
you wish to receive only a single copy for your household or if you prefer to receive separate copies of our
documents in the future, please contact your bank or broker, or contact Kroger’s Secretary at 1014 Vine Street,
Cincinnati, Ohio 45202 or via telephone at 513-762-4000.

Beneficial shareholders can request information about householding from their banks, brokers or other holders

of record.

The management knows of no other matters that are to be presented at the meeting, but, if any should be

presented, the Proxy Committee expects to vote thereon according to its best judgment.

Available Information

The Company files Annual Reports on Form 10-K with the Securities and Exchange Commission. A copy of

the Annual Report on Form 10-K for the fiscal year ended January 28, 2023 (except for certain exhibits thereto),
including our audited financial statements and financial statement schedules, may be obtained, free of charge, upon
written request by any shareholder to Kroger’s Secretary at 1014 Vine Street, Cincinnati, Ohio 45202 or via
telephone at 513-762-4000. Copies of all exhibits to the Annual Report on Form 10-K are available upon a similar
request, subject to reimbursing the Company for its expenses in supplying any exhibit.

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

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended January 28, 2023.
OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to
Commission file number 1-303
THE KROGER CO.
(Exact name of registrant as specified in its charter)

Ohio
(State or Other Jurisdiction of Incorporation or Organization)

1014 Vine Street, Cincinnati, OH
(Address of Principal Executive Offices)

31-0345740
(I.R.S. Employer Identification No.)

45202
(Zip Code)

Registrant’s telephone number, including area code (513) 762-4000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common, $1.00 Par Value

Trading Symbol
KR

Name of each exchange on which registered
New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ☐ No ☒

NONE

(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of
the Exchange Act.

Large accelerated filer ☒
Non-accelerated filer ☐

Accelerated filer ☐
Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements.

Yes ☐ No ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
Yes ☐ No ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the average bid and asked price of such
common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter (August 13, 2022). $33.6 billion.
The number of shares outstanding of the registrant's common stock, as of the latest practicable date. 717,467,532, shares of Common Stock of $1 par value, as of
March 22, 2023.

Documents Incorporated by Reference:

Portions of Kroger’s definitive proxy statement for its 2023 annual meeting of shareholders, which shall be filed with the Securities and Exchange Commission within
120 days after the end of the fiscal year to which this Report relates, are incorporated by reference into Part III of this Report.

The Kroger Co.
Form 10-K

For the Fiscal Year Ended January 28, 2023

Table of Contents

Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Reserved
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Evaluation of Disclosure Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services

Exhibits, Financial Statement Schedules
Form 10-K Summary
Signatures

Page
2
3
11
19
19
20
20

20
22
23
45
48
94
94
94
94

95
95
95
95
96
96

97
97
99
100

Part I
Item 1
Item 1A
Item 1B
Item 2
Item 3
Item 4

Part II
Item 5

Item 6
Item 7
Item 7A
Item 8
Item 9
Item 9A
Item 9B
Item 9C

Part III
Item 10
Item 11
Item 12
Item 13
Item 14

Part IV
Item 15
Item 16

FORWARD LOOKING STATEMENTS.

PART I

This Annual Report on Form 10-K contains forward-looking statements about our future performance. These

statements are based on our assumptions and beliefs in light of the information currently available to us. These
statements are subject to a number of known and unknown risks, uncertainties and other important factors, including the
risks and other factors discussed in “Risk Factors” below, that could cause actual results and outcomes to differ
materially from any future results or outcomes expressed or implied by such forward looking statements. Such
statements are indicated by words such as “achieve,” “affect,” “anticipate,” “believe,” “committed,” “continue,” “could,”
“deliver,” “effect,” “enable,” “estimate,” “expects,” “future,” “goal,” “growth,” “intended,” “likely,” “may,” “model,”
“objective,” “plan,” “position,” “program,” “range,” “result,” “strategy,” “strive,” “strong,” “target,” “trend,” “will” and
“would,” and similar words or phrases. Moreover, statements in the sections entitled Risk Factors, Management’s
Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), and elsewhere in this report
regarding our expectations, projections, beliefs, intentions or strategies are forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended.

Various uncertainties and other factors could cause actual results to differ materially from those contained in the

forward-looking statements. These include:

• The extent to which our sources of liquidity are sufficient to meet our requirements may be affected by the state
of the financial markets and the effect that such condition has on our ability to issue commercial paper at
acceptable rates. Our ability to borrow under our committed lines of credit, including our bank credit facilities,
could be impaired if one or more of our lenders under those lines is unwilling or unable to honor its contractual
obligation to lend to us, or in the event that global pandemics, including the ongoing COVID-19 pandemic
(including any variant), natural disasters or weather conditions interfere with the ability of our lenders to lend to
us. Our ability to refinance maturing debt may be affected by the state of the financial markets.

• Our ability to achieve sales, earnings and incremental FIFO operating profit goals may be affected by: the risks
relating to or arising from our proposed transaction with Albertsons Companies, Inc. (“Albertsons”) announced
in October 2022, including, among others, our ability to consummate the proposed transaction, including on the
terms of the merger agreement, on the anticipated timeline, and/or with the required regulatory approvals;
COVID-19 pandemic related factors, risks and challenges; labor negotiations; potential work stoppages;
changes in the unemployment rate; pressures in the labor market; changes in government-funded benefit
programs; changes in the types and numbers of businesses that compete with us; pricing and promotional
activities of existing and new competitors, including non-traditional competitors, and the aggressiveness of that
competition; our response to these actions; the state of the economy, including interest rates, the current
inflationary environment and future potential inflationary and/or deflationary trends and such trends in certain
commodities, products and/or operating costs; the geopolitical environment including the war in Ukraine;
unstable political situations and social unrest; changes in tariffs; the effect that fuel costs have on consumer
spending; volatility of fuel margins; manufacturing commodity costs; supply constraints; diesel fuel costs
related to our logistics operations; trends in consumer spending; the extent to which our customers exercise
caution in their purchasing in response to economic conditions; the uncertainty of economic growth or
recession; stock repurchases; changes in the regulatory environment in which we operate; our ability to retain
pharmacy sales from third party payors; consolidation in the healthcare industry, including pharmacy benefit
managers; our ability to negotiate modifications to multi-employer pension plans; natural disasters or adverse
weather conditions; the effect of public health crises or other significant catastrophic events; the potential costs
and risks associated with potential cyber-attacks or data security breaches; the success of our future growth
plans; the ability to execute our go-to-market strategy and value creation model, including continued cost
savings, growth of our alternative profit businesses, and our ability to better serve our customers and to generate
customer loyalty and sustainable growth through our strategic pillars of fresh, Our Brands, personalization, and
seamless; and the successful integration of merged companies and new partnerships.

• Our ability to achieve these goals may also be affected by our ability to manage the factors identified above.

Our ability to execute our financial strategy may be affected by our ability to generate cash flow.

• Our effective tax rate may differ from the expected rate due to changes in tax laws, the status of pending items

with various taxing authorities, and the deductibility of certain expenses.

We cannot fully foresee the effects of changes in economic conditions on our business.

Other factors and assumptions not identified above, including those discussed in Part 1, Item 1A of this Annual

Report, could also cause actual results to differ materially from those set forth in the forward-looking information.
Accordingly, actual events and results may vary significantly from those included in, contemplated or implied by
forward-looking statements made by us or our representatives. We undertake no obligation to update the forward-
looking information contained in this filing.

Our ability to complete our proposed transaction with Albertsons may be affected by various factors, including
those set forth in Part I, Item 1A of this Annual Report. Risk Factors included in this Annual Report on Form 10-K and
other factors as may be described in subsequent filings with the SEC.

ITEM 1.

BUSINESS.

The Kroger Co. (the “Company” or “Kroger”) was founded in 1883 and incorporated in 1902. Our Company is

built on the foundation of our food retail business, which includes the added convenience of our retail pharmacies and
fuel centers. Our strategy is focused on growing customer loyalty by delivering great value and convenience, and
investing in four strategic pillars: Fresh, Our Brands, Data & Personalization and Seamless.

We also utilize the data and traffic generated by our retail business to deliver incremental value and services for our

customers that generates alternative profit streams. These alternative profit streams would not exist without our core
retail business.

Our revenues are predominately earned and cash is generated as consumer products are sold to customers in our
stores, fuel centers and via our online platforms. We earn income predominately by selling products at price levels that
produce revenues in excess of the costs we incur to make these products available to our customers. Such costs include
procurement and distribution costs, facility occupancy and operational costs, and overhead expenses. Our fiscal year
ends on the Saturday closest to January 31. All references to 2022, 2021 and 2020 are to the fiscal years ended
January 28, 2023, January 29, 2022 and January 30, 2021, respectively, unless specifically indicated otherwise.

We maintain a web site (www.thekrogerco.com) that includes the Kroger Fact Book and other additional
information about the Company. Kroger’s website and any reports or other information made available by Kroger
through its website are not part of or incorporated by reference into this Annual Report on Form 10-K. We make
available through our web site, free of charge, our annual reports on Form 10-K, our quarterly reports on Form 10-Q, our
current reports on Form 8-K and our interactive data files, including amendments. These forms are available as soon as
reasonably practicable after we have filed them with, or furnished them electronically to, the SEC.

Kroger is diversified across brands, product categories, channels of distribution, geographies and consumer

demographics. Our combination of assets include the following:

Stores

As of January 28, 2023, Kroger operates supermarkets under a variety of local banner names in 35 states and the

District of Columbia. As of January 28, 2023, Kroger operated, either directly or through its subsidiaries, 2,719
supermarkets, of which 2,252 had pharmacies and 1,637 had fuel centers. Approximately 50% of our supermarkets were
operated in Company-owned facilities, including some Company-owned buildings on leased land. Our stores operate
under a variety of banners that have strong local ties and brand recognition. We connect with customers through our
expanding seamless ecosystem and the consistent delivery of a full, fresh, and friendly customer experience. Fuel sales
are an important part of our revenue, net earnings and loyalty offering. Our fuel strategy is to include a fuel center at
each of our supermarket locations when it is feasible and it is expected to be profitable. Each fuel center typically
includes 5 to 10 islands of fuel dispensers and storage tanks with capacity for 40,000 to 50,000 gallons of fuel.
Supermarkets are generally operated under one of the following formats: combination food and drug stores (“combo
stores”); multi-department stores; marketplace stores; or price impact warehouses.

The combo store is the primary food store format. 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 and toys.

Marketplace stores are smaller in size than multi-department stores. They offer full-service grocery, pharmacy and

health and beauty care departments as well as an expanded perishable offering and general merchandise area that
includes apparel, home goods and toys.

Price impact warehouse stores offer a “no-frills, low cost” warehouse format and feature everyday low prices plus

promotions for a wide selection of grocery and health and beauty care items. Quality meat, dairy, baked goods and fresh
produce items provide strategic differentiation for price impact warehouse stores. The average size of a price impact
warehouse store is similar to that of a combo store.

Seamless Digital Ecosystem

We offer a convenient shopping experience for our customers regardless of how they choose to shop with us,
including Pickup, Delivery and Ship. We offer Pickup and Harris Teeter ExpressLane™ — personalized, order online,
pick up at the store services — at 2,274 of our supermarkets and provide Delivery, which allows us to offer digital
solutions to substantially all of our customers. Our Delivery solutions include orders delivered to customers from retail
store locations and customer fulfillment centers powered by Ocado. These channels allow us to serve customers
anything, anytime, and anywhere with zero compromise on selection, convenience, and price. We also provide relevant
customer-facing apps and interfaces that have the features customers want that are also reliable, easy to use and deliver a
seamless customer experience across our store and digital channels.

Merchandising and Manufacturing

Our Brands products play an important role in our merchandising strategy and represented over $30 billion of our
sales in 2022. Our supermarkets, on average, stock over 13,500 private label items. Our Brands products are primarily
produced and sold in three “tiers.” Private Selection® is our main premium quality brand, offering customers culinary
foods and ingredients that deliver amazing eating experiences. The Kroger® brand, which represents the majority of our
private label items, is designed to consistently satisfy and delight customers with quality products that exceed or meet
the national brand in taste and efficacy, as well as with unique and differentiated products. Big K®, Smart Way® and
Heritage Farm® are some of our value brands, designed to deliver good quality at a very affordable price. In addition to
our three “tiers,” Our Brands offers customers a variety of natural and organic products with Simple Truth® and Simple
Truth Organic®. Both Simple Truth and Simple Truth Organic are free from a defined list of artificial ingredients that
some customers have told us they do not want in their food, and the Simple Truth Organic products are USDA certified
organic.

Approximately 30% of Our Brands units and 42% of the grocery category Our Brands units sold in our

supermarkets are produced in our food production plants; the remaining Our Brands items are produced to our strict
specifications by outside manufacturers. We perform a “make or buy” analysis on Our Brands products and decisions
are based upon a comparison of market-based transfer prices versus open market purchases. As of January 28, 2023, we
operated 33 food production plants. These plants consisted of 14 dairies, 9 deli or bakery plants, five grocery product
plants, two beverage plants, one meat plant and two cheese plants.

Our Data

The traffic and data generated by our retail supermarket business, including pharmacies and fuel centers, is enabling

this transformation. Kroger serves approximately 60 million households annually and because of our rewards program,
over 90% of customer transactions are tethered to a Kroger loyalty card. Our 20 years of investment in data science
capabilities is allowing us to utilize this data to create personalized experiences and value for our customers and is also
enabling our fast-growing, high operating margin alternative profit businesses, including data analytic services and third
party media revenue. Our retail media business – Kroger Precision Marketing – provides differentiated media
capabilities for our consumer packaged goods partners and is a key driver of our digital profitability and alternative
profit.

Proposed Merger with Albertsons

As previously disclosed, on October 13, 2022, we entered into a merger agreement with Albertsons. The proposed

merger is expected to accelerate our go-to-market strategy that includes Fresh, Our Brands, Personalization and
Seamless, and continue our track record of investments across lowering prices, enhancing the customer experience, and
increasing associate wages and benefits. For additional information about the proposed merger with Albertsons, see
Note 16 to the Consolidated Financial Statements.

SEGMENTS

We operate supermarkets, multi-department stores and fulfillment centers throughout the United States. Our retail
operations, which represent 97% of our consolidated sales, is our only reportable segment. We aggregate our operating
divisions into one reportable segment due to the operating divisions having similar economic characteristics with similar
long-term financial performance. In addition, our operating divisions offer customers similar products, have similar
distribution methods, operate in similar regulatory environments, purchase the majority of the merchandise for retail sale
from similar (and in many cases identical) vendors on a coordinated basis from a centralized location, serve similar types
of customers, and are allocated capital from a centralized location. Our operating divisions are organized primarily on a
geographical basis so that the operating division management team can be responsive to local needs of the operating
division and can execute company strategic plans and initiatives throughout the locations in their operating division. This
geographical separation is the primary differentiation between these retail operating divisions. The geographical basis of
organization reflects how the business is managed and how our Chief Executive Officer, who acts as our chief operating
decision maker, assesses performance internally. All of our operations are domestic. Revenues, profits and losses and
total assets are shown in our Consolidated Financial Statements set forth in Item 8 below.

SEASONALITY

The majority of our revenues are generally not seasonal in nature. However, revenues tend to be higher during the

major holidays throughout the year. Additionally, certain significant events including inclement weather systems,
particularly winter storms, tend to affect our sales trends.

HUMAN CAPITAL MANAGEMENT

Our People

We want Kroger to be a place where our customers love to shop and associates love to work. This is why we aim to

create working environments where associates feel encouraged and supported to be their best selves every day. As of
January 28, 2023, Kroger employed nearly 430,000 full- and part-time employees. Our people are essential to our
success, and we focus intentionally on attracting, developing and engaging a diverse workforce that represents the
communities we serve. We strive to create a culture of opportunity and take seriously our role as a leading employer in
the United States. Kroger has provided a large number of people with first jobs, new beginnings and lifelong careers.
We have long been guided by our core values – Honesty, Integrity, Respect, Safety, Diversity and Inclusion.

Attracting & Developing Our Talent

To deliver on our customers’ experiences, we continually improve how we attract and retain talent. In addition to
competitive wages, quality benefits and a safe work environment, we offer a broad range of employment opportunities
for workers of all ages and aspirations. Many supermarket roles offer opportunities to learn new skills, grow and
advance careers.

Associates at all levels of the Company have access to training and education programs to build their skills and
prepare for the roles they want. In 2023, we expect to spend approximately $175 million on training our associates
through onboarding, leadership development programs, and programs designed to upskill associates across the
Company. We continue to invest in new platforms and applications to make learning more accessible to our associates.

Beyond our own programs, associates can take advantage of our tuition reimbursement benefit, which offers up to

$3,500 annually — $21,000 over the course of employment — toward continuing education. These funds can be applied
to education programs like certifications, associate or graduate degrees. Approximately 5,000 associates, 90% of whom
are hourly, have taken advantage of our tuition reimbursement program in 2022. Kroger has invested more than $50
million in this program since it launched in 2018.

Rewarding Our Associates

As we continue to operate in a challenging labor market, we are dedicated to attracting and retaining the right talent

across the organization to be able to continue delivering for our customers. We are investing in our associates by
expanding our industry-leading benefits, including continuing education, training and development, health and wellness.
During 2022, we raised our average hourly rates by more than 6% and have now invested an incremental $1.9 billion in
associate wages since 2018. Our average hourly rate is now more than $18 and more than $23, when comprehensive
benefits are included. We are committed to sustainably increasing associate wages and plan to invest more than $770
million in associates in 2023.

Promoting Diversity, Equity & Inclusion

Diversity and inclusion have been among Kroger’s values for decades. We strive to reflect the communities we
serve and foster a culture that empowers everyone to be their true self, inspires collaboration, and feeds the human spirit.
We have taken a very thoughtful and purposeful approach to enact meaningful change and develop what we believe are
the right actions to achieve true and lasting equality. Our Framework for Action: Diversity, Equity & Inclusion plan
reflects our desire to redefine, deepen, and advance our commitment, mobilizing our people, passion, scale and
resources. The following summarizes our framework: Create a More Inclusive Culture; Develop Diverse Talent;
Advance Diverse Partnerships; Advance Equitable Communities; and Deeply Listen and Report Progress.

Creating a Safe Environment

Our associates’ safety is a top priority and it is one of our core values. We prioritize providing the right safety
training and equipment, safe working conditions and resources to maintain and improve associates’ well-being. Through
our strategy to set clear expectations, routine monitoring, and regular communication and engagement, we reduce the
number of injuries and accidents that happen in our workplace. We track health and safety metrics centrally for an
enterprise-wide view of issues, trends and opportunities and monitor associate injury performance including total
injuries, Occupational Safety and Health Administration (“OSHA”) injury rates, and lost-time injuries, as well as
customer injury metrics like slip-and-fall injuries. We also track the completion of required training for associates and
we regularly share these metrics with leaders and relevant team members to inform management decisions.

Supporting Labor Relations

A majority of our employees are covered by collective bargaining agreements negotiated with local unions affiliated

with one of several different international unions. There are approximately 320 such agreements, usually with terms of
three to five years. Wages, health care and pensions are included in all of these collective bargaining agreements that
cover approximately 65% of our associates. Our objective is to negotiate contracts that balance competitive wage
increases and affordable healthcare for associates with keeping groceries affordable for the communities we serve. Our
obligation is to do this in a way that maintains a financially sustainable business.

MANAGING CLIMATE IMPACTS

Managing climate change impacts is an important part of Thriving Together, Kroger’s Environmental, Social &

Governance (“ESG”) strategy, and has been a focus for our business for many years. With a large portfolio of
supermarkets, distribution warehouses and food production plants, as well as a complex supply chain, we recognize
Kroger’s impact on our climate. We continue to explore opportunities and take steps to reduce the effects of our
operations on the environment and to reduce the potential risk of a changing climate on our operations. This includes
enhancing our operational efficiency, increasing our usage of renewable energy and investing in new technologies. The
key elements of our climate strategy are included below.

Governance

Climate effects are managed by leadership with input from several departments across the business. The Public

Responsibilities Committee of the Board of Directors oversees our responsibilities as a corporate citizen and the
Company’s practices related to environmental sustainability, including climate effects, along with other environmental
and social topics of material importance. Kroger discloses detailed energy and emissions data, as well as our approach to
managing climate-related topics, in our annual ESG Report, which can be found at www.thekrogerco.com/esgreport.

Risk assessment

To help identify and manage climate-related risks to our business, we conduct both qualitative and quantitative risk

assessments. We conducted our first quantitative climate risk assessment to determine the likelihood that different
physical climate risks, including drought, extreme heat and extreme precipitation, would affect Kroger’s operations at
representative facilities in different geographies and, in turn, potentially increase operating costs for these facilities. As a
result of our risk assessments, we do not currently anticipate the modeled physical risks to adversely affect our financial
condition, results of operations or cash flows for the foreseeable future. We plan to continue these qualitative and
quantitative risk assessments moving forward.

Kroger also acknowledges that current and emerging climate-related legislation could affect our business. As a

result of forthcoming state and federal requirements regarding the phase down of hydrofluorocarbon (“HFC”)
refrigerants, we anticipate steadily replacing our refrigerant infrastructure to reach required levels, which could incur
significant costs to the business. If legislation required an accelerated timeline regarding the phase down of HFC
refrigerants, we could incur higher costs. Any such legislation will affect all retailers using refrigerants in their
operations.

Climate adaptation

To help prepare for and manage a variety of risk scenarios, including natural disasters and business disruptions to
our supply chain, we maintain more than 200 business continuity plans. We have installed technologies and processes to
ensure our supermarkets, food production plants, fulfillment centers and supply chain can respond quickly and remain
operational. We also monitor energy availability and costs to help anticipate how changing climate patterns, like
increasing temperatures, could affect our energy-sourcing costs and activities. Our teams also monitor transition risks
due to climate change, including the effect possible new legislation may have on our business.

Climate mitigation

For many years, Kroger has implemented emission reduction projects, including energy efficiency improvements,

refrigerant leak detection and mitigation measures, renewable energy installations and procurement and fleet
efficiencies. In 2020, we set a goal to reduce absolute greenhouse gas (“GHG”) emissions from our operations (scope 1
and 2 emissions) by 30% by 2030, against a 2018 baseline. The goal was developed using climate science and is aligned
with the Paris Agreement, specifically supporting a well-below 2°C climate scenario according to the absolute
contraction method. Kroger is in the process of resetting its GHG reduction target to align with the requirements of the
Science Based Targets initiative. This includes resetting our current Scope 1 and 2 emissions goal to support the 1.5°C
scenario, and setting new Scope 3 emissions goals.

Additional discussion about our approach to managing climate effects is included in our annual ESG Report. The

information in our ESG Report is not part of or incorporated by reference into this Annual Report on Form 10-K.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

The following is a list of the names and ages of the executive officers and the positions held by each such person.

Except as otherwise noted, each person has held office for at least five years. Each officer will hold office at the
discretion of the Board for the ensuing year until removed or replaced.

Name

Age

Recent Employment History

Mary E. Adcock

47 Ms. Adcock was elected Senior Vice President effective May 1, 2019 and is

responsible for retail operations as well as the oversight of all Kroger retail divisions.
From June 2016 to April 2019, she served as Group Vice President of Retail
Operations. Prior to that, Ms. Adcock held leadership roles in Kroger’s Columbus
Division, including Vice President of Operations and Vice President of
Merchandising. Prior to that, Ms. Adcock served as Vice President of Natural Foods
Merchandising and as Vice President of Deli/Bakery Manufacturing and held several
leadership positions in the manufacturing department, including human resources
manager, general manager and division operations manager. Ms. Adcock joined
Kroger in 1999 as human resources assistant manager at the Country Oven Bakery in
Bowling Green, Kentucky.

Stuart W. Aitken

51 Mr. Aitken was named Senior Vice President and Chief Merchant and Marketing

Gabriel Arreaga

Officer in August 2020. He was elected Senior Vice President in February 2019 and
served as Group Vice President from June 2015 to February 2019. He is responsible
for sales, pricing, promotional and category planning for fresh foods, center store and
general merchandise categories, as well as analytics & execution, e-commerce and
Digital Merchandising, and Our Brands. Prior to joining Kroger, he served as the
chief executive officer of dunnhumby USA, LLC. Mr. Aitken has over 15 years of
marketing, academic and technical experience across a variety of industries, and held
various leadership roles with other companies, including Michaels Stores and
Safeway, Inc.

Mr. Arreaga was elected Senior Vice President of Supply Chain in December 2020.
He is responsible for the company’s industry-leading Supply Chain organization,
Logistics, Inventory & Replenishment, Manufacturing, and Fulfillment Centers.
Prior to Kroger, Mr. Arreaga served as Senior Vice President of Supply Chains for
Mondelez, where he was responsible for all operations and functions from field to
consumer, internal and external factories, fulfillment centers, direct to store branches,
Logistics and product development. He was also Global Vice President of
Operations for Stanley Black and Decker and held numerous leadership roles at
Unilever including Vice President of Food and Beverage Operations.

Yael Cosset

49 Mr. Cosset was elected Senior Vice President and Chief Information Officer in May

2019 and is responsible for leading Kroger’s digital strategy, focused on building
Kroger’s presence in the marketplace in digital channels, personalization and e-
commerce. In August 2020, he also assumed responsibility for Kroger’s alternative
profit businesses, including Kroger’s data analytics subsidiary, 84.51 ͦ LLC and
Kroger Personal Finance. Prior to that, Mr. Cosset served as Group Vice President
and Chief Digital Officer, and also as Chief Commercial Officer and Chief
Information Officer of 84.51° LLC. Prior to joining Kroger, Mr. Cosset served in
several leadership roles at dunnhumby USA, LLC, including Executive Vice
President of Consumer Markets and Global Chief Information Officer.

Carin L. Fike

Ms. Fike was elected Vice President and Treasurer effective April 2017. Prior to
that, she served as Assistant Treasurer and also as Director of Investor Relations.
Ms. Fike began her career with Kroger in 1999 as a manager in the Financial
Reporting department after working with PricewaterhouseCoopers in various roles,
including audit manager.

Todd A. Foley

53 Mr. Foley was named Group Vice President, Corporate Controller on October 1,

2021. From April 2017 to September 2021, he served as Vice President and
Corporate Controller. Before that, he held several leadership roles, including Vice
President and Treasurer, Assistant Corporate Controller, and Controller of Kroger’s
Cincinnati/Dayton division. Mr. Foley began his career with Kroger in 2001 as an
audit manager in the Internal Audit Department after working for
PricewaterhouseCoopers in various roles, including senior audit manager.

Valerie L. Jabbar

Ms. Jabbar was elected Senior Vice President effective August 19, 2021 and is

Kenneth C. Kimball

responsible for the oversight of several Kroger retail divisions. From July 2020 to
August 2021, she served as Group Vice President of Center Store Merchandising,
and from September 2018 to June 2020, as Group Vice President of Merchandising.
Prior to that, she served as President of the Ralphs Division from July 2016 to
August 2018. Before that, Ms. Jabbar served as Vice President of Merchandising for
the Ralphs Division and as Vice President of Merchandising for the Mid-Atlantic
Division. She also held several leadership roles, including assistant store director,
category manager, Drug/GM coordinator, G.O. Seasonal manager, assistant director
of Drug/GM and director of Drug GM, and district manager in the Fry’s Division.
She joined the Company in 1987 as a clerk in the Fry’s Division.

57 Mr. Kimball was elected Senior Vice President in March 2022 and is responsible for
the oversight of several Kroger retail divisions. From April 2016 to March 2022, he
served as President of the Smith’s Division. Prior to that, he held several leadership
roles with the Ralphs Division, including Vice President of Operations and Vice
President of Merchandising. Prior to that, he held leadership roles, including store
manager, district manager, and director in the Smith’s Division as well as Senior
Vice President of Sales and Merchandising and Group Vice President of Retail
Operations. Mr. Kimball joined the Company in 1984 as a clerk in the Smith’s
Division.

Timothy A. Massa

56 Mr. Massa was elected Senior Vice President of Human Resources and Labor

Relations in June 2018. Prior to that, he served as Group Vice President of Human
Resources and Labor Relations from June 2014 to June 2018. Mr. Massa joined
Kroger in October 2010 as Vice President, Corporate Human Resources and Talent
Development. Prior to joining Kroger, he served in various Human Resources
leadership roles for 21 years at Procter & Gamble, most recently serving as Global
Human Resources Director of Customer Business Development.

W. Rodney McMullen

62 Mr. McMullen was elected Chairman of the Board effective January 1, 2015, and

Chief Executive Officer effective January 1, 2014. Prior to that, he served as
President and Chief Operating Officer from August 2009 to December 2013. Prior to
that he held numerous leadership roles, including Vice Chairman, Executive Vice
President of Strategy, Planning and Finance, Executive Vice President and Chief
Financial Officer, Senior Vice President, Group Vice President and Chief Financial
Officer, Vice President, Control and Financial Services, and Vice President, Planning
and Capital Management. Mr. McMullen joined Kroger in 1978 as a part-time stock
clerk.

Gary Millerchip

51 Mr. Millerchip was elected Senior Vice President and Chief Financial Officer

effective April 2019. From July 2010 to April 2019, he served as Chief Executive
Officer of Kroger Personal Finance. Before coming to Kroger, Mr. Millerchip was
responsible for the Royal Bank of Scotland (RBS) Personal Credit Card business in
the United Kingdom. He joined RBS in 1987 and held leadership positions in Sales
& Marketing, Finance, Change Management, Retail Banking Distribution Strategy
and Branch Operations during his time there.

Christine S. Wheatley

52 Ms. Wheatley was elected Group Vice President, Secretary and General Counsel in

May 2014. She joined Kroger in February 2008 as Corporate Counsel, and thereafter
served as Senior Attorney, Senior Counsel, and Vice President. Before joining
Kroger, Ms. Wheatley was engaged in the private practice of law for 11 years, most
recently as a partner at Porter Wright Morris & Arthur in Cincinnati.

COMPETITIVE ENVIRONMENT

For the disclosure related to our competitive environment, see Item 1A under the heading “Competitive

Environment.”

ITEM 1A. RISK FACTORS.

There are risks and uncertainties that can affect our business. The significant risk factors are discussed below. The
following information should be read together with “Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” which includes forward-looking statements and factors that could cause us not to realize our
goals or meet our expectations.

OUR PROPOSED TRANSACTION WITH ALBERTSONS CREATES INCREMENTAL BUSINESS,
REGULATORY AND REPUTATIONAL RISKS

On October 13, 2022, we entered into a merger agreement with Albertsons Companies Inc. (“Albertsons”), which

sets forth the terms of our proposed transaction. The proposed transaction with Albertsons entails important risks,
including, among others: the expected timing and likelihood of completion of the proposed transaction, including the
timing, receipt and terms and conditions of any required governmental and regulatory clearance of the proposed
transaction; the effect and terms and conditions of any potential divestitures, including those that may be imposed by
regulators as a condition to the approval of the proposed transaction, and/or the separation of SpinCo (as described in the
merger agreement); the occurrence of any event, change or other circumstances that could give rise to the termination of
the merger agreement; the outcome of any legal proceedings that have been instituted and may in the future be instituted
against the parties and others following announcement of the merger agreement and proposed transaction; the inability to
consummate the proposed transaction due to the failure to satisfy other conditions to complete the proposed transaction;
risks that the proposed transaction disrupts our current plans and operations; the ability to identify and recognize,
including on the expected timeline, the anticipated total shareholder return (“TSR”), revenue and EBITDA expectations;
the amount of the costs, fees, expenses and charges related to the proposed transaction; the risk that transaction and/or
integration costs are greater than expected, including as a result of conditions regulators put on any approvals of the
transaction; the potential effect of the announcement and/or consummation of the proposed transaction on relationships,
including with associates, suppliers and competitors; our ability to maintain an investment grade credit rating; the risk
that management’s attention is diverted from other matters; risks related to the potential effect of general economic,
political and market factors, including changes in the financial markets as a result of inflation or measures implemented
to address inflation, and any epidemic, pandemic or disease outbreaks, on Kroger, Albertsons or the proposed
transaction; the risk of adverse effects on the market price of our or Albertsons’s securities or on Albertsons’s or the
Company’s operating results for any reason; the occurrence of any event, change or other circumstances that could give
rise to the termination of the merger agreement; and other risks described in our filings with the SEC.

INTEGRATION OF NEW BUSINESS AND STRATEGIC ALLIANCES

In addition to the above, we enter into mergers, acquisitions and strategic alliances with expected benefits including,
among other things, operating efficiencies, procurement savings, innovation and sharing of best practices, that may allow
for future growth. Achieving the anticipated or desired benefits may be subject to a number of significant challenges
and uncertainties, including, without limitation, whether unique corporate cultures will work collaboratively in an
efficient and effective manner, the coordination of geographically separate organizations, the possibility of imprecise
assumptions underlying expectations regarding potential synergies, capital requirements, and the integration process,
unforeseen expenses and delays, and competitive factors in the marketplace. We could also encounter unforeseen
transaction and integration-related costs or other circumstances such as unforeseen liabilities or other issues. Many of
these potential circumstances are outside of our control and any of them could result in increased costs, decreased
revenue, decreased synergies and the diversion of management time and attention. If we are unable to achieve our
objectives within the anticipated time frame, or at all, the expected benefits may not be realized fully or at all, or may
take longer to realize than expected, which could have an adverse effect on our business, financial condition, results of
operations or cash flows.

COMPETITIVE ENVIRONMENT

The operating environment for the food retailing industry continues to be characterized by the fragmentation of
local, regional, and national retailers, including both retail and digital formats, intense competition and entry of non-
traditional competitors. Customer behavior shifted quickly and considerably during the pandemic, including a shift from
food away from home to food at home. We see three major trends shaping the industry: e-commerce, cooking at home
and prepared foods to go. If we do not appropriately or accurately anticipate customer preferences or fail to quickly
adapt to these changing preferences, or if trends shift more quickly to food away from home, our sales and profitability
could be adversely affected. If we fail to meet the evolving needs of our customers, our ability to compete and our
financial condition, results of operations or cash flows could be adversely affected.

We are continuing to enhance the customer connection with investments in our four strategic pillars – Seamless,

Personalization, Fresh, and Our Brands. Each of these are strategies designed to better serve our customers and to
generate customer loyalty and sustainable growth momentum. We believe our plans to continue to improve these four
strategic pillars will enable us to meet the wide-ranging needs and expectations of our customers. If we are unable to
continue to enhance the foregoing key elements of our connection with customers, or they fail to strengthen customer
loyalty, our ability to compete and our financial condition, results of operations or cash flows could be adversely
affected. Our ecosystem monetizes the traffic and data insights generated by our retail supermarket business to create
fast-growing, asset-light and margin rich revenue streams. We may be unsuccessful in implementing our alternative
profit strategy, which could adversely affect our business growth and our financial condition, results of operations or
cash flows. The nature and extent to which our competitors respond to the evolving and competitive industry by
developing and implementing their competitive strategies could adversely affect our profitability.

In addition, evolving customer preferences and the advancement of online, delivery, ship to home, and mobile
channels in our industry increase the competitive environment. We must anticipate and meet these evolving customer
preferences and continue to implement technology, software and processes to be able to conveniently and cost-
effectively fulfill customer orders. Providing flexible fulfillment options and implementing new technology is complex
and may not meet customer preferences. If we are not successful in reducing or offsetting the cost of fulfilling orders
outside of our traditional in-store channel with efficiencies, cost-savings, expense reductions, or alternative revenues, our
financial condition, results of operations or cash flows could be adversely affected.

In addition, if we do not successfully develop and maintain a relevant digital experience for our customers, our
business, financial condition, results of operations or cash flows could be adversely affected. Digital retailing is rapidly
evolving, and we must keep pace with new developments by our competitors as well as the evolving needs and
preferences of our customers. Our digital business accelerated significantly during the COVID-19 pandemic. We must
compete by offering a convenient shopping experience for our customers regardless of how they choose to shop with us,
and by investing in, providing and maintaining relevant customer-facing apps and interfaces that have the features
customers want that are also reliable and easy to use. The future success of the digital business will also depend on the
efficiency and cost effectiveness of fulfilling orders across our modalities, whether in store, in pickup-only locations, or
through customer fulfillment centers powered by Ocado.

PRODUCT SAFETY

Customers count on Kroger to provide them with safe food and drugs and other merchandise. Concerns regarding

the safety of the products that we sell could cause shoppers to avoid purchasing certain products from us, or to seek
alternative sources of supply even if the basis for the concern is outside of our control. Any lost confidence on the part
of our customers would be difficult and costly to reestablish. We could be adversely affected by personal injury or
product liability claims, product recalls, or other health and safety issues, which occur from time to time. If we sell
products that cause illness or injury to customers, resulting from product contamination or spoilage, the presence of
certain substances, or damage caused in handling, storage or transportation, we could be exposed to claims or litigation.
Any issue regarding the safety of items, whether Our Brands items manufactured by the Company or for the Company
or CPG products we sell, regardless of the cause, could have a substantial and adverse effect on our reputation, financial
condition, results of operations or cash flows.

EMPLOYEE MATTERS

A majority of our associates are covered by collective bargaining agreements with unions, and our relationship with

those unions, including a prolonged work stoppage affecting a substantial number of locations, could have a material
adverse effect on our financial condition, results of operations or cash flows. We are a party to approximately 310
collective bargaining agreements. Upon the expiration of our collective bargaining agreements, work stoppages by the
affected workers could occur (and have occurred in the past) if we are unable to negotiate new contracts with labor
unions. In addition, changes to national labor policy could affect labor relations with our associates and relationships
with unions. Further, if we are unable to control health care, pension and wage costs, or if we have insufficient
operational flexibility under our collective bargaining agreements, we may experience increased operating costs and an
adverse effect on our financial condition, results of operations or cash flows.

We have committed to paying fair wages and providing the benefits that were collectively bargained with the United

Food and Commercial Workers (“UFCW”) and other labor unions representing associates. Our ability to control labor
and benefit costs is subject to numerous internal and external factors, including regulatory changes, wage rates, and
healthcare and other insurance costs. Changes to wage regulations, including further increases in the minimum wage and
extra pay ordinances enacted by local governments, could have an impact on our future financial condition, results of
operations or cash flows. Our ability to meet our labor needs, while controlling wages and other costs, is subject to
numerous external factors, including the available qualified workforce in each area where we are located, unemployment
levels within those areas, wage rates, and changes in employment and labor laws.

Our continued success depends on the ongoing contributions of our associates, including members of our senior
management and other key personnel. We must recruit, hire, develop and retain qualified associates with an increasingly
large range of skills to meet the needs of our evolving and complex business. We compete with other retail and non-
retail businesses for these associates and invest significant resources in training and motivating them. Competition
among potential employers has resulted, and may in the future result, in increased associate costs and has from time to
time affected our ability to recruit and retain associates. There is no assurance that we will be able to attract or retain
sufficient highly qualified associates in the future, which could have a material adverse effect on our business, financial
condition, results of operations or cash flows.

DATA AND TECHNOLOGY

Our business is increasingly dependent on information technology systems that are complex and vital to continuing

operations, resulting in an expansion of our technological presence and corresponding risk exposure. If we were to
experience difficulties maintaining or operating existing systems or implementing new systems, we could incur
significant losses due to disruptions in our operations. As we modernize legacy systems, if we are unable to successfully
implement those systems in a coordinated manner across internal and external stakeholders, we could be subject to
business interruption or reputation risk with our customers, suppliers or associates.

Through our sales and marketing activities, we collect and store some personal information that our customers
provide to us. We also gather and retain information about our associates in the normal course of business. Under certain
circumstances, we may share information with vendors that assist us in conducting our business, as required by law, or
otherwise in accordance with our privacy policy.

Our technology systems have been, and may be in the future, disrupted from circumstances beyond our control, as
we regularly defend against and respond to data security incidents. Cyber-attackers have targeted and accessed, and may
in the future again target and, if successful, access, information stored in our or our vendors’ systems in order to
misappropriate confidential customer or business information. Due to the ongoing war between Russia and Ukraine,
there is an increased possibility of cyberattacks that could either directly or indirectly affect our operations. Although
we have implemented procedures to protect our information, and require our vendors to do the same, we cannot be
certain that our security systems will successfully defend against, or be able to effectively respond to, rapidly evolving,
increasingly sophisticated cyber-attacks as they become more difficult to detect and defend against. Further, a Kroger
associate, a contractor or other third party with whom we do business may in the future circumvent our security
measures in order to obtain information or may inadvertently cause a breach involving information. In addition,
hardware, software or applications we may use may have inherent defects, vulnerabilities, or could be inadvertently or
intentionally applied or used in a way that could compromise our information security.

Our cybersecurity program, continued investment in our information technology systems, and our processes to
evaluate and select vendors with reasonable information security controls may not effectively insulate us from potential
attacks, data breaches or disruptions to our business operations, which could result in a loss of customers or business
information, negative publicity, damage to our reputation, and exposure to claims from customers, financial institutions,
regulatory authorities, payment card associations, associates and other persons. Any such events could have an adverse
effect on our business, financial condition, results of operations or cash flows and may not be covered by our insurance.
In addition, compliance with privacy and information security laws and standards may result in significant expense due
to increased investment in technology and the development of new operational processes and may require us to devote
significant management resources to address these issues. The costs of attempting to protect against the foregoing risks
and the costs of responding to cyber-attacks are significant. Following a cyber-attack, our and/or our vendors’
remediation efforts may not be successful, and a cyber-attack could result in interruptions, delays or cessation of service,
and loss of existing or potential customers. In addition, breaches of our and/or our vendors’ security measures and the
unauthorized dissemination of sensitive personal information or confidential information about us or our customers
could expose our customers’ private information and our customers to the risk of financial or medical identity theft, or
expose us or other third parties to a risk of loss or misuse of this information, and result in investigations, regulatory
enforcement actions, material fines and penalties, loss of customers and business relationships, litigation or other actions
which could have a material adverse effect on our brands, reputation, business, financial condition, results of operations
or cash flows.

Data governance failures can adversely affect our reputation and business. Our business depends on our customers’

willingness to entrust us with their personal information. Events that adversely affect that trust, including inadequate
disclosure to our customers of our uses of their information, failures to honor new and evolving data privacy rights,
failing to keep our information technology systems and our customers’ sensitive information secure from significant
attack, theft, damage, loss or unauthorized disclosure or access, whether as a result of our action or inaction (including
human error) or that of our business associates, vendors or other third parties, could adversely affect our brand and
reputation and operating results and also could expose and/or has exposed us to mandatory disclosure to the media,
litigation (including class action litigation), governmental investigations and enforcement proceedings, material fines,
penalties and/or remediation costs, and compensatory, special, punitive and statutory damages, consent orders, and/or
injunctive relief, any of which could adversely affect our businesses, financial condition, results of operations or cash
flows. Large scale data breaches at other entities, including supply chain security vulnerabilities, increase the challenge
we and our vendors face in maintaining the security of our information technology systems and proprietary information
and of our customers’ information. There can be no assurance that such failures will not occur, or if any do occur, that
we will detect them or that they can be sufficiently remediated.

The use of data by our business and our business associates is highly regulated. Privacy and information-security
laws and regulations change, and compliance with them may result in cost increases due to, among other things, systems
changes and the development of new processes. If we, our third party service providers, or those with whom we share
information fail to comply with laws and regulations, or self-regulatory regimes, that apply to all or parts of our
business, such as section 5 of the FTC Act, the California Consumer Privacy Act (CCPA), the Health Insurance
Portability and Accountability Act (HIPAA), or applicable international laws such as the EU General Data Protection
Regulation (GDPR), our reputation could be damaged, possibly resulting in lost business, and we could be subjected to
additional legal risk or financial losses as a result of non-compliance.

PAYMENT SYSTEMS

We accept payments using a variety of methods, including cash and checks, select credit and debit cards, and
Kroger Pay, a mobile payment solution. As we offer new payment options to our customers, we may be subject to
additional rules, regulations, compliance requirements, and higher fraud losses. For certain payment methods, we pay
interchange and other related acceptance fees, along with additional transaction processing fees. We rely on third parties
to provide payment transaction processing services for credit and debit cards. It could disrupt our business if these
companies become unwilling or unable to provide these services to us, including due to short term disruption of service.
We are also subject to evolving payment card association and network operating rules, including data security rules,
certification requirements and rules governing electronic funds transfers. For example, we are subject to Payment Card
Industry Data Security Standards (“PCI DSS”), which contain compliance guidelines and standards with regard to our
security surrounding the physical and electronic storage, processing and transmission of individual cardholder data. If
our payment card terminals or internal systems are breached or compromised, we may be liable for card re-issuance
costs and other costs, subject to fines and higher transaction fees, and lose our ability to accept card payments from our
members, or if our third-party service providers’ systems are breached or compromised, our business, financial
condition, results of operations or cash flows could be adversely affected.

INDEBTEDNESS

Our indebtedness could reduce our ability to obtain additional financing for working capital, mergers and
acquisitions or other purposes and could make us vulnerable to future economic downturns as well as competitive
pressures. If debt markets do not permit us to refinance certain maturing debt, we may be required to dedicate a
substantial portion of our cash flow from operations to payments on our indebtedness. Changes in our credit ratings, or
in the interest rate environment, could have an adverse effect on our financing costs and structure.

LEGAL PROCEEDINGS AND INSURANCE

From time to time, we are a party to legal proceedings, including matters involving personnel and employment
issues, personal injury, contract disputes, regulatory claims and other proceedings. Other legal proceedings purport to be
brought as class actions on behalf of similarly situated parties. Some of these proceedings could result in a substantial
loss to Kroger. We estimate our exposure to these legal proceedings and establish accruals for the estimated liabilities,
where it is reasonably possible to estimate and where an adverse outcome is probable. Assessing and predicting the
outcome of these matters involves substantial uncertainties. Adverse outcomes in these legal proceedings, or changes in
our evaluations or predictions about the proceedings, could have an adverse effect on our financial condition, results of
operations or cash flows. Please also refer to the “Litigation” section in Note 12 to the Consolidated Financial
Statements.

We use a combination of insurance and self-insurance to provide for potential liability for workers’ compensation,
automobile and general liability, property, director and officers’ liability, cyber risk exposure and associate health care
benefits. Any actuarial projection of losses is subject to a high degree of variability. With respect to insured matters, we
are liable for retention amounts that vary by the nature of the claim, and some losses may not be covered by insurance.
Changes in legal claims, trends and interpretations, variability in inflation rates, changes in the nature and method of
claims settlement, benefit level changes due to changes in applicable laws, insolvency of insurance carriers, and changes
in discount rates could all affect our financial condition, results of operations or cash flows.

MULTI-EMPLOYER PENSION OBLIGATIONS

As discussed in more detail below in “Management’s Discussion and Analysis of Financial Condition and Results of

Operations-Critical Accounting Policies-Multi-Employer Pension Plans,” Kroger contributes to several multi-employer
pension plans based on obligations arising under collective bargaining agreements with unions representing associates
covered by those agreements. We believe the present value of actuarially accrued liabilities in most of these multi-
employer plans exceeds the value of the assets held in trust to pay benefits, and we expect that Kroger’s contributions to
most of these funds will increase over the next few years. A significant increase to those funding requirements could
adversely affect our financial condition, results of operations or cash flows. Despite the fact that the pension obligations
of these funds are not the liability or responsibility of the Company, except as noted below, there is a risk that the
agencies that rate our outstanding debt instruments could view the underfunded nature of these plans unfavorably, or
adjust their current views unfavorably, when determining their ratings on our debt securities. Any downgrading of our
debt ratings likely would adversely affect our cost of borrowing and access to capital.

We also currently bear the investment risk of two multi-employer pension plans in which we participate. In
addition, we have been designated as the named fiduciary of these funds with sole investment authority of the assets of
these funds. If investment results fail to meet our expectations, we could be required to make additional contributions to
fund a portion of or the entire shortfall, which could have an adverse effect on our business, financial condition, results
of operations or cash flows.

FUEL

We sell a significant amount of fuel in our 1,637 fuel centers, which could face increased regulation, including due

to climate change or other environmental concerns, and demand could be affected by concerns about the effect of
emissions on the environment as well as retail price increases. We are unable to predict future regulations,
environmental effects, political unrest, acts of war or terrorism, disruptions to the economy, including but not limited to
the COVID-19 pandemic, the war between Russia and Ukraine, and other matters that affect the cost and availability of
fuel, and how our customers will react to such factors, which could adversely affect our financial condition, results of
operations or cash flows.

ECONOMIC CONDITIONS

Our operating results could be materially affected by changes in overall economic conditions and other economic
factors that impact consumer confidence and spending, including discretionary spending. Future economic conditions
affecting disposable consumer income such as employment levels, business conditions, overall economic slowdown or
recession, changes in housing market conditions, changes in government benefits such as SNAP/EBT or child care
credits, the availability of credit, interest rates, inflation or deflation, tax rates and other matters could reduce consumer
spending. Inflation could materially affect our operating results through increases to our cost of goods, supply chain
costs and labor costs. In addition, the economic factors listed above, or any other economic factors or circumstances
resulting in higher transportation, labor, insurance or healthcare costs or commodity prices, and other economic factors
can increase our merchandise costs and operating, general and administrative expenses and otherwise adversely affect
our financial condition, results of operations or cash flows. Increased fuel prices also have an effect on consumer
spending and on our costs of producing and procuring products that we sell. A deterioration in overall economic
conditions, including the uncertainty caused by inflation rate volatility, could adversely affect our business in many
ways, including slowing sales growth, reducing overall sales and reducing gross margins. We regularly maintain cash
balances at third-party financial institutions in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance
limit and are therefore reliant on banks and other financial institutions to safeguard and allow ready access to these
assets. If banks or financial institutions enter receivership or become insolvent in the future in response to financial
conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents
and investments may be threatened. We are unable to predict how the global economy and financial markets will
perform. If the global economy and financial markets do not perform as we expect, it could adversely affect our
business, financial condition, results of operations or cash flows.

COVID-19

COVID-19 has impacted and may continue to impact our business, including our supply chain, store operations and
merchandising functions, as well as our associates. While our operations have generally stabilized since the peak of the
pandemic, we cannot predict with certainty the extent that our operations may continue to be impacted by any continuing
effects of COVID-19 on us or on our customers, suppliers, vendors, and other business partners, and each of their
financial conditions; however, any adverse effect on these parties could materially and adversely impact us. To the
extent that COVID-19 continues to affect the U.S. and global economy and our business, it may also heighten other risks
described in this section, including but not limited to those related to consumer behavior and expectations, competition,
implementation of strategic initiatives, cybersecurity threats, payment-related risks, supply chain disruptions, labor
availability and cost, litigation and operational risk as a result of regulatory requirements.

LEGAL AND GOVERNMENT REGULATION

We are subject to various laws, regulations, and administrative practices that affect our business, including laws and

regulations involving antitrust and competition, privacy, data protection, environmental, healthcare, anti-bribery, anti-
corruption, tax, accounting, and financial reporting or other matters. These and other rapidly changing laws, regulations,
policies and related interpretations, as well as increased enforcement actions by various governmental and regulatory
agencies, create challenges for the Company, may alter the environment in which we do business and may increase the
ongoing costs of compliance, which could adversely affect our financial condition, results of operations and cash flows.
If we are unable to continue to meet these challenges and comply with all laws, regulations, policies and related
interpretations, it could negatively affect our reputation and our business results. Additionally, we are currently, and in
the future may be, subject to a number of inquiries, investigations, claims, proceeding, and requests for information from
governmental agencies or private parties, the adverse outcomes of which could harm our business. Failure to
successfully manage these new or pending regulatory and legal matters and resolve such matters without significant
liability or damage to our reputation may adversely affect our financial condition, results of operations and cash flows.
Furthermore, if new or pending legal or regulatory matters result in fines or costs in excess of the amounts accrued to
date, that may also materially affect our financial condition, results of operations or cash flows.

In addition, increasing governmental and societal attention to environmental, social, and governance (ESG) matters,

including expanding voluntary reporting, diligence, and disclosure on topics such as climate change, waste production,
water usage, human capital, labor, and risk oversight, could expand the nature, scope, and complexity of matters that we
are required to control, assess, and report and could negatively affect the Company’s reputation.

Additionally, we must comply with numerous provisions regulating, among other things, health and sanitation
standards, food labeling and safety, equal employment opportunity, minimum wages and licensing for the sale of food,
drugs, and alcoholic beverages. We cannot predict future laws, regulations, interpretations, administrative orders, or
applications, or the effect they will have on our operations. They could, however, significantly increase the cost of doing
business. They also could require the reformulation of some of the products that we sell (or manufacture for sale to third
parties) to meet new standards. We also could be required to recall or discontinue the sale of products that cannot be
reformulated. These changes could result in additional record keeping, expanded documentation of the properties of
certain products, expanded or different labeling, or scientific substantiation. Any or all of these requirements could have
an adverse effect on our financial condition, results of operations or cash flows.

WEATHER, NATURAL DISASTERS AND OTHER EVENTS

A large number of our stores, distribution facilities and fulfillment centers are geographically located in areas that
are susceptible to hurricanes, tornadoes, floods, droughts, ice and snow storms and earthquakes. Weather conditions and
natural disasters have, and may again in the future, disrupt our operations at one or more of our facilities, interrupt the
delivery of products to our stores, substantially increase the cost of products, including supplies and materials and
substantially increase the cost of energy needed to operate our facilities or deliver products to our facilities. Moreover,
the effects of climate change, including those associated with extreme weather events, may affect our ability to procure
needed commodities at costs and in quantities that are optimal for us or at all. Adverse weather, natural disasters,
geopolitical and catastrophic events, such as war, civil unrest, acts of terrorism or other acts of violence, including active
shooter situations (which have occurred in the past at our locations), or pandemics, such as the spread of COVID-19, or
other future pandemics and other matters that could reduce consumer spending, could materially affect our financial
condition, results of operations or cash flows.

CLIMATE IMPACT

The long-term effects of global climate change present both physical risks, such as extreme weather conditions or
rising sea levels, and transition risks, such as regulatory or technology changes, which are expected to be widespread and
unpredictable. These changes could over time affect, for example, the availability and cost of products, commodities and
energy including utilities, which in turn may impact our ability to procure goods or services required for the operation of
our business at the quantities and levels we require. In addition, many of our operations and facilities are in locations that
may be affected by the physical risks of climate change, and we face the risk of losses incurred as a result of physical
damage to stores, distribution or fulfillment centers, loss or spoilage of inventory and business interruption caused by
such events. We also use natural gas, diesel fuel, gasoline and electricity in our operations, all of which could face
increased regulation and cost increases as a result of climate change or other environmental concerns. Transitioning to
alternative energy sources, such as renewable electricity or electric vehicles, and investments in new technologies, could
incur higher costs. Regulations limiting greenhouse gas emissions and energy inputs will also increase in coming years,
which may increase our costs associated with compliance, tracking, reporting, and sourcing. These events and their
impacts could otherwise disrupt and adversely affect our operations and could have an adverse effect on our financial
condition, results of operations or cash flows.

SUPPLY CHAIN

Disruption in our global supply chain could negatively affect our business. The products we sell are sourced from a

wide variety of domestic and international vendors, and any future disruption in our supply chain or inability to find
qualified vendors and access products that meet requisite quality and safety standards in a timely and efficient manner
could adversely affect our business. The loss or disruption of such supply arrangements for any reason, labor disputes,
loss or impairment of key manufacturing sites, acts of war or terrorism, disruptive global political events, such as the
ongoing war between Russia and Ukraine, quality control issues, a supplier’s financial distress, natural disasters or
health crises, including the COVID-19 pandemic, regulatory actions or ethical sourcing issues, trade sanctions or other
external factors over which we have no control, could interrupt product supply and, if not effectively managed and
remedied, have an adverse effect on our business, financial condition, results of operations or cash flows.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2.

PROPERTIES.

As of January 28, 2023, we operated approximately 2,800 owned or leased supermarkets, distribution warehouses
and food production plants through divisions, subsidiaries or affiliates. These facilities are located throughout the United
States. We generally own store equipment, fixtures and leasehold improvements, as well as processing and food
production equipment. The total cost of our owned assets and finance leases at January 28, 2023, was $53.4 billion while
the accumulated depreciation was $28.6 billion.

We lease certain store real estate, warehouses, distribution centers, office space and equipment. We operate in
leased facilities in approximately half of our store locations. Lease terms generally range from 10 to 20 years with
options to renew for varying terms at our sole discretion. Certain leases also include options to purchase the leased
property. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Certain leases include
escalation clauses or payment of executory costs such as property taxes, utilities or insurance and maintenance. Rent
expense for leases with escalation clauses or other lease concessions are accounted for on a straight-line basis over the
lease term. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Certain properties or portions thereof are subleased to others for periods generally ranging from one to 20 years. For
additional information on lease obligations, see Note 9 to the Consolidated Financial Statements.

ITEM 3.

LEGAL PROCEEDINGS.

Incorporated by reference herein is information regarding certain legal proceedings in which we are involved as set

forth under “Litigation” contained in Note 12 – “Commitments and Contingencies” in the notes to the Consolidated
Financial Statements in Item 8 of Part II of this Annual Report.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS

AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our common stock is listed on the New York Stock Exchange under the symbol “KR.” As of March 22, 2023, there

were 25,062 shareholders of record.

During 2022, we paid two quarterly cash dividends of $0.21 per share and two quarterly cash dividends of $0.26 per
share. During 2021, we paid two quarterly cash dividends of $0.18 per share and two quarterly cash dividends of $0.21
per share. On March 1, 2023, we paid a quarterly cash dividend of $0.26 per share. On March 9, 2023, we announced
that our Board of Directors declared a quarterly cash dividend of $0.26 per share, payable on June 1, 2023, to
shareholders of record at the close of business on May 15, 2023. We currently expect to continue to pay comparable
cash dividends on a quarterly basis, that will increase over time, depending on our earnings and other factors, including
approval by our Board.

For information on securities authorized for issuance under our existing equity compensation plans, see Item 12

under the heading “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.”

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**

200

150

100

50
02/03/18

02/02/19

02/01/20

01/30/21

01/29/22

01/28/23

The Kroger Co.

S&P 500

Peer Group

Company Name/Index
The Kroger Co.
S&P 500 Index
Peer Group

Base
Period
2017
100
100
100

2018
97.48
99.94
97.12

Kroger’s fiscal year ends on the Saturday closest to January 31.

Data supplied by Standard & Poor’s.

INDEXED RETURNS
Years Ending
2020
125.25
142.45
144.16

2019
95.47
121.49
117.20

2021
161.03
172.36
170.23

2022
170.17
160.94
164.97

The foregoing Performance Graph will not be deemed incorporated by reference into any other filing, absent an

express reference thereto.

* Total assumes $100 invested on February 3, 2018, in The Kroger Co., S&P 500 Index, and the Peer Group, with

reinvestment of dividends.

** The Peer Group consists of Albertsons Companies, Inc. (included from June 26, 2020 when it began trading),

Costco Wholesale Corporation, CVS Health Corporation, Koninklijke Ahold Delhaize N.V., Supervalu Inc.
(included through October 19, 2018 when it was acquired by United Natural Foods), Target Corp., Walgreens Boots
Alliance Inc. and Walmart Inc.

The following table presents information on our purchases of our common shares during the fourth quarter of 2022:

ISSUER PURCHASES OF EQUITY SECURITIES

Period(1)
First four weeks

November 6, 2022 to December 3, 2022

Second four weeks

December 4, 2022 to December 31, 2022

Third four weeks

January 1, 2023 to January 28, 2023

Total

Total Number of
Shares Purchased
as Part of Publicly
Price Paid Per Announced Plans

Average

Share(2)

or Programs(3)

Approximate Dollar
Value of Shares
that May Yet Be
Purchased Under
the Plans or
Programs(4)
(in millions)

Total Number

of Shares

Purchased(2)

26,566

87,928

83,500
197,994

$
$

47.90

45.83

45.15
45.82

26,566 $

66,804 $

83,500 $
176,870 $

1,000

1,000
1,000

(1) The reported periods conform to our fiscal calendar composed of thirteen 28-day periods. The fourth quarter of 2022

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 (“1999
Repurchase Program”) and (ii) 21,124 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) On September 9, 2022, our Board of Directors approved a $1.0 billion share repurchase program to reacquire shares
via open market purchase or privately negotiated transactions, block trades, or pursuant to trades intending to
comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “September 2022
Repurchase Program”). The amounts shown in this column reflect the amount remaining under the September 2022
Repurchase Program as of the specified period end dates. Amounts available under the 1999 Repurchase Program
are dependent upon option exercise activity. The September 2022 Repurchase Program and the 1999 Repurchase
Program do not have an expiration date but may be suspended or terminated by our Board of Directors at any time.
No shares have been repurchased under the September 2022 authorization. During the third quarter of 2022, we
paused our share repurchase program to prioritize de-leveraging following the proposed merger with Albertsons.

ITEM 6.

RESERVED.

Not applicable.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS.

The following discussion and analysis of financial condition and results of operations of The Kroger Co. should be
read in conjunction with the “Forward-looking Statements” section set forth in Part I and the “Risk Factors” section set
forth in Item 1A of Part I. MD&A is provided as a supplement to, and should be read in conjunction with, our
Consolidated Financial Statements and the accompanying notes thereto contained in Item 8 of this report, as well as Part
II, Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K
for the year ended January 29, 2022, which provides additional information on comparisons of fiscal years 2021 and
2020. Kroger is unable to provide a full reconciliation of forward-looking GAAP and non-GAAP measures used in this
Annual Report on Form 10-K without unreasonable effort because it is not possible to predict certain of our adjustment
items with a reasonable degree of certainty. This information is dependent upon future events and may be outside of our
control and its unavailability could have a significant effect on future financial results.

OUR VALUE CREATION MODEL – DELIVERING CONSISTENT AND ATTRACTIVE TOTAL
SHAREHOLDER RETURN

Kroger’s proven value creation model is allowing us to deliver today and invest for the future. The foundation of our

value creation model is our omnichannel food retail business, which is built on Kroger’s strategic assets: our stores,
digital ecosystem, Our Brands and our data. These assets, when combined with our go-to-market strategy, deliver a
compelling value proposition for our customers. We continue to build long-term customer loyalty through Fresh, Our
Brands, Personalization and our seamless shopping experience to drive sustainable sales growth in our retail
supermarket business, including fuel and health and wellness. This, in turn, generates the data and traffic that enables our
fast growing, high operating margin alternative profit businesses. We are evolving from a traditional food retailer into a
more diverse, food first business that we expect will consistently deliver net earnings growth in the future. This will be
achieved by:

• Growing identical sales without fuel. Our plan involves maximizing growth opportunities in our supermarket
business and is supported by continued strategic investments in our customers, associates, and our seamless
ecosystem to ensure we deliver a full, friendly and fresh experience for every customer, every time. As more
and more customers incorporate ecommerce into their permanent routines, we expect digital sales to grow at a
double-digit rate – a faster pace than other food at home sales – over time; and

• Expanding operating margin, through a balanced model where strategic price investments for our customers,
investments in our associates’ wages and benefits and investments in technology to deliver a better associate
and customer experience are offset by (i) our cost savings program, which has delivered $1 billion in cost
savings annually for the past five fiscal years, (ii) improving our product mix, as we accelerate momentum with
our Fresh and Our Brands initiatives, and (iii) growing our alternative profit businesses.

We expect to continue to generate strong free cash flow and are committed to being disciplined with capital

deployment in support of our value creation model and stated capital allocation priorities. Our first priority is to invest in
the business through attractive high return opportunities that drive long-term sustainable net earnings growth. We are
committed to maintaining our current investment grade debt rating and our net total debt to adjusted EBITDA ratio
target range of 2.30 to 2.50. We also expect to continue to grow our dividend over time and return excess cash to
shareholders via stock repurchases, subject to Board approval. During the third quarter of 2022, we paused our share
repurchase program to prioritize de-leveraging following the proposed merger with Albertsons.

We expect our value creation model will result in total shareholder return within our target range of 8% to 11% over

time, which does not contemplate the effect of the proposed merger with Albertsons.

2022 EXECUTIVE SUMMARY

We achieved exceptional results in 2022 as we executed on our Leading with Fresh and Accelerating with Digital

strategy, building on record years in 2020 and 2021. These results were driven by positive identical sales without fuel of
5.6%, disciplined margin management and strong fuel profitability. Our proven go-to-market strategy enables us to
successfully navigate many operating environments, which has allowed us to effectively manage product cost inflation
through strong sourcing practices while maintaining competitive prices and helping customers manage their budgets.

Our value proposition, which includes providing great quality, fresh products at affordable prices, data-driven
promotions, trusted Our Brands products and our fuel rewards program, is resonating with shoppers and driving total
household growth and enhanced customer loyalty. During the year, we continued to invest in wages and the associate
experience and in creating zero hunger, zero waste communities, as we believe these components of our strategy are
critical to achieving long term sustainable growth. In 2022, our average hourly rates increased by more than 6% and we
have now invested an incremental $1.9 billion in associate wages since 2018. Our average hourly rate is now more than
$18 and more than $23, when comprehensive benefits are included.

In 2023, we expect to build on this momentum and deliver revenue and adjusted net earnings per diluted share
growth on top of the record results achieved over the past three years. We expect to grow revenue by continuing to
invest in our customers through competitive pricing and personalization, fresh products and a better shopping
experience. Building on our significant investments over the past four years, we will also continue to increase associate
wages. We will fund these investments through product mix improvements, cost saving initiatives and growth in our
alternative profit businesses. Looking forward, we believe we are well positioned to successfully operate in an evolving
economic environment and continue to deliver attractive and sustainable total shareholder return within our target range
of 8% to 11% over time, which does not contemplate the effect of the proposed merger with Albertsons.

The following table provides highlights of our financial performance:

Financial Performance Data
($ in millions, except per share amounts)

Sales
Sales without fuel
Net earnings attributable to The Kroger Co.
Adjusted net earnings attributable to The Kroger Co.
Net earnings attributable to The Kroger Co. per diluted common share
Adjusted net earnings attributable to The Kroger Co. per diluted common

Operating profit
Adjusted FIFO operating profit
Dividends paid
Dividends paid per common share
Identical sales excluding fuel
FIFO gross margin rate, excluding fuel, bps decrease
OG&A rate, excluding fuel and Adjusted Items, bps decrease
Increase (decrease) in total debt, including obligations under finance leases

compared to prior fiscal year end

Share repurchases

2022
148,258
129,626
2,244
3,104
3.06

4.23
4,126
5,079
682
0.94
5.6 %

(0.09)
0.19

14
993

$
$
$
$
$

$
$

Fiscal Year
Percentage
Change

7.5 % $
5.2 % $
35.6 % $
10.8 % $
41.0 % $

14.9 % $
18.7 % $
17.8 % $
15.8 % $
20.5 % $
N/A
N/A
N/A

2021
137,888
123,210
1,655
2,802
2.17

3.68
3,477
4,310
589
0.78
0.2 %

(0.43)
0.61

N/A
N/A

$
$

(49)
1,647

OVERVIEW

Notable items for 2022 are:

Shareholder Return

• Achieved net earnings attributable to The Kroger Co. per diluted common share of $3.06, which represents a

41% increase compared to 2021.

• Achieved adjusted net earnings attributable to The Kroger Co. per diluted common share of $4.23, which

represents a 15% increase compared to 2021.

• Achieved operating profit of $4.1 billion, which represents a 19% increase compared to 2021.

• Achieved adjusted FIFO operating profit of $5.1 billion, which represents an 18% increase compared to 2021.

• Generated cash flows from operations of $4.5 billion.

• Returned $1.7 billion to shareholders through share repurchases and dividend payments. During the third

quarter of 2022, we paused our share repurchase program to prioritize deleveraging following the proposed
merger with Albertsons.

Other Financial Results

•

Identical sales, excluding fuel, increased 5.6%, which included identical sales growth in Our Brands categories
of 9.0%. Identical sales, excluding fuel, would have grown 5.8% in 2022 if not for the reduction in pharmacy
sales from our termination of our agreement with Express Scripts effective December 31, 2022. This
terminated agreement had no material effect on profitability.

• Digital sales increased 4%, which was led by strength in our Delivery solutions, which grew by 25%. Delivery
solutions growth was driven by our Boost membership program and expansion of our Kroger Delivery network.
Digital sales include products ordered online and picked up at our stores and our Delivery and Ship solutions.
Our Delivery solutions include orders delivered to customers from retail store locations, customer fulfillment
centers powered by Ocado and orders placed through third-party platforms. Our Ship solutions primarily
include online orders placed through our owned platforms that are dispatched using mail service or third-party
courier.

• We are currently operating in a more volatile inflationary environment and we experienced higher product cost
inflation during 2022, compared to 2021. Our LIFO charge for 2022 was $626 million, compared to $197
million in 2021. This increase was attributable to higher product cost inflation primarily in grocery.

•

Achieved cost savings greater than $1 billion for the fifth consecutive year.

Significant Events

• As previously disclosed, on October 13, 2022, we entered into a merger agreement with Albertsons. In

connection with the merger agreement, we entered into a commitment letter for a bridge term loan facility and
executed a term loan credit agreement. During the third quarter of 2022, we paused our share repurchase
program to prioritize deleveraging following the proposed merger with Albertsons. For additional information
about the proposed merger with Albertsons, see Note 16 to the Consolidated Financial Statements.

• During 2022, we opened four additional Kroger Delivery customer fulfillment centers powered by Ocado’s
automated smart platform — one in Dallas, Texas, one in Pleasant Prairie, Wisconsin, one in Romulus,
Michigan and one in Aurora, Colorado.

• During 2022, we recognized legal settlement costs of $85 million, $67 million net of tax, relating to the

settlement of all opioid litigation claims with the State of New Mexico. This amount was excluded from our
adjusted FIFO operating profit and adjusted net earnings results to reflect the unique and non-recurring nature
of the charge. This settlement is not an admission of wrongdoing or liability by Kroger and we will continue to
vigorously defend against other claims and lawsuits relating to opioids. This settlement is based on a set of
unique and specific facts relating to New Mexico, and we do not believe that the settlement amount or any other
terms of our agreement with New Mexico can or should be extrapolated to any other opioid-related cases
pending against us. It is our view that this settlement is not a reliable proxy for the outcome of any other cases
or the overall level of our exposure.

• During 2022, we recorded a goodwill and fixed asset impairment charge related to Vitacost.com for $164
million. The talent and capabilities gained through the merger with Vitacost in 2014 have been key to
advancing Kroger’s digital platform and growing our digital business to more than $10 billion in annual sales.
As our digital strategy has evolved, our primary focus looking forward will be to effectively utilize our Pickup
and Delivery capabilities and this reprioritization resulted in the impairment charge. Vitacost.com will continue
to operate as an online platform providing great value natural, organic, and eco-friendly products for customers.

OUR BUSINESS

The Kroger Co. (the “Company” or “Kroger”) was founded in 1883 and incorporated in 1902. Our Company is

We also utilize the data and traffic generated by our retail business to deliver incremental value and services for our

customers that generates alternative profit streams. These alternative profit streams would not exist without our core
retail business.

Our revenues are predominately earned and cash is generated as consumer products are sold to customers in our
stores, fuel centers and via our online platforms. We earn income predominately by selling products at price levels that
produce revenues in excess of the costs we incur to make these products available to our customers. Such costs include
procurement and distribution costs, facility occupancy and operational costs, and overhead expenses. Our retail
operations, which represent 97% of our consolidated sales, is our only reportable segment.

Kroger is diversified across brands, product categories, channels of distribution, geographies and consumer

demographics. Our combination of assets include the following:

Stores

As of January 28, 2023, Kroger operates supermarkets under a variety of local banner names in 35 states and the

District of Columbia. As of January 28, 2023, Kroger operated, either directly or through its subsidiaries, 2,719
supermarkets, of which 2,252 had pharmacies and 1,637 had fuel centers. We connect with customers through our
expanding seamless ecosystem and the consistent delivery of a full, fresh, and friendly customer experience. Fuel sales
are an important part of our revenue, net earnings and loyalty offering. Our fuel strategy is to include a fuel center at
each of our supermarket locations when it is feasible and it is expected to be profitable.

Seamless Digital Ecosystem

Merchandising and Manufacturing

Our Brands products play an important role in our merchandising strategy and represented over $30 billion of our
sales in 2022. We operate 33 food production plants, primarily bakeries and dairies, which supply approximately 30%
of Our Brands units and 42% of the grocery category Our Brands units sold in our supermarkets; the remaining Our
Brands items are produced to our strict specifications by outside manufacturers.

Our Data

We are evolving from a traditional food retailer into a more diverse, food first business. The traffic and data
generated by our retail supermarket business, including pharmacies and fuel centers, is enabling this transformation.
Kroger serves approximately 60 million households annually and because of our rewards program, over 90% of
customer transactions are tethered to a Kroger loyalty card. Our 20 years of investment in data science capabilities is
allowing us to utilize this data to create personalized experiences and value for our customers and is also enabling our
fast-growing, high operating margin alternative profit businesses, including data analytic services and third party media
revenue. Our retail media business – Kroger Precision Marketing – provides best in class media capabilities for our
consumer packaged goods partners and is a key driver of our digital profitability and alternative profit.

Proposed Merger with Albertsons

As previously disclosed, on October 13, 2022, we entered into a merger agreement with Albertsons. The proposed

USE OF NON-GAAP FINANCIAL MEASURES

The accompanying Consolidated Financial Statements, including the related notes, are presented in accordance with

generally accepted accounting principles (“GAAP”). We provide non-GAAP measures, including First-In, First-Out
(“FIFO”) gross margin, FIFO operating profit, adjusted FIFO operating profit, adjusted net earnings and adjusted net
earnings per diluted share because management believes these metrics are useful to investors and analysts. These non-
GAAP financial measures should not be considered as an alternative to gross margin, operating profit, net earnings and
net earnings per diluted share or any other GAAP measure of performance. These measures should not be reviewed in
isolation or considered as a substitute for our financial results as reported in accordance with GAAP.

We calculate FIFO gross margin as FIFO gross profit divided by sales. FIFO gross profit is calculated as sales less

merchandise costs, including advertising, warehousing, and transportation expenses, but excluding the Last-In, First-Out
(“LIFO”) charge. Merchandise costs exclude depreciation and rent expenses. FIFO gross margin is an important measure
used by management and management believes FIFO gross margin is a useful metric to investors and analysts because it
measures the merchandising and operational effectiveness of our go-to-market strategy.

We calculate FIFO operating profit as operating profit excluding the LIFO charge. FIFO operating profit is an
important measure used by management and management believes FIFO operating profit is a useful metric to investors
and analysts because it measures the operational effectiveness of our financial model.

The adjusted net earnings, adjusted net earnings per diluted share and adjusted FIFO operating profit metrics are
important measures used by management to compare the performance of core operating results between periods. We
believe adjusted net earnings, adjusted net earnings per diluted share and adjusted FIFO operating profit are useful
metrics to investors and analysts because they present more accurate year-over-year comparisons of our net earnings, net
earnings per diluted share and FIFO operating profit because adjusted items are not the result of our normal operations.
Net earnings for 2022 include the following, which we define as the “2022 Adjusted Items:”

• Charges to operating, general and administrative expenses (“OG&A”) of $25 million, $19 million net of tax, for
obligations related to withdrawal liabilities for certain multi-employer pension funds, $20 million, $15 million
net of tax, for the revaluation of Home Chef contingent consideration, $44 million, $34 million net of tax, for
merger related costs, $85 million, $67 million net of tax, for legal settlement costs and $164 million for
goodwill and fixed asset impairment charges related to Vitacost.com (the “2022 OG&A Adjusted Items”).

• Losses in other income (expense) of $728 million, $561 million net of tax, for the unrealized loss on

investments (the “2022 Other Income (Expense) Adjusted Items”).

Net earnings for 2021 include the following, which we define as the “2021 Adjusted Items:”

• Charges to OG&A of $449 million, $344 million net of tax, for obligations related to withdrawal liabilities for a
certain multi-employer pension fund, $66 million, $50 million net of tax, for the revaluation of Home Chef
contingent consideration and $136 million, $104 million net of tax, for transformation costs (the “2021 OG&A
Adjusted Items”).

• Losses in other income (expense) of $87 million, $68 million net of tax, related to company-sponsored pension
plan settlements and $821 million, $628 million net of tax, for the unrealized loss on investments (the “2021
Other Income (Expense) Adjusted Items”).

• A reduction to income tax expense of $47 million primarily due to the completion of income tax audit

examinations covering multiple years.

Net earnings for 2020 include the following, which we define as the “2020 Adjusted Items:”

• Charges to OG&A of $989 million, $754 million net of tax, for commitments to certain multi-employer pension
funds, $189 million, $141 million net of tax, for the revaluation of Home Chef contingent consideration and
$111 million, $81 million net of tax, for transformation costs (the “2020 OG&A Adjusted Items”).

• Gains in other income (expense) of $1.1 billion, $821 million net of tax, for the unrealized gain on investments

(the “2020 Other Income (Expense) Adjusted Item”).

The table below provides a reconciliation of net earnings attributable to The Kroger Co. to adjusted net earnings
attributable to The Kroger Co. and a reconciliation of net earnings attributable to The Kroger Co. per diluted common
share to adjusted net earnings attributable to The Kroger Co. per diluted common share excluding the 2022, 2021 and
2020 Adjusted Items:

Net Earnings per Diluted Share excluding the Adjusted Items
($ in millions, except per share amounts)

Net earnings attributable to The Kroger Co.
(Income) expense adjustments

Adjustment for pension plan withdrawal liabilities(1)(2)
Adjustment for company-sponsored pension plan settlement charges(1)(3)
Adjustment for loss (gain) on investments(1)(4)
Adjustment for Home Chef contingent consideration(1)(5)
Adjustment for transformation costs(1)(6)
Adjustment for merger related costs(1)(7)
Adjustment for legal settlement costs(1)(8)
Adjustment for goodwill and fixed asset impairment charges related to Vitacost.com(1)(9)
Adjustment for income tax audit examinations(1)

Total Adjusted Items

Net earnings attributable to The Kroger Co. excluding the Adjusted Items

Net earnings attributable to The Kroger Co. per diluted common share
(Income) expense adjustments

Adjustment for pension plan withdrawal liabilities(10)
Adjustment for company-sponsored pension plan settlement charges(10)
Adjustment for loss (gain) on investments(10)
Adjustment for Home Chef contingent consideration(10)
Adjustment for transformation costs(10)
Adjustment for merger related costs(10)
Adjustment for legal settlement costs(10)
Adjustment for goodwill and fixed asset impairment charges related to Vitacost.com(10)
Adjustment for income tax audit examinations(10)

Total Adjusted Items

2022

2,244 $

2021
1,655

2020
2,585

19
—
561
15
—
34
67
164
—
860

344
68
628
50
104
—
—
—
(47)
1,147

754
—
(821)
141
81
—
—
—
—
155

3,104 $

2,802

3.06 $

2.17

2,740

3.27

0.03
—
0.76
0.02
—
0.05
0.09
0.22
—
1.17

0.45
0.09
0.83
0.07
0.14
—
—
—
(0.07)
1.51

0.95
—
(1.05)
0.18
0.12
—
—
—
—
0.20

Net earnings attributable to The Kroger Co. per diluted common share excluding the

Adjusted Items

4.23 $

3.68

3.47

Average numbers of common shares used in diluted calculation

727

754

781

(1) The amounts presented represent the after-tax effect of each adjustment, which was calculated using discrete tax

rates.

(2) The pre-tax adjustment for pension plan withdrawal liabilities was $25 in 2022, $449 in 2021 and $989 in 2020.
(3) The pre-tax adjustment for company-sponsored pension plan settlement charges was $87.
(4) The pre-tax adjustment for loss (gain) on investments was $728 in 2022, $821 in 2021 and ($1,105) in 2020.
(5) The pre-tax adjustment for Home Chef contingent consideration was $20 in 2022, $66 in 2021 and $189 in 2020.
(6) The pre-tax adjustment for transformation costs was $136 in 2021 and $111 in 2020. Transformation costs

primarily include costs related to store and business closure costs and third party professional consulting fees
associated with business transformation and cost saving initiatives.

(7) The pre-tax adjustment for merger related costs was $44. Merger related costs primarily include third-party

professional fees and credit facility fees associated with the proposed merger with Albertsons.

(8) The pre-tax adjustment for legal settlement costs was $85.
(9) The pre-tax and after-tax adjustments for goodwill and fixed asset impairment charges related to Vitacost.com was

$164.

(10) The amount presented represents the net earnings per diluted common share effect of each adjustment.

Key Performance Indicators

We evaluate our results of operations and cash flows using a variety of key performance indicators, such as sales,
identical sales, excluding fuel, FIFO gross margin, adjusted FIFO operating profit, adjusted net earnings, adjusted net
earnings per diluted share and return on invested capital. We use these financial metrics and related computations to
evaluate our operational effectiveness and our results of operations from period to period and to plan for near and long-
term operating and strategic decisions. These key performance indicators should not be reviewed in isolation or
considered as a substitute for our financial results as reported in accordance with GAAP. These measures, which are
described in more detail in this Annual Report on Form 10-K, may not be comparable to similarly-titled performance
indicators used by other companies.

RESULTS OF OPERATIONS

Sales

Total Sales
($ in millions)

Total sales to retail customers without fuel(3)
Supermarket fuel sales
Other sales(4)
Total sales

2022
$ 128,664
18,632
962
$ 148,258

Percentage
Change(1)

Percentage
Change(2)

2021

2020

5.2 % $ 122,293
14,678
26.9 %
4.9 %
917
7.5 % $ 137,888

0.1 % $ 122,134
9,486
54.7 %
4.4 %
878
4.1 % $ 132,498

(1) This column represents the percentage change in 2022 compared to 2021.
(2) This column represents the percentage change in 2021 compared to 2020.
(3) Digital sales are included in the “total sales to retail customers without fuel” line above. Digital sales include

products ordered online and picked up at our stores and our Delivery and Ship solutions. Our Delivery solutions
include orders delivered to customers from retail store locations, customer fulfillment centers powered by Ocado
and orders placed through third-party platforms. Our Ship solutions primarily include online orders placed through
our owned platforms that are dispatched using mail service or third-party courier. Digital sales increased
approximately 4% in 2022, decreased approximately 3% in 2021 and grew approximately 116% in 2020. Digital
sales growth for 2022 was led by strength in our Delivery solutions, which grew by 25% in 2022. Delivery solutions
growth was driven by our Boost membership program and expansion of our Kroger Delivery network. The change
in results for 2021 compared to 2020 is primarily due to cycling COVID-19 trends. While digital sales decreased
3% during 2021, almost all customers who reduced their online spend during the year continued to shop with us in
store, highlighting the power of our seamless ecosystem and our ability to create a meaningful customer experience
across channels.

(4) Other sales primarily relate to external sales at food production plants, data analytic services and third-party media
revenue. The increase in 2022, compared to 2021, and the increase in 2021, compared to 2020, is primarily due to
an increase in data analytic services and third-party media revenue, partially offset by decreased external sales at
food production plants due to the closing of a plant during 2021.

Total sales increased in 2022, compared to 2021, by 7.5%. The increase was primarily due to increases in
supermarket fuel sales and total sales to retail customers without fuel. Total sales, excluding fuel, increased 5.2% in
2022, compared to 2021, which was primarily due to our identical sales increase, excluding fuel, of 5.6%, partially offset
by discontinued patient therapies at Kroger Specialty Pharmacy. Identical sales, excluding fuel, for 2022, compared to
2021, increased primarily due to an increase in the number of households shopping with us and an increase in basket
value due to retail inflation, partially offset by a reduction in the number of items in basket and the termination of our
agreement with Express Scripts. Identical sales without fuel would have grown 5.8% in 2022 if not for the reduction in
pharmacy sales from our termination of our agreement with Express Scripts effective December 31, 2022. Total
supermarket fuel sales increased 26.9% in 2022, compared to 2021, primarily due to an increase in the average retail fuel
price of 28.5%, partially offset by a decrease in fuel gallons sold of 1.2%, which was less than the national average
decline. The increase in the average retail fuel price was caused by an increase in the product cost of fuel.

Total sales increased in 2021, compared to 2020, by 4.1%. The increase was primarily due to an increase in

supermarket fuel sales. Total sales, excluding fuel, increased 0.2% in 2021, compared to 2020, which was primarily due
to our identical sales increase, excluding fuel, of 0.2%. Identical sales, excluding fuel, increased in 2021 on top of record
sales results in 2020, which was primarily caused by unprecedented demand due to the COVID-19 pandemic during
2020. Total supermarket fuel sales increased 54.7% in 2021, compared to 2020, primarily due to an increase in fuel
gallons sold of 7.9% and an increase in the average retail fuel price of 43.6%. The increase in the average retail fuel
price was caused by an increase in the product cost of fuel.

We calculate identical sales, excluding fuel, as sales to retail customers, including sales from all departments at
identical supermarket locations, Kroger Specialty Pharmacy businesses and Delivery and Ship solutions. We define a
supermarket as identical when it has been in operation without expansion or relocation for five full quarters. We define
Kroger Specialty Pharmacy businesses as identical when physical locations have been in operation continuously for five
full quarters; discontinued patient therapies are excluded from the identical sales calculation starting in the quarter of
transfer or termination. We define Kroger Delivery identical sales powered by Ocado based on geography. We include
Kroger Delivery sales powered by Ocado as identical if the delivery occurs in an existing Kroger supermarket
geography. If the Kroger Delivery sales powered by Ocado occur in a new geography, these sales are included as
identical when deliveries have occurred to the new geography for five full quarters. Although identical sales is a
relatively standard term, numerous methods exist for calculating identical sales growth. As a result, the method used by
our management to calculate identical sales may differ from methods other companies use to calculate identical sales. It
is important to understand the methods used by other companies to calculate identical sales before comparing our
identical sales to those of other such companies. Our identical sales, excluding fuel, results are summarized in the
following table. We used the identical sales, excluding fuel, dollar figures presented below to calculate percentage
changes for 2022 and 2021.

Excluding fuel
Excluding fuel

Gross Margin, LIFO and FIFO Gross Margin

Identical Sales
($ in millions)

2022
127,635

$
5.6 %

2021
120,846

0.2 %

We define gross margin as sales minus merchandise costs, including advertising, warehousing, and transportation.

Rent expense, depreciation and amortization expense, and interest expense are not included in gross margin.

Our gross margin rates, as a percentage of sales, were 21.43% in 2022 and 22.01% in 2021. The decrease in rate in
2022, compared to 2021, resulted primarily from increased fuel sales, which have a lower gross margin rate, a decrease
in our fuel gross margin, increased shrink, as a percentage of sales, and a higher LIFO charge, partially offset by our
ability to effectively manage product cost inflation through strong sourcing practices while maintaining competitive
prices and helping customers manage their budgets and the cycling of a write down related to a donation of personal
protective equipment inventory from the prior year.

Our LIFO charge was $626 million in 2022 and $197 million in 2021. The increase in our LIFO charge was

attributable to higher product cost inflation primarily in grocery.

Our FIFO gross margin rate, which excludes the LIFO charge, was 21.86% in 2022, compared to 22.15% in 2021.
Our fuel sales lower our FIFO gross margin rate due to the very low FIFO gross margin rate, as a percentage of sales, of
fuel sales compared to non-fuel sales. Excluding the effect of fuel, our FIFO gross margin rate decreased 9 basis points
in 2022, compared to 2021. This decrease resulted primarily from increased shrink, as a percentage of sales, partially
offset by our ability to effectively manage product cost inflation through strong sourcing practices while maintaining
competitive prices and helping customers manage their budgets and the cycling of a write down related to a donation of
personal protective equipment inventory from the prior year.

Operating, General and Administrative Expenses

OG&A expenses consist primarily of employee-related costs such as wages, healthcare benefit costs, retirement plan

costs, utilities, and credit card fees. Rent expense, depreciation and amortization expense, and interest expense are not
included in OG&A.

OG&A expenses, as a percentage of sales, were 16.09% in 2022 and 16.83% in 2021. The decrease in 2022,

compared to 2021, resulted primarily from the effect of sales leverage across fuel and supermarkets, which decreases our
OG&A rate, as a percentage of sales, lower contributions to multi-employer pension plans, decreased healthcare costs,
the 2021 OG&A Adjusted Items and broad-based improvement from cost savings initiatives that drive administrative
efficiencies, store productivity and sourcing cost reductions, partially offset by investments in our associates, costs
related to strategic investments in various margin expansion initiatives that will drive future growth and the 2022 OG&A
Adjusted Items.

Our fuel sales lower our OG&A rate, as a percentage of sales, due to the very low OG&A rate, as a percentage of
sales, of fuel sales compared to non-fuel sales. Excluding the effect of fuel, the 2022 OG&A Adjusted Items and the
2021 OG&A Adjusted Items, our OG&A rate decreased 19 basis points in 2022, compared to 2021. This decrease
resulted primarily from the effect of supermarket sales leverage, which decreases our OG&A rate, as a percentage of
sales, lower contributions to multi-employer pension plans, decreased healthcare costs and broad-based improvement
from cost savings initiatives that drive administrative efficiencies, store productivity and sourcing cost reductions,
partially offset by investments in our associates and costs related to strategic investments in various margin expansion
initiatives that will drive future growth.

Rent Expense

Rent expense was $839 million, or 0.57% of sales, for 2022, compared to $845 million, or 0.61% of sales, for 2021.

Rent expense, as a percentage of sales, decreased 4 basis points in 2022, compared to 2021, primarily due to sales
leverage and the completion of a property transaction during the first quarter of 2021 related to 28 previously leased
properties that we are now accounting for as owned locations and therefore recognizing depreciation and amortization
expense over their useful life. For additional information about this transaction, see Note 5 to the Consolidated Financial
Statements.

Depreciation and Amortization Expense

Depreciation and amortization expense was $3.0 billion, or 2.00% of sales, for 2022, compared to $2.8 billion, or
2.05% of sales, for 2021. Depreciation and amortization expense, as a percentage of sales, decreased 5 basis points in
2022, compared to 2021, primarily due to sales leverage.

Operating Profit and FIFO Operating Profit

Operating profit was $4.1 billion, or 2.78% of sales, for 2022, compared to $3.5 billion, or 2.52% of sales, for 2021.
Operating profit, as a percentage of sales, increased 26 basis points in 2022, compared to 2021, due to decreased OG&A
expense, as a percentage of sales, partially offset by an increased LIFO charge and a lower FIFO gross margin rate. Fuel
earnings also contributed to our operating profit growth for 2022, compared to 2021.

FIFO operating profit was $4.8 billion, or 3.21% of sales, for 2022, compared to $3.7 billion, or 2.66% of sales, for
2021. FIFO operating profit, as a percentage of sales, excluding the 2022 and 2021 Adjusted Items, increased 30 basis
points in 2022, compared to 2021, due to decreased OG&A expense, as a percentage of sales, partially offset by a lower
FIFO gross margin rate. Fuel earnings also contributed to our FIFO operating profit growth for 2022, compared to 2021.

Specific factors contributing to the trends driving operating profit and FIFO operating profit identified above are

discussed earlier in this section.

The following table provides a reconciliation of operating profit to FIFO operating profit, and to Adjusted FIFO

operating profit, excluding the 2022 and 2021 Adjusted Items:

Operating Profit excluding the Adjusted Items

($ in millions)

Operating profit
LIFO charge

FIFO Operating profit

Adjustment for pension plan withdrawal liabilities
Adjustment for Home Chef contingent consideration
Adjustment for transformation costs(1)
Adjustment for merger related costs(2)
Adjustment for legal settlement costs
Adjustment for goodwill and fixed asset impairment charges related to Vitacost.com
Other

2022 and 2021 Adjusted items

2022

2021

4,126
626

4,752

25
20
—
44
85
164
(11)

327

3,477
197

3,674

449
66
136
—
—
—
(15)

636

Adjusted FIFO operating profit excluding the adjusted items above

5,079

4,310

(1) Transformation costs primarily include costs related to third-party professional consulting fees associated with

business transformation and cost saving initiatives.

(2) Merger related costs primarily include third party professional fees and credit facility fees associated with the

proposed merger with Albertsons.

Interest Expense

Interest expense totaled $535 million in 2022 and $571 million in 2021. The decrease in interest expense in 2022,
compared to 2021, was primarily due to decreased average total outstanding debt throughout 2022, compared to 2021,
including both the current and long-term portions of obligations under finance leases, and increased interest income
earned on our cash and temporary cash investments due to rising interest rates throughout 2022, compared to 2021.

Income Taxes

Our effective income tax rate was 22.5% in 2022 and 18.8% in 2021. The 2022 tax rate differed from the federal

statutory rate due to the effect of state income taxes and non-deductible goodwill impairment charges related to
Vitacost.com, partially offset by the benefit from share-based payments and the utilization of tax credits. The 2021 tax
rate differed from the federal statutory rate due to a discrete benefit of $47 million which was primarily from the
favorable outcome of income tax audit examinations covering multiple years, the benefit from share-based payments and
the utilization of tax credits, partially offset by the effect of state income taxes.

Net Earnings and Net Earnings Per Diluted Share

Our net earnings are based on the factors discussed in the Results of Operations section.

Net earnings of $3.06 per diluted share for 2022 represented an increase of 41.0% compared to net earnings of $2.17

per diluted share for 2021. Adjusted net earnings of $4.23 per diluted share for 2022 represented an increase of 14.9%
compared to adjusted net earnings of $3.68 per diluted share for 2021. The increase in adjusted net earnings per diluted
share resulted primarily from increased FIFO operating profit, excluding fuel, increased fuel earnings and lower
weighted average common shares outstanding due to common share repurchases, partially offset by a higher LIFO
charge and higher income tax expense.

RETURN ON INVESTED CAPITAL

We calculate return on invested capital (“ROIC”) by dividing adjusted ROIC operating profit for the prior four
quarters by the average invested capital. Adjusted operating profit for ROIC purposes is calculated by excluding certain
items included in operating profit, and adding back our LIFO charge, depreciation and amortization and rent to our U.S.
GAAP operating profit of the prior four quarters. Average invested capital is calculated as the sum of (i) the average of
our total assets, (ii) the average LIFO reserve and (iii) the average accumulated depreciation and amortization; minus
(i) the average taxes receivable, (ii) the average trade accounts payable, (iii) the average accrued salaries and wages and
(iv) the average other current liabilities, excluding accrued income taxes. Averages are calculated for ROIC by adding
the beginning balance of the first quarter and the ending balance of the fourth quarter, of the last four quarters, and
dividing by two. ROIC is a non-GAAP financial measure of performance. ROIC should not be reviewed in isolation or
considered as a substitute for our financial results as reported in accordance with GAAP. ROIC is an important measure
used by management to evaluate our investment returns on capital. Management believes ROIC is a useful metric to
investors and analysts because it measures how effectively we are deploying our assets.

Although ROIC is a relatively standard financial term, numerous methods exist for calculating a company’s
ROIC. As a result, the method used by our management to calculate ROIC may differ from methods other companies
use to calculate their ROIC. We urge you to understand the methods used by other companies to calculate their ROIC
before comparing our ROIC to that of such other companies.

The following table provides a calculation of ROIC for 2022 and 2021 on a 52 week basis ($ in millions):

Fiscal Year Ended

January 28,
2023

January 29,
2022

Return on Invested Capital
Numerator

Operating profit
LIFO charge
Depreciation and amortization
Rent
Adjustment for Home Chef contingent consideration
Adjustment for pension plan withdrawal liabilities
Adjustment for goodwill and fixed asset impairment charges related to Vitacost.com
Adjustment for merger related costs
Adjustment for transformation costs
Adjustment for legal settlement costs
Adjusted ROIC operating profit

Denominator

Average total assets
Average taxes receivable(1)
Average LIFO reserve
Average accumulated depreciation and amortization(2)
Average trade accounts payable
Average accrued salaries and wages
Average other current liabilities(3)
Average invested capital
Return on Invested Capital

4,126
626
2,965
839
20
25
164
44
—
85
8,894

49,355
(137)
1,883
27,843
(7,118)
(1,741)
(6,333)
63,752

$
13.95 %

3,477
197
2,824
845
66
449
—
—
136
—
7,994

48,874
(54)
1,472
24,868
(6,898)
(1,575)
(5,976)
60,711
13.17 %

(1) Taxes receivable were $231 as of January 28, 2023, $42 as of January 29, 2022 and $66 as of January 30, 2021.
(2) Accumulated depreciation and amortization includes depreciation for property, plant and equipment and

amortization for definite-lived intangible assets.

(3) Other current liabilities included accrued income taxes of $9 as of January 30, 2021. We did not have any accrued
income taxes as of January 28, 2023 or January 29, 2022. Accrued income taxes are removed from other current
liabilities in the calculation of average invested capital.

CRITICAL ACCOUNTING ESTIMATES

We have chosen accounting policies that we believe are appropriate to report accurately and fairly our operating
results and financial position, and we apply those accounting policies in a consistent manner. Our significant accounting
policies are summarized in Note 1 to the Consolidated Financial Statements.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosures of contingent assets
and liabilities. We base our estimates on historical experience and other factors we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

We believe the following accounting estimates are the most critical in the preparation of our financial statements

because they involve the most difficult, subjective or complex judgments about the effect of matters that are inherently
uncertain.

Impairments of Long-Lived Assets

We monitor the carrying value of long-lived assets for potential impairment each quarter based on whether certain

triggering events have occurred. These events include current period losses combined with a history of losses or a
projection of continuing losses or a significant decrease in the market value of an asset. When a triggering event occurs,
we perform an impairment calculation, comparing projected undiscounted cash flows, utilizing current cash flow
information and expected growth rates related to specific stores, to the carrying value for those stores. If we identify
impairment for long-lived assets to be held and used, we compare the assets’ current carrying value to the assets’ fair
value. Fair value is determined based on market values or discounted future cash flows. We record impairment when
the carrying value exceeds fair market value. With respect to owned property and equipment held for disposal, we adjust
the value of the property and equipment to reflect recoverable values based on our previous efforts to dispose of similar
assets and current economic conditions. We recognize impairment for the excess of the carrying value over the
estimated fair market value, reduced by estimated direct costs of disposal. We recorded asset impairments in the normal
course of business totaling $68 million in 2022 and $64 million in 2021. We record costs to reduce the carrying value of
long-lived assets in the Consolidated Statements of Operations as OG&A expense.

The factors that most significantly affect the impairment calculation are our estimates of future cash flows. Our

cash flow projections look several years into the future and include assumptions on variables such as inflation, the
economy and market competition. Application of alternative assumptions and definitions, such as reviewing long-lived
assets for impairment at a different level, could produce significantly different results.

Business Combinations

We account for business combinations using the acquisition method of accounting. All the assets acquired,

liabilities assumed and amounts attributable to noncontrolling interests are recorded at their respective fair values at the
date of acquisition once we obtain control of an entity. The determination of fair values of identifiable assets and
liabilities involves estimates and the use of valuation techniques when market value is not readily available. We use
various techniques to determine fair value in such instances, including the income approach. Significant estimates used
in determining fair value include, but are not limited to, the amount and timing of future cash flows, growth rates,
discount rates and useful lives. The excess of the purchase price over fair values of identifiable assets and liabilities is
recorded as goodwill. See Note 2 for further information about goodwill.

Goodwill

Our goodwill totaled $2.9 billion as of January 28, 2023. We review goodwill for impairment in the fourth quarter
of each year, and also upon the occurrence of triggering events. We perform reviews of each of our operating divisions
and other consolidated entities (collectively, “reporting units”) that have goodwill balances. Generally, fair value is
determined using a multiple of earnings, or discounted projected future cash flows, and we compare fair value to the
carrying value of a reporting unit for purposes of identifying potential impairment. We base projected future cash flows
on management’s knowledge of the current operating environment and expectations for the future. We recognize
goodwill impairment for any excess of a reporting unit's carrying value over its fair value, not to exceed the total amount
of goodwill allocated to the reporting unit.

In 2022, we recorded a goodwill impairment charge for Vitacost.com totaling $160 million. The talent and

capabilities gained through the merger with Vitacost in 2014 have been key to advancing Kroger’s digital platform and
growing our digital business to more than $10 billion in annual sales. As our digital strategy has evolved, our primary
focus looking forward will be to effectively utilize our Pickup and Delivery capabilities. This reprioritization resulted in
reduced long-term profitability expectations and a decline in the market value for one underlying channel of business
and led to the impairment charge. Vitacost.com will continue to operate as an online platform providing great value
natural, organic, and eco-friendly products for customers.

The annual evaluation of goodwill performed in 2022, 2021 and 2020 did not result in impairment for any of our
reporting units other than Vitacost.com described above. Based on current and future expected cash flows, we believe
additional goodwill impairments are not reasonably likely. A 10% reduction in fair value of our reporting units would
not indicate a potential for impairment of our goodwill balance.

The 2022 fair value of our Kroger Specialty Pharmacy (“KSP”) reporting unit was estimated using multiple
valuation techniques: a discounted cash flow model (income approach), a market multiple model and a comparable
mergers and acquisition model (market approaches), with each method weighted in the calculation. The income
approach relies on management’s projected future cash flows, estimates of revenue growth rates, margin assumptions
and an appropriate discount rate. The market approaches require the determination of an appropriate peer group, which is
utilized to derive estimated fair values based on selected market multiples. Our KSP reporting unit has a goodwill
balance of $243 million.

For additional information relating to our results of the goodwill impairment reviews performed during 2022, 2021

and 2020, see Note 2 to the Consolidated Financial Statements.

The impairment review requires the extensive use of management judgment and financial estimates. Application of
alternative estimates and assumptions could produce significantly different results. The cash flow projections embedded
in our goodwill impairment reviews can be affected by several factors such as inflation, business valuations in the
market, the economy, market competition and our ability to successfully integrate recently acquired businesses.

Multi-Employer Pension Plans

We contribute to various multi-employer pension plans based on obligations arising from collective bargaining

agreements. These multi-employer pension plans provide retirement benefits to participants based on their service to
contributing employers. The benefits are paid from assets held in trust for that purpose. Trustees are appointed in equal
number by employers and unions. The trustees typically are responsible for determining the level of benefits to be
provided to participants as well as for such matters as the investment of the assets and the administration of the plans.

We recognize expense in connection with these plans as contributions are funded or when commitments are
probable and reasonably estimable, in accordance with GAAP. We made cash contributions to these plans of $620
million in 2022, $1.1 billion in 2021 and $619 million in 2020. The decrease in 2022, compared to 2021, and the
increase in 2021, compared to 2020, are due to the contractual payments we made in 2021 related to our commitments
established for the restructuring of certain multi-employer pension plan agreements.

We continue to evaluate and address our potential exposure to under-funded multi-employer pension plans as it

relates to our associates who are beneficiaries of these plans. These under-fundings are not our liability. When an
opportunity arises that is economically feasible and beneficial to us and our associates, we may negotiate the
restructuring of under-funded multi-employer pension plan obligations to help stabilize associates’ future benefits and
become the fiduciary of the restructured multi-employer pension plan. The commitments from these restructurings do
not change our debt profile as it relates to our credit rating since these off-balance sheet commitments are typically
considered in our investment grade debt rating. We are currently designated as the named fiduciary of the UFCW
Consolidated Pension Plan and the International Brotherhood of Teamsters (“IBT”) Consolidated Pension Fund and have
sole investment authority over these assets. Significant effects of these restructuring agreements recorded in our
Consolidated Financial Statements are:

•

In 2022, we incurred a $25 million charge, $19 million net of tax, for obligations related to withdrawal
liabilities for certain multi-employer pension funds.

In 2021, we incurred a $449 million charge, $344 million net of tax, for obligations related to withdrawal
liabilities for a certain multi-employer pension fund.

In 2020, we incurred a $989 million charge, $754 million net of tax, for commitments to certain multi-employer
pension funds.

As we continue to work to find solutions to under-funded multi-employer pension plans, it is possible we could

incur withdrawal liabilities for certain funds.

Based on the most recent information available to us, we believe the present value of actuarially accrued liabilities

in most of these multi-employer plans exceeds the value of the assets held in trust to pay benefits, and we expect that our
contributions to most of these funds will increase over the next few years. We have attempted to estimate the amount by
which these liabilities exceed the assets, (i.e., the amount of underfunding), as of December 31, 2022. Because we are
only one of a number of employers contributing to these plans, we also have attempted to estimate the ratio of our
contributions to the total of all contributions to these plans in a year as a way of assessing our “share” of the
underfunding. Nonetheless, the underfunding is not a direct obligation or liability of ours or of any employer.

As of December 31, 2022, we estimate our share of the underfunding of multi-employer pension plans to which we
contribute was approximately $2.5 billion, $1.9 billion net of tax. This represents an increase in the estimated amount of
underfunding of approximately $1.4 billion, $1.1 billion net of tax, as of December 31, 2022, compared to December 31,
2021. The increase in the amount of underfunding is primarily attributable to lower than expected returns on assets in
the funds during 2022. Our estimate is based on the most current information available to us including actuarial
evaluations and other data (that include the estimates of others), and such information may be outdated or otherwise
unreliable.

We have made and disclosed this estimate not because, except as noted above, this underfunding is a direct liability

of ours. Rather, we believe the underfunding is likely to have important consequences. In the event we were to exit
certain markets or otherwise cease making contributions to these plans, we could trigger a substantial withdrawal
liability. Any adjustment for withdrawal liability will be recorded when it is probable that a liability exists and can be
reasonably estimated, in accordance with GAAP.

The amount of underfunding described above is an estimate and could change based on contract negotiations,
returns on the assets held in the multi-employer pension plans, benefit payments or future restructuring agreements. The
amount could decline, and our future expense would be favorably affected, if the values of the assets held in the trust
significantly increase or if further changes occur through collective bargaining, trustee action or favorable
legislation. On the other hand, our share of the underfunding could increase and our future expense could be adversely
affected if the asset values decline, if employers currently contributing to these funds cease participation or if changes
occur through collective bargaining, trustee action or adverse legislation. We continue to evaluate our potential
exposure to under-funded multi-employer pension plans. Although these liabilities are not a direct obligation or liability
of ours, any commitments to fund certain multi-employer pension plans will be expensed when our commitment is
probable and an estimate can be made.

The American Rescue Plan Act ("ARP Act"), which was signed into law on March 11, 2021, established a special
financial assistance program for financially troubled multi-employer pension plans. Under the ARP Act, eligible multi-
employer plans can apply to receive a cash payment in an amount projected by the Pension Benefit Guaranty
Corporation to pay pension benefits through the plan year ending 2051. At the end of 2022, we expect certain multi-
employer pension plans in which we participate, for which our estimated share of underfunding is approximately $1.0
billion, $750 million net of tax, to apply for funding in 2023, which may reduce a portion of our share of unfunded
multi-employer pension plan liabilities.

See Note 15 to the Consolidated Financial Statements for more information relating to our participation in these

multi-employer pension plans.

NEW ACCOUNTING STANDARDS

Refer to Note 17 to the Consolidated Financial Statements for recently issued accounting standards not yet adopted

as of January 28, 2023.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow Information

The following table summarizes our net (decrease) increase in cash and temporary cash investments for 2022 and

2021:

Net cash provided by (used in)

Operating activities
Investing activities
Financing activities

Net (decrease) increase in cash and temporary cash investments

Net cash provided by operating activities

Fiscal Year

2022

2021

4,498
(3,015)
(2,289)
(806)

6,190
(2,611)
(3,445)
134

We generated $4.5 billion of cash from operations in 2022, compared to $6.2 billion in 2021. Net earnings including

noncontrolling interests, adjusted for non-cash items, generated approximately $7.7 billion of operating cash flow in
2022 compared to $6.4 billion in 2021. Cash used by operating activities for changes in operating assets and liabilities,
including working capital, was $3.2 billion in 2022 compared to $229 million in 2021. The increase in cash used by
operating activities for changes in operating assets and liabilities, including working capital, in 2022 compared to 2021,
and compared to management’s expectations, was primarily due to a variety of factors, including the effect of higher
inflation on inventory balances, some forward buying of inventory to protect margins, and the timing of payments
related to certain trade accounts payable and receivables. Specifically:

• An increase in pharmacy receivables at the end of 2022, compared to the end of 2021, primarily due to timing

of cash receipts;

• An increase in FIFO inventory at the end of 2022, compared to the end of 2021, primarily due to rising costs

resulting from continued inflationary cost pressures, in stock inventory returning to pre-pandemic levels due to
a reduction of supply chain constraints and increased forward buying to protect gross margin;

• A decrease in prepaid and other current assets at the end of 2021, compared to the end of 2020, primarily due to
the transfer of prepaid escrow funds in the first quarter of 2021 to fulfill obligations related to the restructuring
of multi-employer pension plans;

• An increase in trade accounts payable at the end of 2021, compared to the end of 2020, primarily due to timing

of payments;

• An increase in cash used by operating activities for changes in accrued expenses in 2022, compared to 2021,

primarily due to the following:

o An increase in accrued payroll at the end of 2021, compared to the end of 2020, primarily due to

timing of payments;

o A decrease in accrued expenses at the end of 2022, compared to the end of 2021, primarily due to the

payment of the employer portion of social security tax in 2022 that had previously been deferred under
the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) which was enacted in
2020; and

• An increase in income taxes receivable at the end of 2022, compared to the end of 2021, primarily due to the

implementation of a tax planning strategy toward the end of 2022.

Cash paid for taxes increased in 2022, compared to 2021, primarily due to higher taxable income in 2022, compared

to 2021.

Net cash used by investing activities

Investing activities used cash of $3.0 billion in 2022, compared to $2.6 billion in 2021. The amount of cash used by

investing activities increased in 2022, compared to 2021, primarily due to increased payments for property and
equipment in 2022.

Net cash used by financing activities

We used $2.3 billion of cash for financing activities in 2022, compared to $3.4 billion in 2021. The amount of cash

used for financing activities decreased in 2022, compared to 2021, primarily due to the following:

• Decreased payments on long-term debt including obligations under finance leases; and

• Decreased treasury stock purchases;

• Partially offset by decreased proceeds from financing arrangement.

Capital Investments

Capital investments, including changes in construction-in-progress payables and excluding the purchase of leased
facilities, totaled $3.3 billion in 2022 and $3.2 billion in 2021. Capital investments for the purchase of leased facilities
totaled $21 million in 2022. We did not purchase any leased facilities in 2021. Our capital priorities align directly with
our value creation model and our target to consistently grow net earnings. Our capital program includes initiatives to
enhance the customer experience in stores, improve our process efficiency and enhance our digital capabilities through
technology developments. As such, we increased our allocation of capital investments related to digital and technology
compared to prior years. These investments are expected to drive digital sales growth and improve operating efficiency
by removing cost and waste from our business.

The table below shows our supermarket storing activity and our total supermarket square footage for 2022, 2021 and

Supermarket Storing Activity

2020:

Beginning of year
Opened
Opened (relocation)
Closed (operational)
Closed (relocation)
End of year

Total supermarket square footage (in millions)

Debt Management

2022
2,726
3
1
(10)
(1)
2,719

2021
2,742
4
4
(20)
(4)
2,726

2020
2,757
5
6
(20)
(6)
2,742

179

Total debt, including both the current and long-term portions of obligations under finance leases, increased $14
million to $13.4 billion as of year-end 2022 compared to 2021. This increase resulted primarily from a net increase in
obligations under finance leases of $466 million primarily related to our four additional Kroger Delivery customer
fulfillment center openings during 2022, partially offset by the payment of $400 million of senior notes bearing an
interest rate of 2.80%.

Common Share Repurchase Programs

We maintain share repurchase programs that comply with Rule 10b5-1 of the Securities Exchange Act of 1934, as

amended (the “Exchange Act”) and allow for the orderly repurchase of our common shares, from time to time. The
share repurchase programs do not have an expiration date but may be suspended or terminated by our Board of Directors
at any time. We made open market purchases of our common shares totaling $821 million in 2022 and $1.4 billion in
2021. During the third quarter of 2022, we paused our share repurchase program to prioritize de-leveraging following
the proposed merger with Albertsons.

In addition to these repurchase programs, we also repurchase common shares to reduce dilution resulting from our
employee stock option plans. This program is solely funded by proceeds from stock option exercises, and the tax benefit
from these exercises. We repurchased approximately $172 million in 2022 and $225 million in 2021 of our common
shares under the stock option program.

On December 30, 2021, our Board of Directors approved a $1.0 billion share repurchase program to reacquire

shares via open market purchase or privately negotiated transactions, block trades, or pursuant to trades intending to
comply with Rule 10b5-1 under the Exchange Act (the “December 2021 Repurchase Program”). The December 2021
Repurchase Program was exhausted during the third quarter of 2022. On September 9, 2022, our Board of Directors
approved a $1.0 billion share repurchase program to reacquire shares via open market purchase or privately negotiated
transactions, block trades, or pursuant to trades intending to comply with Rule 10b5-1 under the Exchange Act (the
“September 2022 Repurchase Program”). No shares have been repurchased under the September 2022 authorization.
During the third quarter of 2022, we paused our share repurchase program to prioritize de-leveraging following the
proposed merger with Albertsons.

The shares we repurchased in 2022 were reacquired under the following share repurchase programs:

• The December 2021 Repurchase Program.

• A program announced on December 6, 1999 to repurchase common shares to reduce dilution resulting from our
employee stock option and long-term incentive plans, under which repurchases are limited to proceeds received
from exercises of stock options and the tax benefits associated therewith (“1999 Repurchase Program”).

As of January 28, 2023, there was $1.0 billion remaining under the September 2022 Repurchase Program.

Dividends

The following table provides dividend information for 2022 and 2021 ($ in millions, except per share amounts):

Cash dividends paid
Cash dividends paid per common share

Liquidity Needs

2022

682
0.94

$
$

2021

589
0.78

$
$

We held cash and temporary cash investments of $1.0 billion, as of the end of 2022, which reflects our elevated
operating performance over the last few years. We actively manage our cash and temporary cash investments in order to
internally fund operating activities, support and invest in our core businesses, make scheduled interest and principal
payments on our borrowings and return cash to shareholders through cash dividend payments and share repurchases. Our
current levels of cash, borrowing capacity and balance sheet leverage provide us with the operational flexibility to adjust
to changes in economic and market conditions. We remain committed to our dividend, and growing our dividend over
time, subject to board approval, as well as share repurchase programs and we will evaluate the optimal use of any excess
free cash flow, consistent with our capital allocation strategy. During the third quarter of 2022, we paused our share
repurchase program to prioritize de-leveraging following the proposed merger with Albertsons.

The table below summarizes our short-term and long-term material cash requirements, based on year of maturity or

settlement, as of January 28, 2023 (in millions of dollars):

2023

2024

2025

2026

2027

Thereafter

Total

Contractual Obligations(1)(2)
Long-term debt(3)
Interest on long-term debt(4)
Finance lease obligations
Operating lease obligations
Self-insurance liability(5)
Construction commitments(6)
Purchase obligations(7)
Total

$ 1,153 $

25
439
226
864
162
—
330
$ 5,470 $ 2,046

480
228
930
236
1,718
725

84
422
222
791
106
—
274
$ 1,899

$ 1,386
400
221
740
65
—
303
$ 3,115

607 $
376
223
683
38
—
283

8,037 $ 11,292
6,665
4,548
2,612
1,492
9,696
5,688
712
105
1,718
—
3,852
1,937
$ 2,210 $ 21,807 $ 36,547

(1) The contractual obligations table excludes funding of pension and other postretirement benefit obligations, which
totaled approximately $38 million in 2022. For additional information about these obligations, see Note 14 to the
Consolidated Financial Statements. This table also excludes contributions under various multi-employer pension
plans, which totaled $620 million in 2022. For additional information about these multi-employer pension plans,
see Note 15 to the Consolidated Financial Statements.

(2) The liability related to unrecognized tax benefits has been excluded from the contractual obligations table because a

reasonable estimate of the timing of future tax settlements cannot be determined.

(3) As of January 28, 2023, we had no outstanding commercial paper and no borrowings under our credit facility.
(4) Amounts include contractual interest payments using the interest rate as of January 28, 2023 and stated fixed and

swapped interest rates, if applicable, for all other debt instruments.

(5) The amounts included for self-insurance liability related to workers’ compensation claims have been stated on a

present value basis.

(6) Amounts include funds owed to third parties for projects currently under construction. These amounts are reflected

in “Other current liabilities” in our Consolidated Balance Sheets.

(7) Amounts include commitments, many of which are short-term in nature, to be utilized in the normal course of
business, such as several contracts to purchase raw materials utilized in our food production plants and several
contracts to purchase energy to be used in our stores and food production plants. Our obligations also include
management fees for facilities operated by third parties and outside service contracts. Any upfront vendor
allowances or incentives associated with outstanding purchase commitments are recorded as either current or long-
term liabilities in our Consolidated Balance Sheets. We included our future commitments for customer fulfillment
centers for which we have placed an order as of January 28, 2023. We did not include our commitments associated
with additional customer fulfillment centers that have not yet been ordered. We expect our future commitments for
customer fulfillment centers will continue to grow as we place orders for additional customer fulfillment centers.

We expect to meet our short-term and long-term liquidity needs with cash and temporary cash investments on hand

as of January 28, 2023, cash flows from our operating activities and other sources of liquidity, including borrowings
under our commercial paper program and bank credit facility. Our short-term and long-term liquidity needs include
anticipated requirements for working capital to maintain our operations, pension plan commitments, interest payments
and scheduled principal payments of debt and commercial paper, settlement of interest rate swap liabilities, servicing our
lease obligations, self-insurance liabilities, capital investments and other purchase obligations. We may also require
additional capital in the future to fund organic growth opportunities, additional customer fulfillment centers, joint
ventures or other business partnerships, property development, acquisitions, dividends and share repurchases. In
addition, we generally operate with a working capital deficit due to our efficient use of cash in funding operations and
because we have consistent access to the capital markets. We believe we have adequate coverage of our debt covenants
to continue to maintain our current investment grade debt ratings and to respond effectively to competitive conditions.

As previously disclosed, on October 13, 2022, we entered into a merger agreement with Albertsons. We expect to
meet our liquidity needs for the proposed merger with cash and temporary cash investments on hand as of the merger
closing date, cash flows from our operating activities and other sources of liquidity, including borrowings under our
commercial paper program, senior notes issuances, bank credit facility and other sources of financing. In connection
with the proposed merger, we entered into a commitment letter for a bridge term loan facility and executed a term loan
credit agreement. During the third quarter of 2022, we paused our share repurchase program to prioritize de-leveraging
following the proposed merger with Albertsons. For additional information about the proposed merger with Albertsons,
see Note 16 to the Consolidated Financial Statements.

For additional information about our debt activity in 2022, see Note 5 to the Consolidated Financial Statements.

Factors Affecting Liquidity

We can currently borrow on a daily basis approximately $2.75 billion under our commercial paper program. At
January 28, 2023, we had no outstanding commercial paper. Commercial paper borrowings are backed by our credit
facility and reduce the amount we can borrow under the credit facility. If our short-term credit ratings fall, the ability to
borrow under our current commercial paper program could be adversely affected for a period of time and increase our
interest cost on daily borrowings under our commercial paper program. This could require us to borrow additional funds
under the credit facility, under which we believe we have sufficient capacity. However, in the event of a ratings decline,
we do not anticipate that our borrowing capacity under our commercial paper program would be any lower than $500
million on a daily basis. Factors that could affect our credit rating include changes in our operating performance and
financial position, the state of the economy, the current inflationary environment, conditions in the food retail industry
and changes in our business model. Further information on the risks and uncertainties that can affect our business can be
found in the “Risk Factors” section set forth in Item 1A of Part I of this Annual Report on Form 10-K. Although our
ability to borrow under the credit facility is not affected by our credit rating, the interest cost and applicable margin on
borrowings under the credit facility could be affected by a downgrade in our Public Debt Rating. “Public Debt Rating”
means, as of any date, the rating that has been most recently announced by either S&P or Moody’s, as the case may be,
for any class of non-credit enhanced long-term senior unsecured debt issued by the Company. As of March 22, 2023, we
had no commercial paper borrowings outstanding.

Our credit facility requires the maintenance of a Leverage Ratio (our “financial covenant”). A failure to maintain
our financial covenant would impair our ability to borrow under the credit facility. This financial covenant is described
below:

• Our Leverage Ratio (the ratio of Net Debt to Adjusted EBITDA, as defined in the credit facility) was 1.34 to 1
as of January 28, 2023. If this ratio were to exceed 3.50 to 1, we would be in default of our revolving credit
facility and our ability to borrow under the facility would be impaired.

Our credit facility is more fully described in Note 5 to the Consolidated Financial Statements. We were in

compliance with our financial covenant at January 28, 2023.

As of January 28, 2023, we maintained a $2.75 billion (with the ability to increase by $1.25 billion), unsecured
revolving credit facility that, unless extended, terminates on July 6, 2026. Outstanding borrowings under the credit
facility, commercial paper borrowings, and some outstanding letters of credit reduce funds available under the credit
facility. As of January 28, 2023, we had no outstanding commercial paper and no borrowings under our revolving credit
facility. The outstanding letters of credit that reduce funds available under our credit facility totaled $2 million as of
January 28, 2023.

In connection with the proposed merger with Albertsons, on October 13, 2022, we entered into a commitment letter

with certain lenders pursuant to which the lenders have committed to provide a 364-day $17.4 billion senior unsecured
bridge term loan facility. The commitments are intended to be drawn to finance the proposed merger with Albertsons
only to the extent we do not arrange for alternative financing prior to closing. As alternative financing for the proposed
merger is secured, the commitments with respect to the bridge term loan facility under the commitment letter will be
reduced.

On November 9, 2022, we executed a term loan credit agreement with certain lenders pursuant to which the lenders

committed to provide, contingent upon the completion of the proposed merger with Albertsons and certain other
customary conditions to funding, (1) senior unsecured term loans in an aggregate principal amount of $3.0 billion
maturing on the third anniversary of the proposed merger closing date and (2) senior unsecured term loans in an
aggregate principal amount of $1.75 billion maturing on the date that is 18 months after the proposed merger closing
date (collectively, the “Term Loan Facilities”). Borrowings under the Term Loan Facilities will be used to pay a portion
of the consideration and other amounts payable in connection with the proposed merger with Albertsons. The duration of
the Term Loan Facilities will allow us to achieve our net total debt to adjusted EBITDA ratio target range of 2.30 to 2.50
within the first 18 to 24 months after the proposed merger closing date. The entry into the term loan credit agreement
reduced the commitments under our bridge facility commitment letter from $17.4 billion to $12.65 billion. Borrowings
under the Term Loan Facilities will bear interest at rates that vary based on the type of loan and our debt rating.

In addition to the available credit mentioned above, as of January 28, 2023, we had authorized for issuance $3.3
billion of securities remaining under a shelf registration statement filed with the SEC and effective on May 20, 2022.

We maintain surety bonds related primarily to our self-insured workers’ compensation claims. These bonds are
required by most states in which we are self-insured for workers’ compensation and are placed with predominately third-
party insurance providers to insure payment of our obligations in the event we are unable to meet our claim payment
obligations up to our self-insured retention levels. These bonds do not represent liabilities of ours, as we already have
reserves on our books for the claims costs. Market changes may make the surety bonds more costly and, in some
instances, availability of these bonds may become more limited, which could affect our costs of, or access to, such
bonds. Although we do not believe increased costs or decreased availability would significantly affect our ability to
access these surety bonds, if this does become an issue, we would issue letters of credit, in states where allowed, to meet
the state bonding requirements. This could increase our cost or decrease the funds available under our credit facility if
the letters of credit were issued against our credit facility. We had $467 million of outstanding surety bonds as of
January 28, 2023. These surety bonds expire during fiscal year 2023 and are expected to be renewed.

We have standby letters of credit outstanding as part of our insurance program and for other business purposes. The

letters of credit for our insurance program collateralize obligations to our insurance carriers in connection with the
settlement of potential claims. We have also provided a letter of credit which supports our commitment to build a certain
number of fulfillment centers. The balance of this letter of credit reduces primarily upon the construction of each
fulfillment center. If we do not reach our total purchase commitment, we will be responsible for the balance remaining
on the letter of credit. We had $310 million of outstanding standby letters of credit as of January 28, 2023. These
standby letters of credit expire during fiscal year 2023 and are expected to be renewed. Letters of credit do not represent
liabilities of ours and are not reflected in the Company’s Consolidated Balance Sheets.

We also are contingently liable for leases that have been assigned to various third parties in connection with facility
closings and dispositions. We could be required to satisfy obligations under the leases if any of the assignees are unable
to fulfill their lease obligations. Due to the wide distribution of our assignments among third parties, and various other
remedies available to us, we believe the likelihood that we will be required to assume a material amount of these
obligations is remote. We have agreed to indemnify certain third-party logistics operators for certain expenses,
including multi-employer pension plan obligations and withdrawal liabilities.

In addition to the above, we enter into various indemnification agreements and take on indemnification obligations

in the ordinary course of business. Such arrangements include indemnities against third-party claims arising out of
agreements to provide services to us; indemnities related to the sale of our securities; indemnities of directors, officers
and employees in connection with the performance of their work; and indemnities of individuals serving as fiduciaries
on benefit plans. While our aggregate indemnification obligation could result in a material liability, we are not aware of
any current matter that could result in a material liability.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

FINANCIAL RISK MANAGEMENT

In addition to the risks inherent in our operations, we are exposed to market risk from a variety of sources, including
changes in interest rates, commodity prices, the fair value of certain equity investments and defined benefit pension and
other post-retirement benefit plans. Our market risk exposures are discussed below.

Interest Rate Risk

We manage our exposure to interest rates and changes in the fair value of our debt instruments primarily through the
strategic use of our commercial paper program, variable and fixed rate debt, and interest rate swaps. Our current program
relative to interest rate protection contemplates hedging the exposure to changes in the fair value of fixed-rate debt
attributable to changes in interest rates. To do this, we use the following guidelines: (i) use average daily outstanding
borrowings to determine annual debt amounts subject to interest rate exposure, (ii) limit the average annual amount
subject to interest rate reset and the amount of floating rate debt to a combined total amount that represents 25% of the
carrying value of our debt portfolio or less, (iii) include no leveraged products, and (iv) hedge without regard to profit
motive or sensitivity to current mark-to-market status.

When we use derivative financial instruments, it is primarily to manage our exposure to fluctuations in interest rates.

We do not enter into derivative financial instruments for trading purposes. As a matter of policy, all of our derivative
positions are intended to reduce risk by hedging an underlying economic exposure. Because of the high correlation
between the hedging instrument and the underlying exposure, fluctuations in the value of the instruments generally are
offset by reciprocal changes in the value of the underlying exposure. The interest rate derivatives we use are
straightforward instruments with liquid markets.

As of January 28, 2023, we maintained five forward-starting interest rate swap agreements with a maturity date of

August 1, 2027 with an aggregate notional amount totaling $5.4 billion. A forward-starting interest rate swap is an
agreement that effectively hedges the variability in future benchmark interest payments attributable to changes in interest
rates on the forecasted issuance of fixed-rate debt. We entered into these forward-starting interest rate swaps in order to
lock in fixed interest rates on our forecasted issuances of debt. The fixed interest rates for these forward-starting interest
rate swaps range from 3.00% to 3.78%. The variable rate component on the forward-starting interest rate swaps is the
Secured Overnight Financing Rate (SOFR). A notional amount of $2.4 billion of these forward-starting interest rate
swaps was designated as a cash-flow hedge as defined by GAAP. Accordingly, the changes in fair value of these
forward-starting interest rate swaps are recorded to other comprehensive income and reclassified into net earnings when
the hedged transaction affects net earnings. As of January 28, 2023, the fair value of the interest rate swaps designated
as cash flow hedges was recorded in “Other long-term liabilities” for $116 million and accumulated other
comprehensive loss for $89 million, net of tax. The remainder of the notional amount of $3.0 billion of the forward-
starting interest rate swaps was not designated as a cash-flow hedge. Accordingly, the changes in the fair value of these
forward-starting interest rate swaps not designated as cash-flow hedges are recognized through net earnings. As of
January 28, 2023, the fair value of these swaps was recorded in “Other long-term liabilities” for $142 million. During
2022, we recognized an unrealized loss of $142 million that is included in “(Loss) gain on investments” in our
Consolidated Statements of Operations. We had no forward-starting interest rate swap agreements outstanding as of
January 29, 2022.

Annually, we review with the Finance Committee of our Board of Directors compliance with the guidelines

described above. The guidelines may change as our business needs dictate.

The tables below provide information about our underlying debt portfolio as of January 28, 2023 and January 29,
2022. The amounts shown for each year represent the contractual maturities of long-term debt, excluding finance leases,
as of January 28, 2023 and January 29, 2022. Interest rates reflect the weighted average rate for the outstanding
instruments. The variable rate debt is based on a reference rate using the forward yield curve as of January 28, 2023 and
January 29, 2022. The Fair Value column includes the fair value of our debt instruments as of January 28, 2023 and
January 29, 2022. We had no outstanding interest rate derivatives classified as fair value hedges as of January 28, 2023
or January 29, 2022. See Notes 5, 6 and 7 to the Consolidated Financial Statements.

Debt
Fixed rate
Average interest rate
Variable rate
Average interest rate

January 28, 2023
Expected Year of Maturity

2023

2024 2025

2026

2027 Thereafter Total

Fair Value

(in millions)

$ (1,118) $

(3)

4.52 % 1.53 %

(35) $

(22)

6.32 % 7.07 %

(3)
3.64 %
(81)
1.70 %

$ (1,386)

$ (607)

$ (8,037)

$ (11,154) $ (10,455)

4.26 % 4.68 %

$ — $ — $

—

4.54 %
—
—

(138) $

(138)

2022 2023

2024 2025

2026

Thereafter Total

Fair Value

(in millions)

January 29, 2022
Expected Year of Maturity

$ (416)

$ (1,107)

4.38 %

$ (35)

1.86 %

(5)
1.51 %
$ — $

4.50 %
(23)
2.61 % —

(3)
3.53 %
(81)
0.12 %

$ (1,387)

$ (8,688)

$ (11,606) $ (13,050)

4.27 %

$ — $
—

4.46 %
—
—

(139) $

(139)

Based on our year-end 2022 variable rate debt levels, a 10 percent change in interest rates would be immaterial. See

Note 6 to the Consolidated Financial Statements for further discussion of derivatives and hedging policies.

Commodity Price Risk

We are subject to commodity price risk generated by our purchases of meat, seafood and dairy products, among
other food items. We purchase, manufacture and sell various commodity related food products and risk arises from the
price volatility of these commodities. The price and availability of these commodities directly impacts our results of
operations. To help manage or minimize the effect of commodity price risk exposure on our operations, we use a
combination of pricing features embedded within supply contracts, such as fixed-price and price-to-be-fixed contracts,
and have the ability to increase or decrease retail prices to our customers as commodity prices change.

We are exposed to changes in the prices of diesel and unleaded fuel. The majority of our fuel contracts utilize
index-based pricing formulas plus or minus a fixed locational/supplier differential. We expect to take delivery of these
commitments in the normal course of business, and, as a result, these contracts qualify as normal purchases. While
many of the indices are aligned, each index may fluctuate at a different pace, driving variability in the prices paid for
fuel. Because of this, our operating results may be affected should the market price of fuel suddenly change by a
significant amount, which can affect our operating results either positively or negatively in the short-term.

We have entered into fixed price contracts to purchase electricity and natural gas for a portion of our energy needs.

We expect to take delivery of these commitments in the normal course of business, and, as a result, these contracts
qualify as normal purchases.

As of January 28, 2023 and January 29, 2022, we had no commodity derivative contracts outstanding.

Equity Investment Risk

We are exposed to market price volatility for our investment in Ocado Group plc (“Ocado”), which is measured at
fair value through net earnings. Fair value adjustments flow through “(Loss) gain on investments” in our Consolidated
Statements of Operations. The change in fair value of this investment resulted in an unrealized (loss) gain on
investments of ($586) million in 2022, ($821) million in 2021 and $1.0 billion in 2020. As of January 28, 2023, the
value of our investment in Ocado was $401 million. As of January 28, 2023, a 10% change in the fair value of this
investment would be approximately $40 million. For additional details on this investment, see Note 7 to the
Consolidated Financial Statements.

Company-Sponsored Benefit Plans

We sponsor defined benefit pension plans and post-retirement healthcare plans for certain eligible employees.
Changes in interest rates affect our liabilities associated with these retirement plans, as well as the amount of expense
recognized for these retirement plans. Increased interest rates could result in a lower fair value of plan assets and
increased pension expense in the following years. The target plan asset allocations are established based on our LDI
strategy. An LDI strategy focuses on maintaining a close to fully-funded status over the long-term with minimal funded
status risk. This is achieved by investing more of the plan assets in fixed income instruments to more closely match the
duration of the plan liability. As of January 28, 2023, our defined benefit pension plans had total investment assets of
$2.5 billion. Declines in the fair value of plan assets could diminish the funded status of our defined benefit pension
plans and potentially increase our requirement to make contributions to these plans. For additional details, see Note 14
to the Consolidated Financial Statements.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Consolidated Financial Statements of The Kroger Co.
For the Fiscal Year Ended January 28, 2023

Table of Contents

Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Shareholders’ Equity
Notes to Consolidated Financial Statements

Page
49
52
53
54
55
56
57

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of The Kroger Co.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of The Kroger Co. and its subsidiaries (the
“Company”) as of January 28, 2023 and January 29, 2022, and the related consolidated statements of
operations, of comprehensive income, of changes in shareholders' equity and of cash flows for each of the
three years in the period ended January 28, 2023, including the related notes (collectively referred to as the
“consolidated financial statements”). We also have audited the Company's internal control over financial
reporting as of January 28, 2023, based on criteria established in Internal Control - Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position of the Company as of January 28, 2023 and January 29, 2022, and the results of its
operations and its cash flows for each of the three years in the period ended January 28, 2023 in conformity
with accounting principles generally accepted in the United States of America. Also in our opinion, the
Company maintained, in all material respects, effective internal control over financial reporting as of
January 28, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by
the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining
effective internal control over financial reporting, and for its assessment of the effectiveness of internal
control over financial reporting, included in Management’s Report on Internal Control over Financial
Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated
financial statements and on the Company's internal control over financial reporting based on our audits. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement, whether due to error or fraud, and whether effective internal
control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of
material misstatement of the consolidated financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over
financial reporting included obtaining an understanding of internal control over financial reporting, assessing
the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audits also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our
opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the
consolidated financial statements that was communicated or required to be communicated to the audit
committee and that (i) relates to accounts or disclosures that are material to the consolidated financial
statements and (ii) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a
separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Assessment – Kroger Specialty Pharmacy (“KSP”) Reporting Unit

As described in Notes 1 and 2 to the consolidated financial statements, the Company’s consolidated goodwill
balance was $2.9 billion as of January 28, 2023 and the goodwill associated with the KSP reporting unit was
$243 million. Management reviews goodwill annually for impairment in the fourth quarter of each year, and
also upon the occurrence of triggering events. The fair value of a reporting unit is compared to its carrying
value for purposes of identifying potential impairment. Goodwill impairment is recognized for any excess of
the reporting unit’s carrying value over its fair value, not to exceed the total amount of goodwill allocated to
the reporting unit. The fair value of the Company's KSP reporting unit was estimated using multiple valuation
techniques, a discounted cash flow model (income approach), a market multiple model and comparable
mergers and acquisition model (market approaches), with each method weighted in the calculation. The
income approach relies on management’s estimates of revenue growth rates, margin assumptions, and
discount rate to estimate future cash flows. The market approaches require the determination of an
appropriate peer group, which is utilized to derive estimated fair values based on selected market multiples.

The principal considerations for our determination that performing procedures relating to the goodwill
impairment assessment of the KSP reporting unit is a critical audit matter are (i) the significant judgment by
management when developing the fair value measurement of the reporting unit; (ii) the high degree of auditor
judgment, subjectivity, and effort in performing procedures to evaluate management’s cash flow projections
and significant assumptions related to revenue growth rates, margin assumptions, discount rate, peer group
determination, and market multiple selection; and (iii) the audit effort involved the use of professionals with
specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with
forming our overall opinion on the consolidated financial statements. These procedures included testing the
effectiveness of controls relating to management’s goodwill impairment assessment, including controls over
the valuation of the Company’s KSP reporting unit. These procedures also included, among others, testing
management’s process for developing the fair value estimate, evaluating the appropriateness of the income
and market approach models, testing the completeness, accuracy, and relevance of the underlying data used
in the models and evaluating the significant assumptions used by management related to the revenue growth
rates, margin assumptions, discount rate, peer group determination, and market multiple selection.
Evaluating management’s assumptions relating to revenue growth rates and margin assumptions involved
evaluating whether the assumptions used by management were reasonable considering (i) the current and
past performance of the reporting unit, (ii) the consistency with external market and industry data, and
(iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. Evaluating
the Company’s peer group determinations included evaluating the appropriateness of the identified peer
companies. Professionals with specialized skill and knowledge were used to assist in the evaluation of the
Company’s discounted cash flow and market models, and certain significant assumptions related to the
discount rate, peer group determination, and market multiples.

/s/ PricewaterhouseCoopers LLP
Cincinnati, Ohio
March 28, 2023

We have served as the Company’s auditor since 1929.

THE KROGER CO.
CONSOLIDATED BALANCE SHEETS

(In millions, except par amounts)
ASSETS
Current assets

Cash and temporary cash investments
Store deposits in-transit
Receivables
FIFO inventory
LIFO reserve
Prepaid and other current assets

Total current assets

Property, plant and equipment, net
Operating lease assets
Intangibles, net
Goodwill
Other assets

Total Assets

LIABILITIES
Current liabilities

Current portion of long-term debt including obligations under finance leases
Current portion of operating lease liabilities
Trade accounts payable
Accrued salaries and wages
Other current liabilities
Total current liabilities

Long-term debt including obligations under finance leases
Noncurrent operating lease liabilities
Deferred income taxes
Pension and postretirement benefit obligations
Other long-term liabilities

Total Liabilities

Commitments and contingencies see Note 12

SHAREOWNERS’ EQUITY

Preferred shares, $100 par per share, 5 shares authorized and unissued
Common shares, $1 par per share, 2,000 shares authorized; 1,918 shares issued in 2022 and 2021
Additional paid-in capital
Accumulated other comprehensive loss
Accumulated earnings
Common shares in treasury, at cost, 1,202 shares in 2022 and 1,191 shares in 2021

Total Shareowners’ Equity - The Kroger Co.

Noncontrolling interests

Total Equity

Total Liabilities and Equity

January 28, January 29,

2023

2022

1,015
1,127
2,234
9,756
(2,196)
734
12,670

24,726
6,662
899
2,916
1,750

1,821
1,082
1,828
8,353
(1,570)
660
12,174

23,789
6,695
942
3,076
2,410

49,623

49,086

1,310
662
7,119
1,746
6,401
17,238

12,068
6,372
1,672
436
1,823

555
650
7,117
1,736
6,265
16,323

12,809
6,426
1,562
478
2,059

39,609

39,657

—
1,918
3,805
(632)
25,601
(20,650)

10,042
(28)

10,014

—
1,918
3,657
(467)
24,066
(19,722)

9,452
(23)

9,429

49,623

49,086

The accompanying notes are an integral part of the consolidated financial statements.

THE KROGER CO.
CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended January 28, 2023, January 29, 2022 and January 30, 2021

(In millions, except per share amounts)
Sales

Operating expenses

Merchandise costs, including advertising, warehousing, and transportation,

excluding items shown separately below

Operating, general and administrative
Rent
Depreciation and amortization

Operating profit

Other income (expense)

2022
(52 weeks)

2021
(52 weeks)

2020
(52 weeks)

$ 148,258 $ 137,888 $ 132,498

116,480
23,848
839
2,965

107,539
23,203
845
2,824

101,597
24,500
874
2,747

4,126

3,477

2,780

Interest expense
Non-service component of company-sponsored pension plan benefits

(costs)

(Loss) gain on investments

(535)

(571)

(544)

39
(728)

(34)
(821)

29
1,105

Net earnings before income tax expense

2,902

2,051

3,370

Income tax expense

Net earnings including noncontrolling interests
Net income attributable to noncontrolling interests

653

385

782

2,249
5

1,666
11

2,588
3

Net earnings attributable to The Kroger Co.

2,244 $

1,655 $

2,585

Net earnings attributable to The Kroger Co. per basic common share

3.10 $

2.20 $

3.31

Average number of common shares used in basic calculation

718

744

773

Net earnings attributable to The Kroger Co. per diluted common share

3.06 $

2.17 $

3.27

Average number of common shares used in diluted calculation

727

754

781

The accompanying notes are an integral part of the consolidated financial statements.

THE KROGER CO.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years Ended January 28, 2023, January 29, 2022 and January 30, 2021

(In millions)
Net earnings including noncontrolling interests

2022
(52 weeks)

2021
(52 weeks)

$ 2,249 $ 1,666

2020
(52 weeks)
$ 2,588

Other comprehensive (loss) income

Change in pension and other postretirement defined benefit plans, net of income

tax(1)

Unrealized gains and losses on cash flow hedging activities, net of income tax(2)
Amortization of unrealized gains and losses on cash flow hedging activities, net of

income tax(3)

Total other comprehensive (loss) income

Comprehensive income
Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to The Kroger Co.

(83)
(89)

156
—

(165)

163

22
(14)

2,084
5

1,829
11
$ 2,079 $ 1,818

2,598
3
$ 2,595

(1) Amount is net of tax (benefit) expense of ($26) in 2022, $48 in 2021 and $7 in 2020.
(2) Amount is net of tax benefit of ($27) in 2022 and ($8) in 2020.
(3) Amount is net of tax expense of $2 in 2022, $3 in 2021 and $2 in 2020.

The accompanying notes are an integral part of the consolidated financial statements.

Years Ended January 28, 2023, January 29, 2022 and January 30, 2021

THE KROGER CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)
Cash Flows from Operating Activities:

Net earnings including noncontrolling interests

Adjustments to reconcile net earnings including noncontrolling interests to net cash provided by operating activities:

2022
(52 weeks)

2021
(52 weeks)

2020
(52 weeks)

2,249

1,666

2,588

Depreciation and amortization
Asset impairment charges
Goodwill and fixed asset impairment charges related to Vitacost.com
Operating lease asset amortization
LIFO charge (credit)
Share-based employee compensation
Company-sponsored pension plans (benefit) expense
Deferred income taxes
Gain on the sale of assets
Loss (gain) on investments
Other
Changes in operating assets and liabilities:

Store deposits in-transit
Receivables
Inventories
Prepaid and other current assets
Trade accounts payable
Accrued expenses
Income taxes receivable and payable
Operating lease liabilities
Other

Net cash provided by operating activities

Cash Flows from Investing Activities:

Payments for property and equipment, including payments for lease buyouts
Proceeds from sale of assets
Other

Net cash used by investing activities

Cash Flows from Financing Activities:

Proceeds from issuance of long-term debt
Payments on long-term debt including obligations under finance leases
Net payments on commercial paper
Dividends paid
Financing fees paid
Proceeds from issuance of capital stock
Treasury stock purchases
Proceeds from financing arrangement
Other

Net cash used by financing activities

Net (decrease) increase in cash and temporary cash investments

Cash and temporary cash investments:

Beginning of year
End of year

Reconciliation of capital investments:

Payments for property and equipment, including payments for lease buyouts
Payments for lease buyouts
Changes in construction-in-progress payables

Total capital investments, excluding lease buyouts

Disclosure of cash flow information:

Cash paid during the year for interest
Cash paid during the year for income taxes

2,965
68
164
614
626
190
(26)
161
(40)
728
(8)

(45)
(222)
(1,370)
(36)
3
(126)
(190)
(622)
(585)

2,824
64
—
605
197
203
50
(31)
(44)
821
64

13
(61)
80
232
438
331
16
(618)
(660)

4,498

6,190

(3,078)
78
(15)

(2,614)
153
(150)

2,747
70
—
626
(7)
185
(9)
73
(59)
(1,105)
165

83
(90)
7
(342)
330
1,382
24
(552)
699

6,815

(2,865)
165
(114)

(3,015)

(2,611)

(2,814)

—
(552)
—
(682)
(84)
134
(993)
—
(112)

56
(1,442)
—
(589)
(5)
172
(1,647)
166
(156)

1,049
(747)
(1,150)
(534)
(9)
127
(1,324)
—
(125)

(2,289)

(3,445)

(2,713)

(806)

134

1,288

1,821
1,015

(3,078)
21
(281)
(3,338)

545
698

$
$

1,687
1,821

(2,614)
—
(542)
(3,156)

607
513

$
$

399
1,687

(2,865)
58
(359)
(3,166)

564
659

$
$

The accompanying notes are an integral part of the consolidated financial statements

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

All amounts in the Notes to Consolidated Financial Statements are in millions except per share amounts.

1. ACCOUNTING POLICIES

The following is a summary of the significant accounting policies followed in preparing these financial statements.

Description of Business, Basis of Presentation and Principles of Consolidation

The Kroger Co. (the “Company”) was founded in 1883 and incorporated in 1902. The Company is a food and drug
retailer that operates 2,719 supermarkets, 2,252 pharmacies and 1,637 fuel centers across 35 states while also operating
online through a digital ecosystem to offer customers an omnichannel shopping experience. The Company also
manufactures and processes food for sale by its supermarkets and online. The accompanying financial statements
include the consolidated accounts of the Company, its wholly-owned subsidiaries and other consolidated
entities. Intercompany transactions and balances have been eliminated.

Fiscal Year

The Company’s fiscal year ends on the Saturday nearest January 31. The last three fiscal years consist of the 52-

week periods ended January 28, 2023, January 29, 2022 and January 30, 2021.

Pervasiveness of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”)

requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities.
Disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported
amounts of consolidated revenues and expenses during the reporting period is also required. Actual results could differ
from those estimates.

Cash, Temporary Cash Investments and Book Overdrafts

Cash and temporary cash investments represent store cash and short-term investments with original maturities of
less than three months. Book overdrafts are included in “Trade accounts payable” and “Accrued salaries and wages” in
the Consolidated Balance Sheets.

Deposits In-Transit

Deposits in-transit generally represent funds deposited to the Company’s bank accounts at the end of the year
related to sales, a majority of which were paid for with debit cards, credit cards and checks, to which the Company does
not have immediate access but settle within a few days of the sales transaction.

Inventories

Inventories are stated at the lower of cost (principally on a last-in, first-out “LIFO” basis) or market. In total,
approximately 89% of inventories in 2022 and 91% of inventories in 2021 were valued using the LIFO method. The
remaining inventories, including substantially all fuel inventories, are stated at the lower of cost (on a FIFO basis) or net
realizable value. Replacement cost was higher than the carrying amount by $2,196 at January 28, 2023 and $1,570 at
January 29, 2022. The Company follows the Link-Chain, Dollar-Value LIFO method for purposes of calculating its
LIFO charge or credit. During 2020, the Company had a LIFO liquidation primarily related to pharmacy inventory. The
liquidated inventory was carried at lower costs prevailing in prior years as compared with current costs. The effect of
this reduction in inventory decreased “Merchandise costs” by approximately $76, $58 net of tax.

The item-cost method of accounting to determine inventory cost before the LIFO adjustment is followed for

substantially all store inventories at the Company’s supermarket divisions. This method involves counting each item in
inventory, assigning costs to each of these items based on the actual purchase costs (net of vendor allowances and cash
discounts) of each item and recording the cost of items sold. The item-cost method of accounting allows for more
accurate reporting of periodic inventory balances and enables management to more precisely manage inventory. In
addition, substantially all of the Company’s inventory consists of finished goods and is recorded at actual purchase costs
(net of vendor allowances and cash discounts).

The Company evaluates inventory shortages throughout the year based on actual physical counts in its facilities.

Allowances for inventory shortages are recorded based on the results of these counts to provide for estimated shortages
as of the financial statement date.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost or, in the case of assets acquired in a business combination, at
fair value. Depreciation and amortization expense, which includes the depreciation of assets recorded under finance
leases, is computed principally using the straight-line method over the estimated useful lives of individual assets.
Buildings and land improvements are depreciated based on lives varying from 10 to 40 years. All new purchases of
store equipment are assigned lives varying from three to nine years. Leasehold improvements are amortized over the
shorter of the lease term to which they relate, which generally varies from four to 25 years, or the useful life of the
asset. Food production plant, fulfillment center and distribution center equipment is depreciated over lives varying from
three to 15 years. Information technology assets are generally depreciated over three to five years. Depreciation and
amortization expense was $2,965 in 2022, $2,824 in 2021 and $2,747 in 2020.

Interest costs on significant projects constructed for the Company’s own use are capitalized as part of the costs of
the newly constructed facilities. Upon retirement or disposal of assets, the cost and related accumulated depreciation and
amortization are removed from the balance sheet and any gain or loss is reflected in net earnings. Refer to Note 3 for
further information regarding the Company’s property, plant and equipment.

Leases

The Company leases certain store real estate, warehouses, distribution centers, fulfillment centers, office space and
equipment. The Company determines if an arrangement is a lease at inception. Finance and operating lease assets and
liabilities are recognized at the lease commencement date. Finance and operating lease liabilities represent the present
value of minimum lease payments not yet paid. Operating lease assets represent the right to use an underlying asset and
are based upon the operating lease liabilities adjusted for prepayments, lease incentives and impairment, if any. To
determine the present value of lease payments, the Company estimates an incremental borrowing rate which represents
the rate used for a secured borrowing of a similar term as the lease.

Lease terms generally range from 10 to 20 years with options to renew for varying terms at the Company’s sole

discretion. The lease term includes the initial contractual term as well as any options to extend the lease when it is
reasonably certain that the Company will exercise that option. Leases with an initial term of 12 months or less are not
recorded on the balance sheet. Certain leases include escalation clauses or payment of executory costs such as property
taxes, utilities or insurance and maintenance. Operating lease payments are charged on a straight-line basis to rent
expense over the lease term and finance lease payments are charged to interest expense and depreciation and
amortization expense over the lease term. Assets under finance leases are amortized in accordance with the Company’s
normal depreciation policy for owned assets or over the lease term, if shorter. The Company’s lease agreements do not
contain any residual value guarantees or material restrictive covenants. For additional information on leases, see Note 9
to the Consolidated Financial Statements.

Goodwill

The Company reviews goodwill for impairment during the fourth quarter of each year, or earlier upon the
occurrence of a triggering event. The Company performs reviews of each of its operating divisions and other
consolidated entities (collectively, “reporting units”) that have goodwill balances. Generally, fair value is determined
using a market multiple model, or discounted projected future cash flows, and is compared to the carrying value of a
reporting unit for purposes of identifying potential impairment. Projected future cash flows are based on management’s
knowledge of the current operating environment and expectations for the future. Goodwill impairment is recognized for
any excess of the reporting unit’s carrying value over its fair value, not to exceed the total amount of goodwill allocated
to the reporting unit. Results of the goodwill impairment reviews performed during 2022, 2021 and 2020 are
summarized in Note 2.

Impairment of Long-Lived Assets

The Company monitors the carrying value of long-lived assets for potential impairment each quarter based on
whether certain triggering events have occurred. These events include current period losses combined with a history of
losses or a projection of continuing losses or a significant decrease in the market value of an asset. When a triggering
event occurs, an impairment calculation is performed, comparing projected undiscounted future cash flows, utilizing
current cash flow information and expected growth rates related to specific stores, to the carrying value for those stores.
If the Company identifies impairment for long-lived assets to be held and used, the Company compares the assets’
current carrying value to the assets’ fair value. Fair value is based on current market values or discounted future cash
flows. The Company records impairment when the carrying value exceeds fair market value. With respect to owned
property and equipment held for disposal, the value of the property and equipment is adjusted to reflect recoverable
values based on previous efforts to dispose of similar assets and current economic conditions. Impairment is recognized
for the excess of the carrying value over the estimated fair market value, reduced by estimated direct costs of disposal.
The Company recorded asset impairments totaling $68, $64 and $70 in 2022, 2021 and 2020, respectively. Costs to
reduce the carrying value of long-lived assets for each of the years presented have been included in the Consolidated
Statements of Operations as Operating, general and administrative (“OG&A”) expense.

Accounts Payable Financing Arrangement

The Company has an agreement with a third party to provide an accounts payable tracking system which facilitates

participating suppliers’ ability to finance payment obligations from the Company with designated third-party financial
institutions. Participating suppliers may, at their sole discretion, make offers to finance one or more payment obligations
of the Company prior to their scheduled due dates at a discounted price to participating financial institutions. The
Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not affected by
suppliers’ decisions to finance amounts under this arrangement. As of January 28, 2023, the Company had $65 and
$249 in “Other current liabilities” and “Trade accounts payable,” respectively, associated with financing arrangements.
As of January 29, 2022, the Company had $59 and $236 in “Other current liabilities” and “Trade accounts payable,”
respectively, associated with financing arrangements.

Contingent Consideration

The Company’s Home Chef business combination involves potential payment of future consideration that is

contingent upon the achievement of certain performance milestones. The Company recorded contingent consideration at
fair value at the date of acquisition based on the consideration expected to be transferred, estimated as the probability-
weighted future cash flows, discounted back to present value using a discount rate determined in accordance with
accepted valuation methods. The liability for contingent consideration is remeasured to fair value at each reporting
period using Level 3 inputs, and the change in fair value, including accretion for the passage of time, is recognized in
earnings until the contingency is resolved. In 2022, 2021 and 2020, adjustments to increase the contingent consideration
liability as of year-end were recorded for $20, $66 and $189, respectively, in OG&A expense. During the first quarter of
2023, the Company will make the final contingent consideration payment, which is based on the fair value of the
outstanding year-end 2022 liability.

Store Closing Costs

The Company regularly evaluates the performance of its stores and periodically closes those stores that are

underperforming. Related liabilities arise, such as severance, contractual obligations and other accruals associated with
store closings. The Company records a liability for costs associated with an exit or disposal activity when the liability is
incurred, usually in the period the store closes. Adjustments to closed store liabilities primarily relate to actual exit costs
differing from original estimates. Adjustments are made for changes in estimates in the period in which the change
becomes known.

Owned stores held for disposal are reduced to their estimated net realizable value. Costs to reduce the carrying
values of property, plant, equipment and operating lease assets are accounted for in accordance with the Company’s
policy on impairment of long-lived assets. Inventory write-downs, if any, in connection with store closings, are
classified in the Consolidated Statements of Operations as “Merchandise costs”. Costs to transfer inventory and
equipment from closed stores are expensed as incurred.

Interest Rate Risk Management

The Company uses derivative instruments primarily to manage its exposure to changes in interest rates. The
Company’s current program relative to interest rate protection and the methods by which the Company accounts for its
derivative instruments are described in Note 6.

Benefit Plans and Multi-Employer Pension Plans

The Company recognizes the funded status of its retirement plans on the Consolidated Balance Sheets. Actuarial
gains or losses, prior service costs or credits and transition obligations that have not yet been recognized as part of net
periodic benefit cost are required to be recorded as a component of Accumulated Other Comprehensive Income
(“AOCI”). The Company has elected to measure defined benefit plan assets and obligations as of January 31, which is
the month-end that is closest to its fiscal year-ends, which were January 28, 2023 for fiscal 2022 and January 29, 2022
for fiscal 2021.

The determination of the obligation and expense for company-sponsored pension plans and other post-retirement

benefits is dependent on the selection of assumptions used by actuaries and the Company in calculating those
amounts. Those assumptions are described in Note 14 and include, among others, the discount rate, the expected long-
term rate of return on plan assets, mortality and the rates of increase in compensation and health care costs. Actual
results that differ from the assumptions are accumulated and amortized over future periods and, therefore, generally
affect the recognized expense and recorded obligation in future periods. While the Company believes that the
assumptions are appropriate, significant differences in actual experience or significant changes in assumptions may
materially affect the pension and other post-retirement obligations and future expense.

The Company also participates in various multi-employer plans for substantially all union employees. Pension
expense for these plans is recognized as contributions are funded or when commitments are probable and reasonably
estimable, in accordance with GAAP. Refer to Note 15 for additional information regarding the Company’s
participation in these various multi-employer pension plans.

The Company administers and makes contributions to the employee 401(k) retirement savings accounts.

Contributions to the employee 401(k) retirement savings accounts are expensed when contributed or over the service
period in the case of automatic contributions. Refer to Note 14 for additional information regarding the Company’s
benefit plans.

Share Based Compensation

The Company recognizes compensation expense for all share-based payments granted under fair value recognition

provisions. The Company recognizes share-based compensation expense, net of an estimated forfeiture rate, over the
requisite service period of the award based on the fair value at the date of the grant. The Company grants options for
common shares (“stock options”) to employees under various plans at an option price equal to the fair market value of
the stock option at the date of grant. Stock options typically expire 10 years from the date of grant. Stock options vest
between one and four years from the date of grant. In addition to stock options, the Company awards restricted stock to
employees and incentive shares to nonemployee directors under various plans. The restrictions on these restricted stock
awards generally lapse between one and four years from the date of the awards. The Company determines the fair value
for restricted stock awards in an amount equal to the fair market value of the underlying shares on the grant date of the
award.

Deferred Income Taxes

Deferred income taxes are recorded to reflect the tax consequences of differences between the tax basis of assets and

liabilities and their financial reporting basis. Refer to Note 4 for the types of differences that give rise to significant
portions of deferred income tax assets and liabilities.

Uncertain Tax Positions

The Company reviews the tax positions taken or expected to be taken on tax returns to determine whether and to

what extent a benefit can be recognized in its consolidated financial statements. Refer to Note 4 for the amount of
unrecognized tax benefits and other related disclosures related to uncertain tax positions.

Various taxing authorities periodically audit the Company’s income tax returns. These audits include questions

regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of
income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions,
including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse
before a particular matter, for which an allowance has been established, is audited and fully resolved. As of January 28,
2023, the years ended February 1, 2020 and forward remain open for review for federal income tax purposes.

The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures

associated with the Company’s various filing positions.

Self-Insurance Costs

The Company is primarily self-insured for costs related to workers’ compensation and general liability
claims. Liabilities are actuarially determined and are recognized based on claims filed and an estimate of claims
incurred but not reported. The liabilities for workers’ compensation claims are accounted for on a present value
basis. The Company has purchased stop-loss coverage to limit its exposure to any significant exposure on a per claim
basis. The Company is insured for covered costs in excess of these per claim limits.

The following table summarizes the changes in the Company’s self-insurance liability through January 28, 2023:

Beginning balance
Expense
Claim payments
Ending balance
Less: Current portion
Long-term portion

2022
$ 721
227
(236)
712
(236)
$ 476

2021

2020
$ 731 $ 689
262
226
(220)
(236)
731
721
(236)
(220)
$ 485 $ 511

The current portion of the self-insured liability is included in “Other current liabilities,” and the long-term portion is

included in “Other long-term liabilities” in the Consolidated Balance Sheets.

The Company maintains surety bonds related to self-insured workers’ compensation claims. These bonds are
required by most states in which the Company is self-insured for workers’ compensation and are placed with third-party
insurance providers to insure payment of the Company’s obligations in the event the Company is unable to meet its
claim payment obligations up to its self-insured retention levels. These bonds do not represent liabilities of the
Company, as the Company has recorded reserves for the claim costs.

The Company also maintains insurance coverages for certain risks, including cyber exposure and property-related

losses. The Company’s insurance coverage begins for these exposures ranging from $25 to $30.

Revenue Recognition

Sales

The Company recognizes revenues from the retail sale of products, net of sales taxes, at the point of sale. Pharmacy

sales are recorded when the product is provided to the customer. Digital channel originated sales are recognized either
upon pickup in store or upon delivery to the customer. Amounts billed to a customer related to shipping and delivery
represent revenues earned for the goods provided and are classified as sales. When shipping is discounted, it is recorded
as an adjustment to sales. Discounts provided to customers by the Company at the time of sale, including those provided
in connection with loyalty cards, are recognized as a reduction in sales as the products are sold. Discounts provided by
vendors, usually in the form of coupons, are not recognized as a reduction in sales provided the coupons are redeemable at
any retailer that accepts coupons. The Company records a receivable from the vendor for the difference in sales price and
cash received. For merchandise sold in one of the Company’s stores or online, tender is accepted at the point of sale.
The Company acts as principal in certain vendor arrangements where the purchase and sale of inventory are virtually
simultaneous. The Company records revenue and related costs on a gross basis for these arrangements. For pharmacy
sales, collection of third-party receivables is typically expected within three months or less from the time of purchase.
The third-party receivables from pharmacy sales are recorded in “Receivables” in the Company’s Consolidated Balance
Sheets and were $867 as of January 28, 2023 and $774 as of January 29, 2022.

Gift Cards and Gift Certificates

The Company does not recognize revenue when it sells its own gift cards and gift certificates (collectively “gift
cards”). Rather, it records a deferred revenue liability equal to the amount received. A sale is then recognized when the
gift cards are redeemed to purchase the Company’s products. The Company’s gift cards do not expire. While gift cards
are generally redeemed within 12 months, some are never fully redeemed. The Company recognizes gift card breakage
under the proportional method, where recognition of breakage income is based upon the historical run-off rate of
unredeemed gift cards. The Company’s gift card deferred revenue liability was $200 as of January 28, 2023 and $185
as of January 29, 2022.

Disaggregated Revenues

The following table presents sales revenue by type of product for the year-ended January 28, 2023, January 29, 2022,

and January 30, 2021:

Non Perishable(1)
Fresh(2)
Supermarket Fuel
Pharmacy
Other(3)

Total Sales

2022

2021

2020

Amount
$ 74,121
35,433
18,632
13,377
6,695

% of total Amount
50.0 % $ 69,648
33,972
23.9 %
14,678
12.6 %
12,401
9.0 %
7,189
4.5 %

% of total Amount
50.6 % $ 71,434
24.6 % 33,449
10.6 %
9,486
9.0 % 11,388
6,741
5.2 %

% of total

53.9 %
25.2 %
7.2 %
8.6 %
5.1 %

$ 148,258

100 % $ 137,888

100 % $ 132,498

100 %

(1) Consists primarily of grocery, general merchandise, health and beauty care and natural foods.
(2) Consists primarily of produce, floral, meat, seafood, deli, bakery and fresh prepared.
(3) Consists primarily of sales related to food production plants to outside parties, data analytic services, third-party

media revenue, other consolidated entities, specialty pharmacy, in-store health clinics, digital coupon services and
other online sales not included in the categories above. The decrease in 2022, compared to 2021, is primarily due to
discontinued patient therapies at Kroger Specialty Pharmacy.

Merchandise Costs

The “Merchandise costs” line item of the Consolidated Statements of Operations includes product costs, net of
discounts and allowances; advertising costs (see separate discussion below); inbound freight charges; warehousing costs,
including receiving and inspection costs; transportation costs; and food production and operational costs. Warehousing,
transportation and manufacturing management salaries are also included in the “Merchandise costs” line item; however,
purchasing management salaries and administration costs are included in the “OG&A” line item along with most of the
Company’s other managerial and administrative costs. Shipping and delivery costs associated with the Company’s
digital offerings originating from non-retail store locations are included in the “Merchandise costs” line item. Rent
expense and depreciation and amortization expense are shown separately in the Consolidated Statements of Operations.

Warehousing and transportation costs include distribution center direct wages, transportation direct wages, repairs
and maintenance, utilities, inbound freight and, where applicable, third-party warehouse management fees. These costs
are recognized in the periods the related expenses are incurred.

The Company believes the classification of costs included in merchandise costs could vary widely throughout the
industry. The Company’s approach is to include in the “Merchandise costs” line item the direct, net costs of acquiring
products and making them available to customers. The Company believes this approach most accurately presents the
actual costs of products sold.

The Company recognizes all vendor allowances as a reduction in merchandise costs when the related product is

sold. When possible, vendor allowances are applied to the related product cost by item and, therefore, reduce the
carrying value of inventory by item. When the items are sold, the vendor allowance is recognized. When it is not
possible, due to systems constraints, to allocate vendor allowances to the product by item, vendor allowances are
recognized as a reduction in merchandise costs based on inventory turns and, therefore, recognized as the product is sold.

Advertising Costs

The Company’s advertising costs are recognized in the periods the related expenses are incurred and are included in

the “Merchandise costs” line item of the Consolidated Statements of Operations. The Company’s advertising costs
totaled $1,030 in 2022, $984 in 2021 and $888 in 2020. The Company does not record vendor allowances for co-
operative advertising as a reduction of advertising expense.

Operating, General and Administrative Expenses

OG&A expenses consist primarily of employee-related costs such as wages, healthcare benefit costs, retirement plan

costs, utilities, and credit card fees. Shipping and delivery costs associated with the Company's digital offerings
originating from retail store locations, including third-party delivery fees, are included in the “OG&A” line item of the
Consolidated Statements of Operations. Rent expense, depreciation and amortization expense and interest expense are
shown separately in the Consolidated Statement of Operations.

Consolidated Statements of Cash Flows

For purposes of the Consolidated Statements of Cash Flows, the Company considers all highly liquid debt

instruments purchased with an original maturity of three months or less to be temporary cash investments.

Segments

The Company operates supermarkets, multi-department stores and fulfillment centers throughout the United States.

The Company’s retail operations, which represent 97% of the Company’s consolidated sales, are its only reportable
segment. The Company aggregates its operating divisions into one reportable segment due to the operating divisions
having similar economic characteristics with similar long-term financial performance. In addition, the Company’s
operating divisions offer customers similar products, have similar distribution methods, operate in similar regulatory
environments, purchase the majority of the merchandise for retail sale from similar (and in many cases identical)
vendors on a coordinated basis from a centralized location, serve similar types of customers, and are allocated capital
from a centralized location. Operating divisions are organized primarily on a geographical basis so that the operating
division management team can be responsive to local needs of the operating division and can execute company strategic
plans and initiatives throughout the locations in their operating division. This geographical separation is the primary
differentiation between these retail operating divisions. The geographical basis of organization reflects how the business
is managed and how the Company’s Chief Executive Officer, who acts as the Company’s chief operating decision
maker, assesses performance internally. All of the Company’s operations are domestic.

2. GOODWILL AND INTANGIBLE ASSETS

The following table summarizes the changes in the Company’s net goodwill balance through January 28, 2023:

Balance beginning of year

Goodwill
Accumulated impairment losses

Subtotal

Activity during the year

Impairment charge related to Vitacost.com

Balance end of year

Goodwill
Accumulated impairment losses

Total Goodwill

2022

2021

$ 5,737 $ 5,737
(2,661)
3,076

(2,661)
3,076

(160)

—

5,737
(2,821)

5,737
(2,661)
$ 2,916 $ 3,076

Testing for impairment is performed annually, or on an interim basis upon the occurrence of a triggering event or a

change in circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying
amount. The annual evaluation of goodwill and indefinite-lived intangible assets was performed during the fourth
quarter of 2021 and 2020 and did not result in impairment.

Based on the results of the Company’s impairment assessment in the fourth quarter of 2022, Vitacost.com recorded

a $160 goodwill impairment. In the fourth quarter of 2022, as the Company’s digital strategy evolved, the Company’s
primary focus will be to effectively utilize its Pickup and Delivery capabilities. This reprioritization resulted in reduced
long-term profitability expectations and a decline in the market value for one underlying channel of business and led to
the pre-tax and after-tax impairment charge of $160. The pre-impairment goodwill balance for Vitacost.com was $160
as of the fourth quarter 2022. There is no goodwill remaining for Vitacost.com as of January 28, 2023.

The following table summarizes the Company’s intangible assets balance through January 28, 2023:

2022

2021

Definite-lived pharmacy prescription files
Definite-lived customer relationships
Definite-lived other
Indefinite-lived trade name
Indefinite-lived liquor licenses

amount

amortization(1)

Gross carrying Accumulated Gross carrying Accumulated
amortization(1)
(199)
(160)
(88)
—
—

(230) $
(173)
(96)
—
—

317 $
186
111
685
90

325
186
112
685
90

Total

1,398

(499) $

1,389 $

(447)

(1) Pharmacy prescription files are amortized to merchandise costs, customer relationships are amortized to

depreciation and amortization expense and other intangibles are amortized to OG&A expense and depreciation and
amortization expense.

Amortization expense associated with intangible assets totaled approximately $52, $59 and $67, during fiscal years

2022, 2021 and 2020, respectively. Future amortization expense associated with the net carrying amount of definite-
lived intangible assets for the years subsequent to 2022 is estimated to be approximately:

2023
2024
2025
2026
2027
Thereafter

41
36
32
11
2
2

Total future estimated amortization associated with definite-lived intangible assets

124

3. PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consists of:

Land
Buildings and land improvements
Equipment
Leasehold improvements
Construction-in-progress
Leased property under finance leases

Total property, plant and equipment
Accumulated depreciation and amortization

Property, plant and equipment, net

2022
3,442 $
14,539
17,328
11,435
4,044
2,580

2021
3,395
13,996
15,951
10,775
3,831
1,939

53,368
(28,642)

49,887
(26,098)

$ 24,726 $ 23,789

Accumulated depreciation and amortization for leased property under finance leases was $562 at January 28, 2023

and $414 at January 29, 2022.

Approximately $124 and $136, net book value, of property, plant and equipment collateralized certain mortgages at

January 28, 2023 and January 29, 2022, respectively.

Capitalized implementation costs associated with cloud computing arrangements of $193, net of accumulated
amortization of $36, and $151, net of accumulated amortization of $15, are included in “Other assets” in the Company’s
Consolidated Balance Sheets as of January 28, 2023 and January 29, 2022, respectively. The corresponding cash flows
related to these arrangements are included in “Net cash provided by operating activities” in the Company’s Consolidated
Statements of Cash Flows.

4. TAXES BASED ON INCOME

The provision for taxes based on income consists of:

Federal

Current
Deferred

Subtotal federal

State and local
Current
Deferred

Subtotal state and local

Total

2022 2021 2020

$ 401
162

$ 349 $ 577
75
(46)

563

303

652

91
(1)

67
15

133
(3)

130

$ 653

$ 385 $ 782

A reconciliation of the statutory federal rate and the effective rate follows:

Statutory rate
State income taxes, net of federal tax benefit
Credits
Resolution of tax audit examinations
Excess tax benefits from share-based payments
Impairment of goodwill related to Vitacost.com
Non-deductible executive compensation
Other changes, net

2022 2021 2020
21.0 % 21.0 % 21.0 %
3.2
(1.3)
(3.1)
(1.3)
—
0.6
(0.3)

2.5
(0.8)
(0.2)
(1.9)
1.2
0.5
0.2

3.0
(0.7)
—
(0.8)
—
0.3
0.4

22.5 % 18.8 % 23.2 %

The Company’s effective income tax rates were 22.5% in 2022, 18.8% in 2021, and 23.2% in 2020.

The 2022 tax rate differed from the federal statutory rate due to the effect of state income taxes and non-deductible
goodwill impairment charges related to Vitacost.com, partially offset by the benefits from share-based payments and the
utilization of tax credits.

The 2021 tax rate differed from the federal statutory rate primarily due to a discrete benefit of $47 which was
primarily from the favorable outcome of income tax audit examinations covering multiple years, the benefit from share-
based payments and the utilization of tax credits, partially offset by the effect of state income taxes.

The 2020 tax rate differed from the federal statutory rate primarily due to the effect of state income taxes, partially

offset by the utilization of tax credits and deductions.

The tax effects of significant temporary differences that comprise tax balances were as follows:

Deferred tax assets:

Compensation related costs
Lease liabilities
Closed store reserves
Unrealized losses on hedging instruments
Net operating loss and credit carryforwards
Deferred income
Allowance for uncollectible receivables
Other

Subtotal
Valuation allowance

Total deferred tax assets

Deferred tax liabilities:

Depreciation and amortization
Operating lease assets
Insurance related costs
Inventory related costs
Equity investments in excess of tax basis

Total deferred tax liabilities

Deferred taxes

2022

2021

409 $
1,892
51
74
101
104
26
13

560
1,926
46
—
98
126
36
25

2,670
(83)

2,817
(72)

2,587

2,745

(1,954)
(1,759)
(257)
(281)
(8)

(2,006)
(1,790)
(54)
(310)
(147)

(4,259)

(4,307)

$ (1,672) $ (1,562)

At January 28, 2023, the Company had net operating loss carryforwards for state income tax purposes of $1,468.
These net operating loss carryforwards expire from 2023 through 2042. The utilization of certain of the Company’s state
net operating loss carryforwards may be limited in a given year. Further, the Company has recorded a valuation
allowance against certain deferred tax assets resulting from its state net operating losses.

At January 28, 2023, the Company had state credit carryforwards of $34. These state credit carryforwards expire
from 2023 through 2036. The utilization of certain of the Company’s credits may be limited in a given year. Further, the
Company has recorded a valuation allowance against certain deferred tax assets resulting from its state credits.

The Company regularly reviews all deferred tax assets on a tax filer and jurisdictional basis to estimate whether
these assets are more likely than not to be realized based on all available evidence. This evidence includes historical
taxable income, projected future taxable income, the expected timing of the reversal of existing temporary differences
and the implementation of tax planning strategies. Projected future taxable income is based on expected results and
assumptions as to the jurisdiction in which the income will be earned. The expected timing of the reversals of existing
temporary differences is based on current tax law and the Company’s tax methods of accounting. Unless deferred tax
assets are more likely than not to be realized, a valuation allowance is established to reduce the carrying value of the
deferred tax asset until such time that realization becomes more likely than not. Increases and decreases in these
valuation allowances are included in "Income tax expense" in the Consolidated Statements of Operations. As of January
28, 2023, January 29, 2022 and January 28, 2021 the total valuation allowance was $83, $72 and $53, respectively.

A reconciliation of the beginning and ending amount of unrecognized tax benefits, including positions impacting

only the timing of tax benefits, is as follows:

Beginning balance
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Settlements
Lapse of statute
Ending balance

2022 2021

2020

$ 100
8
6
(4)
(9)
(8)
$ 93

10
9
(108)
—
(4)

$ 193 $ 174
7
16
—
—
(4)
$ 100 $ 193

As of January 28, 2023, January 29, 2022 and January 30, 2021, the amount of unrecognized tax benefits that, if

recognized, would effect the effective tax rate was $66, $73 and $85, respectively.

To the extent interest and penalties would be assessed by taxing authorities on any underpayment of income tax,
such amounts have been accrued and classified as a component of income tax expense. During the years ended January
28, 2023, January 29, 2022 and January 30, 2021, the Company recognized approximately $(6), $(15) and $7,
respectively, in interest and penalties (recoveries). The Company had accrued approximately $14, $22 and $38 for the
payment of interest and penalties as of January 28, 2023, January 29, 2022 and January 30, 2021, respectively.

As of January 28, 2023, the years ended February 1, 2020 and forward remain open for review for federal income

tax purposes.

5. DEBT OBLIGATIONS

Long-term debt consists of:

1.70% to 8.00% Senior Notes due through 2049
Other

Total debt, excluding obligations under finance leases

Less current portion

January 28, January 29,

2023

2022

$ 10,215 $ 10,607
1,138

1,077

11,292
(1,153)

11,745
(451)

Total long-term debt, excluding obligations under finance leases

$ 10,139 $ 11,294

In 2022, the Company repaid $400 of senior notes bearing an interest rate of 2.80% using cash on hand.

In 2021, the Company repaid $300 of senior notes bearing an interest rate of 2.60%, $500 of senior notes bearing an

interest rate of 2.95%, and $500 of senior notes bearing an interest rate of 3.40%, all using cash on hand.

Additionally in 2021, the Company acquired 28, previously leased, properties for a purchase price of $455.
Separately, the Company also entered into a transaction to sell those properties to a third party for total proceeds of
$621. Total cash proceeds received as a result of the transactions was $166. The sale transaction did not qualify for sale-
leaseback accounting treatment. As a result, the Company recorded property, plant and equipment for the $455 price
paid and recorded a $621 financing obligation. The leases have a base term of 25 years and twelve option periods of five
years each. The Company has the option to purchase the individual properties for fair market value at the end of the base
term or at the end of any option period. The Company is obligated to repurchase the properties at the end of the base
term for $300 if the lessor exercises its put option.

On July 6, 2021, the Company entered into an amended and restated credit agreement, which credit agreement was

further amended on November 9, 2022 (as so amended, the “Credit Agreement”) providing for a $2,750 unsecured
revolving credit facility (the “Revolving Credit Facility”), with a termination date of July 6, 2026, unless extended as
permitted under the Credit Agreement. The Company has the ability to increase the size of the Revolving Credit Facility
by up to an additional $1,250, subject to certain conditions.

Borrowings under the Credit Agreement bear interest, at the Company’s option, at either (i) adjusted Term SOFR
plus a market spread, based on the Company’s Public Debt Rating or (ii) the base rate, defined as the highest of (a) the
Federal Funds Rate plus 0.5%, (b) Bank of America’s prime rate, and (c) one-month Term SOFR plus 1.0%, plus a
market rate spread based on the Company’s Public Debt Rating. The Company will also pay a Commitment Fee based
on its Public Debt Rating and Letter of Credit fees equal to a market rate spread based on the Company’s Public Debt
Rating. “Public Debt Rating” means, as of any date, the rating that has been most recently announced by either S&P or
Moody’s, as the case may be, for any class of non-credit enhanced long-term senior unsecured debt issued by the
Company.

The Credit Agreement contains a covenant, which, among other things, requires the maintenance of a Leverage

Ratio of not greater than (i) 3.50:1.00 or (ii) upon the consummation of the proposed merger with Albertsons, 4.50 to
1.00, with step downs to 4.25:1.00, 4.00:1.00, 3.75:1.00 and 3.50:1.00 effective at the end of the third, fifth, seventh and
ninth, full fiscal quarters after the consummation of the proposed merger, respectively. The Company may repay the
Credit Agreement in whole or in part at any time without premium or penalty. The Credit Agreement is not guaranteed
by the Company’s subsidiaries.

On October 13, 2022, the Company entered into a merger agreement with Albertsons Companies, Inc.

(“Albertsons”). For additional information about the Company’s unsecured bridge term loan facility and term loan credit
agreement associated with the merger agreement, see Note 16 to the Consolidated Financial Statements.

As of January 28, 2023, and January 29, 2022, the Company had no commercial paper borrowings and no

borrowings under the Credit Agreement.

As of January 28, 2023, the Company had outstanding letters of credit in the amount of $310, of which $2 reduces
funds available under the Credit Agreement. As of January 29, 2022, the Company had outstanding letters of credit in
the amount of $363, of which $2 reduces funds available under the Credit Agreement. The letters of credit are
maintained primarily to support performance, payment, deposit or surety obligations of the Company.

Most of the Company’s outstanding public debt is subject to early redemption at varying times and premiums, at the

option of the Company. In addition, subject to certain conditions, some of the Company’s publicly issued debt will be
subject to redemption, in whole or in part, at the option of the holder upon the occurrence of a redemption event, upon
not less than five days’ notice prior to the date of redemption, at a redemption price equal to the default amount, plus a
specified premium. “Redemption Event” is defined in the indentures as the occurrence of (i) any person or group,
together with any affiliate thereof, beneficially owning 50% or more of the voting power of the Company, (ii) any one
person or group, or affiliate thereof, succeeding in having a majority of its nominees elected to the Company’s Board of
Directors, in each case, without the consent of a majority of the continuing directors of the Company or (iii) both a
change of control and a below investment grade rating.

The aggregate annual maturities and scheduled payments of long-term debt, as of year-end 2022, and for the years

subsequent to 2022 are:

2023
2024
2025
2026
2027
Thereafter

Total debt

1,153
25
84
1,386
607
8,037

$ 11,292

6. DERIVATIVE FINANCIAL INSTRUMENTS

GAAP requires that derivatives be carried at fair value on the balance sheet and provides for hedge accounting when

certain conditions are met. The Company’s derivative financial instruments are recognized on the balance sheet at fair
value. Changes in the fair value of derivative instruments designated as “cash flow” hedges, to the extent the hedges are
highly effective, are recorded in other comprehensive income, net of tax effects. Ineffective cash flow hedges, if any,
are recognized in current period earnings. Other comprehensive income or loss is reclassified into current period
earnings when the hedged transaction affects earnings. Changes in the fair value of derivative instruments designated as
“fair value” hedges, along with corresponding changes in the fair values of the hedged assets or liabilities, are recorded
in current period earnings. Ineffective fair value hedges, if any, are recognized in current period earnings. Changes in
fair value of derivative instruments not designated as hedges are recognized in current period earnings and included in
“(Loss) gain on investments” in the Company’s Consolidated Statements of Operations.

The Company assesses, both at the inception of the hedge and on an ongoing basis, whether derivatives used as
hedging instruments are highly effective in offsetting the changes in the fair value or cash flow of the hedged items. If it
is determined that a derivative is not highly effective as a hedge or ceases to be highly effective, the Company
discontinues hedge accounting prospectively.

Interest Rate Risk Management

The Company is exposed to market risk from fluctuations in interest rates. The Company manages its exposure to

interest rate fluctuations through the use of a commercial paper program, interest rate swaps (fair value hedges) and
forward-starting interest rate swaps (cash flow hedges). The Company’s current program relative to interest rate
protection contemplates hedging the exposure to changes in the fair value of fixed-rate debt attributable to changes in
interest rates. To do this, the Company uses the following guidelines: (i) use average daily outstanding borrowings to
determine annual debt amounts subject to interest rate exposure, (ii) limit the average annual amount subject to interest
rate reset and the amount of floating rate debt to a combined total amount that represents 25% of the carrying value of
the Company’s debt portfolio or less, (iii) include no leveraged products, and (iv) hedge without regard to profit motive
or sensitivity to current mark-to-market status.

The Company reviews compliance with these guidelines annually with the Finance Committee of the Board of

Directors. These guidelines may change as the Company’s needs dictate.

Fair Value Interest Rate Swaps

The Company did not have any outstanding interest rate derivatives classified as fair value hedges as of January 28,

2023 and January 29, 2022.

Cash Flow Forward-Starting Interest Rate Swaps

As of January 28, 2023, the Company had five forward-starting interest rate swap agreements with a maturity date
of August 2027 with an aggregate notional amount totaling $5,350. A forward-starting interest rate swap is an agreement
that effectively hedges the variability in future benchmark interest payments attributable to changes in interest rates on
the forecasted issuance of fixed-rate debt. The Company entered into these forward-starting interest rate swaps in order
to lock in fixed interest rates on its forecasted issuances of debt. A notional amount of $2,350 of these forward-starting
interest rate swaps was designated as a cash-flow hedge as defined by GAAP. Accordingly, the changes in fair value of
these forward-starting interest rate swaps are recorded to other comprehensive income and reclassified into net earnings
when the hedged transaction affects net earnings. As of January 28, 2023, the fair value of these interest rate swaps
designated as cash flow hedges was recorded in other long-term liabilities for $116 and accumulated other
comprehensive income for $89, net of tax. The remainder of the notional amount of $3,000 of the forward-starting
interest rate swaps was not designated as a cash-flow hedge. Accordingly, the changes in the fair value of these forward-
starting interest rate swaps not designated as cash-flow hedges are recognized through net earnings. As of January 28,
2023, the fair value of these swaps was recorded in other long-term liabilities for $142. In 2022, the Company
recognized an unrealized loss of $142 related to these swaps that is included in “(Loss) gain on investments” in the
Company’s Consolidated Statements of Operations.

The Company did not have any outstanding forward-starting interest rate swap agreements as of January 29, 2022.

The following table summarizes the effect of the Company’s derivative instruments designated as cash flow hedges

for 2022, 2021 and 2020:

Derivatives in Cash Flow Hedging
Relationships

Year-To-Date

Amount of Gain/(Loss)

Amount of Gain/(Loss) in
AOCI on Derivative

2022

2021 2020

Reclassified from AOCI into Income Location of Gain/(Loss)
Reclassified into Income
2020

2021

2022

Forward-Starting Interest Rate Swaps, net of tax(1)

$ (129) $

(47) $

(54) $

(7) $

(2)

Interest expense

(1) The amounts of Gain/(Loss) reclassified from AOCI into income on derivatives include unamortized proceeds and
payments from forward-starting interest rate swaps once classified as cash flow hedges that were terminated prior
to the end of 2020.

For the above cash flow interest rate swaps, the Company has entered into International Swaps and Derivatives
Association master netting agreements that permit the net settlement of amounts owed under their respective derivative
contracts. Under these master netting agreements, net settlement generally permits the Company or the counterparty to
determine the net amount payable for contracts due on the same date and in the same currency for similar types of
derivative transactions. These master netting agreements generally also provide for net settlement of all outstanding
contracts with a counterparty in the case of an event of default or a termination event.

Collateral is generally not required of the counterparties or of the Company under these master netting agreements.

As of January 28, 2023, no cash collateral was received or pledged under the master netting agreements.

The effect of the net settlement provisions of these master netting agreements on the Company’s derivative balances

upon an event of default or termination event is as follows as of January 28, 2023:

Gross Amounts Not Offset in the

Net Amount

Balance Sheet

January 28, 2023
Liabilities
Cash Flow Forward-Starting

Gross Amount Gross Amounts Offset Presented in the Financial
Recognized

in the Balance Sheet Balance Sheet

Instruments Cash Collateral Net Amount

Interest Rate Swaps

258 $

— $

258

—

— $

258

7. FAIR VALUE MEASUREMENTS

GAAP establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of

the fair value hierarchy defined in the standards are as follows:

Level 1 - Quoted prices are available in active markets for identical assets or liabilities;

Level 2 - Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly

or indirectly observable;

Level 3 - Unobservable pricing inputs in which little or no market activity exists, therefore requiring an entity to
develop its own assumptions about the assumptions that market participants would use in pricing an asset or liability.

For items carried at (or adjusted to) fair value in the consolidated financial statements, the following tables

summarize the fair value of these instruments at January 28, 2023 and January 29, 2022:

January 28, 2023 Fair Value Measurements Using

Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)

Significant Other
Observable Inputs

(Level 2)

Total

Marketable Securities
Interest Rate Hedges
Total

463
—
463

— $

(258)
(258) $

463
(258)
205

January 29, 2022 Fair Value Measurements Using

Marketable Securities

Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)

1,054

The company values interest rate hedges using observable forward yield curves. These forward yield curves are

classified as Level 2 inputs.

Fair value measurements of non-financial assets and non-financial liabilities are primarily used in the impairment

analysis of goodwill, other intangible assets, long-lived assets and in the valuation of store lease exit costs. The
Company reviews goodwill and indefinite-lived intangible assets for impairment annually, during the fourth quarter of
each fiscal year, and as circumstances indicate the possibility of impairment. See Note 2 for further discussion related to
the Company’s carrying value of goodwill. Long-lived assets and store lease exit costs were measured at fair value on a
nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy. See Note 1 for further discussion of the
Company’s policies for impairments of long-lived assets and valuation of store lease exit costs. In 2022, long-lived
assets with a carrying amount of $69 were written down to their fair value of $1, resulting in an impairment charge of
$68. In 2021, long-lived assets with a carrying amount of $74 were written down to their fair value of $10, resulting in
an impairment charge of $64.

Fair Value of Other Financial Instruments

Current and Long-term Debt

The fair value of the Company’s long-term debt, including current maturities, was estimated based on the quoted
market prices for the same or similar issues adjusted for illiquidity based on available market evidence. If quoted market
prices were not available, the fair value was based upon the net present value of the future cash flow using the forward
interest rate yield curve in effect at respective year-ends. At January 28, 2023, the fair value of total debt excluding
obligations under finance leases was $10,593 compared to a carrying value of $11,292. At January 29, 2022, the fair
value of total debt excluding obligations under finance leases was $13,189 compared to a carrying value of $11,745.

Contingent Consideration

As a result of the Home Chef merger in 2018, the Company recognized a contingent liability of $91 on the

acquisition date. The contingent consideration was measured using unobservable (Level 3) inputs and was included in
“Other long-term liabilities” within the Consolidated Balance Sheet. The Company estimated the fair value of the
earnout liability by applying a Monte-Carlo simulation method using the Company’s projection of future operating
results for both the online and offline businesses related to the Home Chef merger and the estimated probability of
achievement of the earnout target metrics. The Monte-Carlo simulation is a generally accepted statistical technique used
to generate a defined number of valuation paths in order to develop a reasonable estimate of the fair value of the earnout
liability. The liability is remeasured to fair value using the Monte-Carlo simulation method at each reporting period, and
the change in fair value, including accretion for the passage of time, is recognized in net earnings until the contingency is
resolved. In 2020, the Company amended the contingent consideration agreement including the performance milestones
to align with the Company’s current business strategies. In 2022 and 2021, the Company recorded adjustments to
increase the contingent consideration liability for $20 and $66, respectively, in OG&A. During the first quarter of 2023,
the Company will make the final contingent consideration payment, which is based on the fair value of the outstanding
year-end 2022 liability.

Cash and Temporary Cash Investments, Store Deposits In-Transit, Receivables, Prepaid and Other Current Assets,

Trade Accounts Payable, Accrued Salaries and Wages and Other Current Liabilities

The carrying amounts of these items approximated fair value due to their short term nature.

Other Assets

The equity investment in Ocado Group plc is measured at fair value through net earnings. The fair value of all
shares owned, which is measured using Level 1 inputs, was $401 and $987 as of January 28, 2023 and January 29, 2022,
respectively, and is included in “Other assets” in the Company’s Consolidated Balance Sheets. The unrealized (loss)
gain for this Level 1 investment was approximately ($586), ($821) and $1,032 for 2022, 2021, and 2020, respectively,
and is included in “(Loss) Gain on investments” in the Company’s Consolidated Statements of Operations.

The Company held other equity investments without a readily determinable fair value. These investments are
measured initially at cost and remeasured for observable price changes to fair value through net earnings. The value of
these investments was $320 and $309 as of January 28, 2023 and January 29, 2022, respectively, and is included in
“Other assets” in the Company’s Consolidated Balance Sheets. There were no observable price changes or impairments
for these investments during 2022 or 2021, and as such, they are excluded from the fair value measurements table above
for January 28, 2023 and January 29, 2022.

The following table presents the Company’s remaining other assets as of January 28, 2023 and January 29 2022:

Other Assets

Equity method and other long-term investments
Notes receivable
Prepaid deposits under certain contractual arrangements
Implementation costs related to cloud computing arrangements
Funded asset status of pension plans
Other

Total

January 28, 2023 January 29, 2022

274 $
169
199
193
69
125
1,029 $

282
191
214
151
156
120
1,114

8. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table represents the changes in AOCI by component for the years ended January 28, 2023 and

January 29, 2022:

Balance at January 30, 2021
OCI before reclassifications(2)
Amounts reclassified out of AOCI(3)
Net current-period OCI
Balance at January 29, 2022

Balance at January 29, 2022
OCI before reclassifications(2)
Amounts reclassified out of AOCI(3)
Net current-period OCI
Balance at January 28, 2023

Cash Flow
Hedging

Pension and
Postretirement
Defined Benefit

Activities(1)

Plans(1)

Total(1)

(54) $
—
7
7
(47) $

(47) $
(89)
7
(82)

(129) $

(576) $
82
74
156
(420) $

(420) $
(88)
5
(83)
(503) $

(630)
82
81
163
(467)

(467)
(177)
12
(165)
(632)

(1) All amounts are net of tax.
(2) Net of tax of $25 for pension and postretirement defined benefit plans as of January 29, 2022. Net of tax of ($28)
and ($27) for pension and postretirement defined benefit plans and cash flow hedging activities, respectively, as of
January 28, 2023.

(3) Net of tax of $23 and $3 for pension and postretirement defined benefit plans and cash flow hedging activities,

respectively, as of January 29, 2022. Net of tax of $2 and $2 for pension and postretirement defined benefit plans
and cash flow hedging activities, respectively, as of January 28, 2023.

The following table represents the items reclassified out of AOCI and the related tax effects for the years ended

January 28, 2023, January 29, 2022 and January 30, 2021:

Cash flow hedging activity items

Amortization of gains and losses on cash flow hedging

activities(1)
Tax expense
Net of tax

Pension and postretirement defined benefit plan items
Amortization of amounts included in net periodic

pension cost(2)

Tax expense
Net of tax

Total reclassifications, net of tax

For the year ended For the year ended For the year ended
January 28, 2023 January 29, 2022 January 30, 2021

9
(2)
7

7
(2)
5
12

10 $
(3)
7

97
(23)
74
81 $

4
(2)
2

19
(5)
14
16

(1) Reclassified from AOCI into interest expense.
(2) Reclassified from AOCI into non-service component of company-sponsored pension plan costs. These components

are included in the computation of net periodic pension expense.

9. LEASES AND LEASE-FINANCED TRANSACTIONS

The Company leases certain store real estate, warehouses, distribution centers, fulfillment centers, office space and

equipment. The Company operates in leased facilities in approximately half of its store locations. Lease terms generally
range from 10 to 20 years with options to renew for varying terms at the Company’s sole discretion. Certain leases also
include options to purchase the leased property. Leases with an initial term of 12 months or less are not recorded on the
balance sheet. Certain leases include escalation clauses or payment of executory costs such as property taxes, utilities or
insurance and maintenance. Rent expense for leases with escalation clauses or other lease concessions are accounted for
on a straight-line basis over the lease term. The Company’s lease agreements do not contain any material residual value
guarantees or material restrictive covenants. Certain properties or portions thereof are subleased to others for periods
generally ranging from one to 20 years.

The following table provides supplemental balance sheet classification information related to leases:

Classification

Operating lease assets
Property, plant and equipment, net(1)

Current portion of operating lease liabilities

Current portion of long-term debt including obligations

under finance leases

Assets
Operating
Finance

Total leased assets

Liabilities
Current

Operating
Finance

Noncurrent
Operating
Finance

January 28,
2023

January 29,
2022

6,662 $
2,018

6,695
1,525

8,680 $

8,220

662 $

157

650

104

6,426
1,515

Noncurrent operating lease liabilities
Long-term debt including obligations under finance leases

6,372
1,929

Total lease liabilities

9,120 $

8,695

(1) Finance lease assets are recorded net of accumulated amortization of $562 and $414 as of January 28, 2023 and

January 29, 2022.

The following table provides the components of lease cost:

Classification
Lease Cost
Operating lease cost(1)
Rent Expense
Sublease and other rental income Rent Expense
Finance lease cost

Amortization of leased assets
Interest on lease liabilities

Depreciation and Amortization
Interest Expense

Net lease cost

Year-To-Date
January 28, 2023

Year-To-Date
January 29, 2022

950
(111)

161
66

1,066

954
(109)

95
52

992

(1) Includes short-term leases and variable lease costs, which are immaterial.

Maturities of operating and finance lease liabilities are listed below. Amounts in the table include options to extend

lease terms that are reasonably certain of being exercised.

2023
2024
2025
2026
2027
Thereafter

Total lease payments

Less amount representing interest

Operating
Leases

Finance
Leases

Total

930
864
791
740
683
5,688

9,696

2,662

228
226
222
221
223
1,492

1,158
1,090
1,013
961
906
7,180

2,612

12,308

526

Present value of lease liabilities(1)

7,034

2,086

(1) Includes the current portion of $662 for operating leases and $157 for finance leases.

Total future minimum rentals under non-cancellable subleases at January 28, 2023 were $232.

The following table provides the weighted-average lease term and discount rate for operating and finance leases:

Weighted-average remaining lease term (years)

Operating leases
Finance leases

Weighted-average discount rate

Operating leases
Finance leases

January 28, 2023

January 29, 2022

14.3
12.7

4.2 %
3.5 %

14.9
14.7

4.1 %
3.7 %

The following table provides supplemental cash flow information related to leases:

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows from operating leases
Operating cash flows from finance leases
Financing cash flows from finance leases

Leased assets obtained in exchange for new operating lease liabilities
Leased assets obtained in exchange for new finance lease liabilities
Net gain recognized from sale and leaseback transactions(1)
Impairment of operating lease assets
Impairment of finance lease assets

Year-To-Date
January 28, 2023

Year-To-Date
January 29, 2022

$
$
$
$
$
$
$
$

$
903
$
66
132
$
602 $
$
656
30
$
$
1
2 $

897
52
127
669
753
35
8
4

(1) In 2022, the Company entered into sale leaseback transactions related to five properties, which resulted in total
proceeds of $44. In 2021, the Company entered into sale leaseback transactions related to seven properties,
which resulted in total proceeds of $79.

On May 17, 2018, the Company entered into a Partnership Framework Agreement with Ocado International
Holdings Limited and Ocado Group plc (“Ocado”), which has since been amended. Under this agreement, Ocado will
partner exclusively with the Company in the U.S., enhancing the Company’s digital and robotics capabilities in its
distribution networks. In 2022, the Company opened four additional Kroger Delivery customer fulfillment centers in
Romulus, Michigan, Dallas, Texas, Pleasant Prairie, Wisconsin, and Aurora, Colorado. The Company determined the
arrangement with Ocado contains a lease of the robotic equipment used to fulfill customer orders. As a result, the
Company establishes a finance lease when each facility begins fulfilling orders to customers. The base term of each lease
is 10 years with options to renew at the Company’s sole discretion. The Company elected to combine the lease and non-
lease elements in the contract. As a result, the Company will account for all payments to Ocado as lease payments. In
2022, the Company recorded finance lease assets of $629 and finance lease liabilities of $583 related to these location
openings. In 2021, the Company recorded finance lease assets of $401 and finance lease liabilities of $372 related to
openings during 2021.

10. EARNINGS PER COMMON SHARE

Net earnings attributable to The Kroger Co. per basic common share equals net earnings attributable to The Kroger

Co. less income allocated to participating securities divided by the weighted average number of common shares
outstanding. Net earnings attributable to The Kroger Co. per diluted common share equals net earnings attributable to
The Kroger Co. less income allocated to participating securities divided by the weighted average number of common
shares outstanding, after giving effect to dilutive stock options. The following table provides a reconciliation of net
earnings attributable to The Kroger Co. and shares used in calculating net earnings attributable to The Kroger Co. per
basic common share to those used in calculating net earnings attributable to The Kroger Co. per diluted common share:

(in millions, except per share amounts)
Net earnings attributable to The Kroger Co. per

basic common share

Dilutive effect of stock options

Net earnings attributable to The Kroger Co. per

For the year ended
January 28, 2023

For the year ended
January 29, 2022

For the year ended
January 30, 2021

Earnings
(Numerator)

Shares
(Denominator)

Per
Share
Amount

Earnings
(Numerator)

Shares
(Denominator)

Per
Share
Amount

Earnings
(Numerator)

Per
Share
(Denominator) Amount

2,224

3.10

1,639

718
9

744
10

2.20 $

2,556

$ 3.31

773
8

diluted common share

2,224

727

3.06

1,639

754

2.17 $

2,556

781

$ 3.27

The Company had combined undistributed and distributed earnings to participating securities totaling $20, $16 and

$29 in 2022, 2021 and 2020, respectively.

The Company had stock options outstanding for approximately 1.7 million, 2.4 million and 9.1 million shares,
respectively, for the years ended January 28, 2023, January 29, 2022, and January 30, 2021, which were excluded from
the computations of net earnings per diluted common share because their inclusion would have had an anti-dilutive
effect on net earnings per diluted share.

11. STOCK-BASED COMPENSATION

The Company recognizes compensation expense for all share-based payments granted. The Company recognizes

share-based compensation expense, net of an estimated forfeiture rate, over the requisite service period of the award
based on the fair value at the date of the grant.

The Company grants options for common shares (“stock options”) to employees under various plans at an option

price equal to the fair market value of the stock option at the date of grant. The Company accounts for stock options
under the fair value recognition provisions. Stock options typically expire 10 years from the date of grant. Stock options
vest between one and four years from the date of grant.

In addition to the stock options described above, the Company awards restricted stock to employees and incentive

shares to nonemployee directors under various plans. The restrictions on the restricted share awards generally lapse
between one and four years from the date of the awards. The Company determines the fair value for restricted stock
awards in an amount equal to the fair market value of the underlying shares on the grant date of the award.

At January 28, 2023, approximately 53 million common shares were available for future options or restricted stock

grants under the 2019 Amended and Restated Long-Term Incentive Plan. Options granted reduce the shares available
under the Plans at a ratio of one to one. Restricted stock grants reduce the shares available under the Plans at a ratio of
2.83 to one.

Equity awards granted are based on the aggregate value of the award on the grant date. This can affect the number

of shares granted in a given year as equity awards. Excess tax benefits related to equity awards are recognized in the
provision for income taxes. Equity awards may be approved at one of four meetings of its Board of Directors occurring
shortly after the Company’s release of quarterly earnings. The 2022 primary grants were made in conjunction with the
March and June meetings of the Company’s Board of Directors.

All awards become immediately exercisable upon certain changes of control of the Company.

Stock Options

Changes in options outstanding under the stock option plans are summarized below:

Outstanding, year-end 2019

Granted
Exercised
Canceled or Forfeited

Outstanding, year-end 2020

Granted
Exercised
Canceled or Forfeited

Outstanding, year-end 2021

Granted
Exercised
Canceled or Forfeited

Outstanding, year-end 2022

Weighted-

Shares
subject
to option
(in millions)

average
exercise
price

24.52
29.31
17.72
30.53

26.65
35.45
24.70
28.88

28.15
56.13
26.02
31.54

32.2 $
2.9 $
(7.3) $
(1.0) $

26.8 $
2.1 $
(7.1) $
(0.7) $

21.1 $
1.2 $
(5.4) $
(0.3) $

16.6 $

30.81

A summary of options outstanding, exercisable and expected to vest at January 28, 2023 follows:

Options Outstanding
Options Exercisable
Options Expected to Vest

Number of shares
(in millions)

16.6
12.3
4.3

Weighted-average
remaining
contractual life
(in years)

Weighted-average
exercise price

Aggregate
intrinsic
value
(in millions)

5.08
4.07
7.89

$
$
$

30.81
28.29
37.77

$
$
$

250
205
44

Restricted stock

Changes in restricted stock outstanding under the restricted stock plans are summarized below:

Outstanding, year-end 2019

Granted
Lapsed
Canceled or Forfeited

Outstanding, year-end 2020

Granted
Lapsed
Canceled or Forfeited

Outstanding, year-end 2021

Granted
Lapsed
Canceled or Forfeited

Outstanding, year-end 2022

Restricted
shares
outstanding
(in millions)

Weighted-average

grant-date
fair value

24.85
31.99
24.69
26.71

28.46
37.29
29.58
31.31

32.52
50.50
32.16
38.32

$
9.3
$
4.0
(4.9) $
(0.6) $

7.8
$
$
3.9
(4.0) $
(0.5) $

$
7.2
$
3.0
(4.0) $
(0.4) $

5.8

41.76

The weighted-average grant date fair value of stock options granted during 2022, 2021 and 2020 was $15.91, $8.54

and $6.43, respectively. The fair value of each stock option grant was estimated on the date of grant using the Black-
Scholes option-pricing model, based on the assumptions shown in the table below. The Black-Scholes model utilizes
accounting judgment and financial estimates, including the term option holders are expected to retain their stock options
before exercising them, the volatility of the Company’s share price over that expected term, the dividend yield over the
term and the number of awards expected to be forfeited before they vest. Using alternative assumptions in the
calculation of fair value would produce fair values for stock option grants that could be different than those used to
record stock-based compensation expense in the Consolidated Statements of Operations. The increase in the fair value
of the stock options granted during 2022, compared to 2021, resulted primarily from increases in the Company’s share
price, the weighted-average expected volatility, and an increase in the weighted-average risk-free interest rate. The
increase in the fair value of the stock options granted during 2021, compared to 2020, resulted primarily from increases
in the Company’s share price and the weighted-average expected volatility.

The following table reflects the weighted-average assumptions used for grants awarded to option holders:

Weighted average expected volatility
Weighted average risk-free interest rate
Expected dividend yield
Expected term (based on historical results)

2022

30.47 %
2.09 %
1.82 %
7.2 years

2021
28.52 %
1.21 %
2.00 %
7.2 years

2020

26.96 %
0.82 %
2.00 %

7.2 years

The weighted-average risk-free interest rate was based on the yield of a treasury note as of the grant date,

continuously compounded, which matures at a date that approximates the expected term of the options. The dividend
yield was based on our history and expectation of dividend payouts. Expected volatility was determined based upon
historical stock volatilities; however, implied volatility was also considered. Expected term was determined based upon
historical exercise and cancellation experience.

Total stock compensation recognized in 2022, 2021 and 2020 was $190, $203 and $185, respectively. Stock option
compensation recognized in 2022, 2021 and 2020 was $19, $20 and $22, respectively. Restricted shares compensation
recognized in 2022, 2021 and 2020 was $171, $183 and $163, respectively.

The total intrinsic value of stock options exercised was $159, $121 and $115 in 2022, 2021 and 2020, respectively.
The total amount of cash received in 2022 by the Company from the exercise of stock options granted under share-based
payment arrangements was $134. As of January 28, 2023, there was $206 of total unrecognized compensation expense
remaining related to non-vested share-based compensation arrangements granted under the Plans. This cost is expected
to be recognized over a weighted-average period of approximately two years. The total fair value of options that vested
was $19, $20 and $23 in 2022, 2021 and 2020, respectively.

Shares issued as a result of stock option exercises may be newly issued shares or reissued treasury shares. Proceeds
received from the exercise of options, and the related tax benefit, may be utilized to repurchase the Company’s common
shares under a stock repurchase program adopted by the Company’s Board of Directors. During 2022, the Company
repurchased approximately three million common shares in such a manner.

12. COMMITMENTS AND CONTINGENCIES

The Company continuously evaluates contingencies based upon the best available evidence.

The Company believes that allowances for loss have been provided to the extent necessary and that its assessment of

contingencies is reasonable. To the extent that resolution of contingencies results in amounts that vary from the
Company’s estimates, future earnings will be charged or credited.

The principal contingencies are described below:

Insurance — The Company’s workers’ compensation risks are self-insured in most states. In addition, other
workers’ compensation risks and certain levels of insured general liability risks are based on retrospective premium
plans, deductible plans, and self-insured retention plans. The liability for workers’ compensation risks is accounted for
on a present value basis. Actual claim settlements and expenses incident thereto may differ from the provisions for
loss. Property risks have been underwritten by a subsidiary and are all reinsured with unrelated insurance
companies. Operating divisions and subsidiaries have paid premiums, and the insurance subsidiary has provided loss
allowances, based upon actuarially determined estimates.

Litigation — Various claims and lawsuits arising in the normal course of business, including personal injury,
contract disputes, employment discrimination, wage and hour and other regulatory claims are pending against the
Company. Some of these suits purport or have been determined to be class actions and/or seek substantial damages.
Although it is not possible at this time to evaluate the merits of all of these claims and lawsuits, nor their likelihood of
success, the Company is of the belief that any resulting liability will not have a material effect on the Company’s
financial position, results of operations, or cash flows.

The Company continually evaluates its exposure to loss contingencies arising from pending or threatened litigation

and believes it has made provisions where it is reasonably possible to estimate and when an adverse outcome is
probable. Nonetheless, assessing and predicting the outcomes of these matters involves substantial uncertainties.
Management currently believes that the aggregate range of loss for the Company’s exposure is not material to the
Company. It remains possible that despite management’s current belief, material differences in actual outcomes or
changes in management’s evaluation or predictions could arise that could have a material adverse effect on the
Company’s financial condition, results of operations, or cash flows.

The Company is one of dozens of companies that have been named in various lawsuits alleging that defendants

contributed to create a public nuisance through the distribution and dispensing of opioids.

At present, the Company is named in a significant number of lawsuits pending in various state courts, including
cases brought by certain state Attorneys General, as well as in the United States District Court for the Northern District
of Ohio, where over 2,000 cases have been consolidated as Multi-District Litigation (“MDL”) pursuant to 28 U.S.C.
§1407 in a case entitled In re National Prescription Opiate Litigation. Most of these cases have been stayed pending
developments in bellwether MDL cases, including some in which the Company is named, which are proceeding on a
staggered discovery schedule. Once discovery is completed, those cases will be remanded to the originating federal
court for trial. In addition, the Company has received requests for documents and information from government agencies
regarding opioids. The Company has and will cooperate with these inquiries.

The Company is vigorously defending these matters and believes that these cases are without merit. At this stage in

the proceedings, the Company is unable to determine the probability of the outcome of these matters or the range of
reasonably possible loss, if any.

In the third quarter of 2022, the Company recorded a charge of $85 relating to a settlement of opioid litigation
claims with the State of New Mexico. The agreed upon settlement framework allocates $85 among various constituents
related to the state of New Mexico. This settlement agreement resolved all opioid lawsuits and claims by the state of
New Mexico against the Company. Kroger continues to vigorously defend against all claims and lawsuits relating to
opioids.

Assignments — The Company is contingently liable for leases that have been assigned to various third parties in
connection with facility closings and dispositions. The Company could be required to satisfy the obligations under the
leases if any of the assignees is unable to fulfill its lease obligations. Due to the wide distribution of the Company’s
assignments among third parties, and various other remedies available, the Company believes the likelihood that it will
be required to assume a material amount of these obligations is remote.

13. STOCK

Preferred Shares

The Company has authorized five million shares of voting cumulative preferred shares; two million shares were
available for issuance at January 28, 2023. The shares have a par value of $100 per share and are issuable in series.

Common Shares

The Company has authorized two billion common shares, $1 par value per share.

Common Stock Repurchase Program

The Company maintains stock repurchase programs that comply with Rule 10b5-1 of the Securities Exchange Act
of 1934 to allow for the orderly repurchase of The Kroger Co. common shares, from time to time. The Company made
open market purchases totaling $821, $1,422 and $1,196 under these repurchase programs in 2022, 2021 and 2020,
respectively.

In addition to these repurchase programs, in December 1999, the Company began a program to repurchase common

shares to reduce dilution resulting from its employee stock option plans. This program is solely funded by proceeds
from stock option exercises and the related tax benefit. The Company repurchased approximately $172, $225 and $128
under the stock option program during 2022, 2021 and 2020, respectively.

14. COMPANY- SPONSORED BENEFIT PLANS

The Company administers non-contributory defined benefit retirement plans for some non-union employees and
union-represented employees as determined by the terms and conditions of collective bargaining agreements. These
include several qualified pension plans (the “Qualified Plans”) and non-qualified pension plans (the “Non-Qualified
Plans”). The Non-Qualified Plans pay benefits to any employee that earns in excess of the maximum allowed for the
Qualified Plans by Section 415 of the Internal Revenue Code. The Company only funds obligations under the Qualified
Plans. Funding for the company-sponsored pension plans is based on a review of the specific requirements and on
evaluation of the assets and liabilities of each plan.

In addition to providing pension benefits, the Company provides certain health care benefits for retired employees.

Based on employee’s age, years of service and position with the Company, the employee may be eligible for retiree
health care benefits. Funding of retiree health care benefits occurs as claims or premiums are paid.

The Company recognizes the funded status of its retirement plans on the Consolidated Balance Sheets. Actuarial
gains or losses and prior service credits that have not yet been recognized as part of net periodic benefit cost are required
to be recorded as a component of AOCI. The Company has elected to measure defined benefit plan assets and
obligations as of January 31, which is the month-end that is closest to its fiscal year-ends, which were January 28, 2023
for fiscal 2022 and January 29, 2022 for fiscal 2021.

Amounts recognized in AOCI as of January 28, 2023 and January 29, 2022 consist of the following (pre-tax):

Net actuarial loss (gain)
Prior service credit

Total

Pension Benefits

Other Benefits

Total

2022
785
—

785

2021
715
—

2022
$ (108)
(23)

2021

2022

$ (127) $
(43)

677
(23)

715

$ (131)

$ (170) $

654

2021
588
(43)

545

Other changes recognized in other comprehensive income (loss) in 2022, 2021 and 2020 were as follows (pre-tax):

Incurred net actuarial loss (gain)
Amortization of prior service credit
Amortization of net actuarial gain (loss)
Total recognized in other comprehensive

$ 101
—
(31)

$ (109) $ 36

—
(126)

$ 15
— 13
11
(40)

$ 2
12
17

Pension Benefits

Total
2020 2022 2021 2020 2022 2021

Other Benefits

2022 2021

2020
$ (46) $ 116 $ (107) $ (10)
13
(32)

12
(109)

13
(20)

13
8

income (loss)

$ 70

$ (235) $ (4) $ 39

$ 31

$ (25) $ 109 $ (204) $ (29)

Total recognized in net periodic benefit cost
and other comprehensive income (loss)

$ 58

$ (164) $ (4) $ 25

$ 10

$ (34) $ 83 $ (154) $ (38)

Information with respect to change in benefit obligation, change in plan assets, the funded status of the plans
recorded in the Consolidated Balance Sheets, net amounts recognized at the end of fiscal years, weighted-average
assumptions and components of net periodic benefit cost follow:

Pension Benefits

Qualified Plans
2021
2022

Non-Qualified Plans
2022

2021

Other Benefits
2021

2022

Change in benefit obligation:
Benefit obligation at beginning of fiscal year

Service cost
Interest cost
Plan participants’ contributions
Actuarial (gain) loss
Plan settlements
Benefits paid
Other

$ 2,977
8
92
4
(421)
(33)
(159)
(5)

$ 3,615
12
92
—
(125)
(442)
(172)
(3)

$ 325 $ 351 $ 150
5
5
12
8
—
(22)
7

—
9
—
(12)
—
(24)
1

—
10
—
(40)
(2)
(22)
—

$ 152
4
4
13
2
—
(25)
—

Benefit obligation at end of fiscal year

$ 2,463

$ 2,977

$ 271 $ 325 $ 165

$ 150

Change in plan assets:
Fair value of plan assets at beginning of fiscal year

Actual return on plan assets
Employer contributions
Plan participants’ contributions
Plan settlements
Benefits paid
Other

Fair value of plan assets at end of fiscal year
Funded status and net asset and liability recognized at end of

$ 3,096
(409)
2
4
(33)
(159)
(5)

$ 3,569
141
—
—
(442)
(172)
—

$ — $
—
24
—
(2)
(22)
—

— $ — $ —
—
—
12
24
13
—
—
—
(25)
(24)
—
—

—
10
12
—
(22)
—

$ 2,496

$ 3,096

$ — $

— $ — $ —

fiscal year

$ 119

$ (271) $ (325) $ (165) $ (150)

As of January 28, 2023, other assets and other current liabilities include $69 and $36, respectively, of the net asset

and liability recognized for the above benefit plans. As of January 29, 2022, other assets and other current liabilities
include $156 and $34, respectively, of the net asset and liability recognized for the above benefit plans. Pension plan
assets do not include common shares of The Kroger Co.

In 2021, the Company settled certain company-sponsored pension plan obligations using existing assets of the plans.

The Company recognized a non-cash settlement charge of $87, $68 net of tax, associated with the settlement of its
obligations for the eligible participants’ pension balances that were distributed out of the plans via a lump sum
distribution or the purchase of an annuity contract, based on each participant’s election. The settlement charge is
included in “Non-service component of company-sponsored pension plan costs” in the Consolidated Statements of
Operations.

The following table outlines the weighted average assumptions associated with pension and other benefit costs for

2022, 2021 and 2020:

Weighted average assumptions
Discount rate — Benefit obligation
Discount rate — Net periodic benefit

Pension Benefits

Other Benefits

2022 2021 2020 2022 2021 2020

4.90 % 3.17 % 2.72 % 4.86 % 3.01 % 2.43 %

cost

3.17 % 2.72 % 3.01 % 3.01 % 2.43 % 2.97 %

Expected long-term rate of return on

plan assets

5.50 % 5.50 % 5.50 %

Rate of compensation increase — Net

periodic benefit cost

Rate of compensation increase —

Benefit obligation

Cash Balance plan interest crediting rate

3.05 % 3.03 % 3.03 %

2.57 % 3.05 % 3.03 %
3.30 % 3.30 % 3.30 %

The Company’s discount rate assumptions were intended to reflect the rates at which the pension benefits could be
effectively settled. They take into account the timing and amount of benefits that would be available under the plans.
The Company’s policy is to match the plan’s cash flows to that of a hypothetical bond portfolio whose cash flow from
coupons and maturities match the plan’s projected benefit cash flows. The discount rates are the single rates that
produce the same present value of cash flows. The selection of the 4.90% and 4.86% discount rates as of year-end 2022
for pension and other benefits, respectively, represents the hypothetical bond portfolio using bonds with an AA or better
rating constructed with the assistance of an outside consultant. A 100 basis point increase in the discount rate would
decrease the projected pension benefit obligation as of January 28, 2023, by approximately $225.

The Company’s assumed pension plan investment return rate was 5.50% in 2022, 2021, and 2020. The value of all

investments in the company-sponsored defined benefit pension plans during the calendar year ended December 31, 2022,
net of investment management fees and expenses, decreased 22.5% and for fiscal year 2022 investments decreased
15.4%. Historically, the Company’s pension plans’ average rate of return was 4.4% for the 10 calendar years ended
December 31, 2022, net of all investment management fees and expenses. For the past 20 years, the Company’s pension
plans’ average annual rate of return has been 7.0%. To determine the expected rate of return on pension plan assets held
by the Company, the Company considers current and forecasted plan asset allocations as well as historical and
forecasted rates of return on various asset categories.

The Company calculates its expected return on plan assets by using the market-related value of plan assets. The

market-related value of plan assets is determined by adjusting the actual fair value of plan assets for gains or losses on
plan assets. Gains or losses represent the difference between actual and expected returns on plan investments for each
plan year. Gains or losses on plan assets are recognized evenly over a five-year period. Using a different method to
calculate the market-related value of plan assets would provide a different expected return on plan assets.

The pension benefit unfunded status increased in 2022, compared to 2021, due primarily to a lower actual rate of

return on plan assets, partially offset by an increase in discount rates, which lowered the benefit obligation. The
Company’s Qualified Plans were fully funded as of January 28, 2023 and January 29, 2022.

The following table provides the components of the Company’s net periodic benefit costs for 2022, 2021 and 2020:

Pension Benefits

2022

Qualified Plans
2021

2020

Non-Qualified Plans

Other Benefits

2022 2021 2020 2022 2021 2020

Components of net periodic benefit

cost:
Service cost
Interest cost
Expected return on plan assets
Amortization of:

Prior service credit
Actuarial (gain) loss
Settlement loss recognized

Other

Net periodic benefit cost

8
92
(153)

12
92
(168)

13
104
10
(168) —

$ — $ — $ — $
9
—

10
—

5 $
5
—

4
4
—

7
6
—

—
22
4
—
$ (27) $

—
33
87
(1)
55

—
35
—
1

—
5
—
—
$ (15) $ 15

—
6
—
1
$ 16

—
5
—
—

(13)
(11)
—
—
$ 15 $ (14) $ (21) $

(12)
(17)
—
—

(13)
(8)
—
(1)
(9)

The following table provides the projected benefit obligation (“PBO”) and the fair value of plan assets for those

company-sponsored pension plans with projected benefit obligations in excess of plan assets:

PBO at end of fiscal year
Fair value of plan assets at end of year

Qualified Plans Non-Qualified Plans
2022 2021 2022
$ 244
$ 207

2021
$ 271 $ 325
—
— $
$

$ 176
$ 141

The following table provides the accumulated benefit obligation (“ABO”) and the fair value of plan assets for those

company-sponsored pension plans with accumulated benefit obligations in excess of plan assets:

ABO at end of fiscal year
Fair value of plan assets at end of year

Qualified Plans Non-Qualified Plans
2022 2021 2022
$ 244
$ 207

2021
$ 271 $ 325
—
— $
$

$ 176
$ 141

The following table provides information about the Company’s estimated future benefit payments:

2023
2024
2025
2026
2027
2028 —2032

Pension Other
Benefits Benefits
$ 206 $ 13
$ 209 $ 14
$ 210 $ 15
$ 211 $ 16
$ 210 $ 16
$ 998 $ 75

The following table provides information about the target and actual pension plan asset allocations as of January 28,

2023:

Pension plan asset allocation
Global equity securities
Emerging market equity securities
Investment grade debt securities
High yield debt securities
Private equity
Hedge funds
Real estate
Other

Total

Target allocations

Actual
Allocations

2022

2021

5.0 %
—
78.0
3.0
10.0
2.0
2.0
—

4.9 %
—
75.8
2.9
9.8
2.3
1.8
2.5

7.0 %
1.7
73.6
2.5
10.6
2.9
1.7
—

100.0 % 100.0 % 100.0 %

Investment objectives, policies and strategies are set by the Retirement Benefit Plan Management Committee (the
“Committee”). The primary objectives include holding and investing the assets and distributing benefits to participants
and beneficiaries of the pension plans. Investment objectives have been established based on a comprehensive review of
the capital markets and each underlying plan’s current and projected financial requirements. The time horizon of the
investment objectives is long-term in nature and plan assets are managed on a going-concern basis.

Investment objectives and guidelines specifically applicable to each manager of assets are established and reviewed

annually. Derivative instruments may be used for specified purposes, including rebalancing exposures to certain asset
classes. Any use of derivative instruments for a purpose or in a manner not specifically authorized is prohibited, unless
approved in advance by the Committee.

The target allocations shown for 2022 were established at the beginning of 2022 based on the Company’s liability-

driven investment (“LDI”) strategy. An LDI strategy focuses on maintaining a close to fully-funded status over the long-
term with minimal funded status risk. This is achieved by investing more of the plan assets in fixed income instruments
to more closely match the duration of the plan liability.

The Company did not make any significant contributions to its company-sponsored pension plans in 2022, and the

Company is not required to make any contributions to these plans in 2023. If the Company does make any contributions
in 2023, the Company expects these contributions will decrease its required contributions in future years. Among other
things, investment performance of plan assets, the interest rates required to be used to calculate the pension obligations,
and future changes in legislation, will determine the amounts of any contributions. The Company expects 2023 net
periodic benefit costs for company-sponsored pension plans to be approximately ($7).

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. The

Company used a 6.20% initial health care cost trend rate, which is assumed to decrease on a linear basis to a 4.00%
ultimate health care cost trend rate in 2046, to determine its expense.

The following tables, set forth by level within the fair value hierarchy, present the Qualified Plans’ assets at fair

value as of January 28, 2023 and January 29, 2022:

Assets at Fair Value as of January 28, 2023

Quoted Prices in
Active Markets for

Significant Other
Identical Assets Observable Inputs

(Level 1)

(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Assets

Measured

at NAV

Cash and cash equivalents
Corporate Stocks
Corporate Bonds
U.S. Government Securities
Mutual Funds
Collective Trusts
Hedge Funds
Private Equity
Real Estate
Other
Total

178
4
—
—
124
—
—
—
—
—
306

— $
—
1,113
115
—
—
—
—
—
98
1,326

— $
—
—
—
—
—
31
—
28
—
59

—
—
—
—
—
514
28
248
16
—
806

Assets at Fair Value as of January 29, 2022

Quoted Prices in
Active Markets for

Significant Other
Identical Assets Observable Inputs

(Level 1)

(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Assets

Measured

at NAV

Cash and cash equivalents
Corporate Stocks
Corporate Bonds
U.S. Government Securities
Mutual Funds
Collective Trusts
Hedge Funds
Private Equity
Real Estate
Other
Total

80
98
—
—
265
—
—
—
—
—
443

— $
—
1,070
144
—
—
—
—
—
101
1,315

— $
—
—
—
—
—
39
—
37
—
76

—
—
—
—
—
871
49
326
16
—
1,262

Total

178
4
1,113
115
124
514
59
248
44
98
2,497

Total

80
98
1,070
144
265
871
88
326
53
101
3,096

Certain investments that are measured at fair value using the NAV per share (or its equivalent) have not been
classified in the fair value hierarchy. The fair value amounts presented for these investments in the preceding tables are
intended to permit reconciliation of the fair value hierarchies to the total fair value of plan assets.

For measurements using significant unobservable inputs (Level 3) during 2022 and 2021, a reconciliation of the

beginning and ending balances is as follows:

Ending balance, January 30, 2021
Contributions into Fund
Realized gains
Unrealized gains
Distributions

Ending balance, January 29, 2022
Contributions into Fund
Realized gains
Unrealized losses
Distributions

Ending balance, January 28, 2023

Hedge Funds Real Estate
39
35 $
$
1
—
2
2
6
7
(11)
(5)

39
—
—
(3)
(5)

37
1
12
(6)
(16)

31 $

See Note 7 for a discussion of the levels of the fair value hierarchy. The assets’ fair value measurement level above

is based on the lowest level of any input that is significant to the fair value measurement.

The following is a description of the valuation methods used for the Qualified Plans’ assets measured at fair value in

the above tables:

• Cash and cash equivalents: The carrying value approximates fair value.

• Corporate Stocks: The fair values of these securities are based on observable market quotations for identical
assets and are valued at the closing price reported on the active market on which the individual securities are
traded.

• Corporate Bonds: The fair values of these securities are primarily based on observable market quotations for
similar bonds, valued at the closing price reported on the active market on which the individual securities are
traded. When such quoted prices are not available, the bonds are valued using a discounted cash flow approach
using current yields on similar instruments of issuers with similar credit ratings, including adjustments for
certain risks that may not be observable, such as credit and liquidity risks.

• U.S. Government Securities: Certain U.S. Government securities are valued at the closing price reported in the
active market in which the security is traded. Other U.S. government securities are valued based on yields
currently available on comparable securities of issuers with similar credit ratings. When quoted prices are not
available for similar securities, the security is valued under a discounted cash flow approach that maximizes
observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that
may not be observable, such as credit and liquidity risks.

• Mutual Funds: The fair values of these securities are based on observable market quotations for identical assets
and are valued at the closing price reported on the active market on which the individual securities are traded.

• Collective Trusts: The collective trust funds are public investment vehicles valued using a Net Asset Value
(NAV) provided by the manager of each fund. These assets have been valued using NAV as a practical
expedient.

• Hedge Funds: The Hedge funds classified as Level 3 include investments that are not readily tradeable and have
valuations that are not based on readily observable data inputs. The fair value of these assets is estimated based
on information provided by the fund managers or the general partners. Therefore, these assets are classified as
Level 3. Certain other hedge funds are private investment vehicles valued using a NAV provided by the
manager of each fund. These assets have been valued using NAV as a practical expedient.

•

Private Equity: Private Equity investments are valued based on the fair value of the underlying securities within
the fund, which include investments both traded on an active market and not traded on an active market. For
those investments that are traded on an active market, the values are based on the closing price reported on the
active market on which those individual securities are traded. For investments not traded on an active market,
or for which a quoted price is not publicly available, a variety of unobservable valuation methodologies,
including discounted cash flow, market multiple and cost valuation approaches, are employed by the fund
manager to value investments. Fair values of all investments are adjusted annually, if necessary, based on
audits of the private equity fund financial statements; such adjustments are reflected in the fair value of the
plan’s assets.

Real Estate: Real estate investments include investments in real estate funds managed by a fund manager.
These investments are valued using a variety of unobservable valuation methodologies, including discounted
cash flow, market multiple and cost valuation approaches. The valuations for these investments are not based
on readily observable inputs and are classified as Level 3 investments. Certain other real estate investments are
valued using a NAV provided by the manager of each fund. These assets have been valued using NAV as a
practical expedient.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value

or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and
consistent with other market participants, the use of different methodologies or assumptions to determine the fair value
of certain financial instruments could result in a different fair value measurement.

The Company contributed and expensed $315, $289 and $294 to employee 401(k) retirement savings accounts in

2022, 2021 and 2020, respectively. The 401(k) retirement savings account plans provide to eligible employees both
matching contributions and automatic contributions from the Company based on participant contributions, compensation
as defined by the plan and length of service.

15. MULTI-EMPLOYER PENSION PLANS

The Company contributes to various multi-employer pension plans based on obligations arising from collective
bargaining agreements. These multi-employer pension plans provide retirement benefits to participants based on their
service to contributing employers. The benefits are paid from assets held in trust for that purpose. Trustees are
appointed in equal number by employers and unions. The trustees typically are responsible for determining the level of
benefits to be provided to participants as well as for such matters as the investment of the assets and the administration
of the plans.

The Company recognizes expense in connection with these plans as contributions are funded or when commitments
are probable and reasonably estimable, in accordance with GAAP. The Company made cash contributions to these plans
of $620 in 2022, $1,109 in 2021 and $619 in 2020. The decrease in 2022, compared to 2021, and the increase in 2021,
compared to 2020, are due to the contractual payments the Company made in 2021 related to its commitments
established for the restructuring of certain multi-employer pension plan agreements.

The Company continues to evaluate and address potential exposure to under-funded multi-employer pension plans

as it relates to the Company’s associates who are beneficiaries of these plans. These under-fundings are not a liability of
the Company. When an opportunity arises that is economically feasible and beneficial to the Company and its
associates, the Company may negotiate the restructuring of under-funded multi-employer pension plan obligations to
help stabilize associates’ future benefits and become the fiduciary of the restructured multi-employer pension plan. The
commitments from these restructurings do not change the Company’s debt profile as it relates to its credit rating since
these off balance sheet commitments are typically considered in the Company’s investment grade debt rating.

The Company is currently designated as the named fiduciary of the United Food and Commercial Workers
(“UFCW”) Consolidated Pension Plan and the International Brotherhood of Teamsters (“IBT”) Consolidated Pension
Fund and has sole investment authority over these assets. Due to opportunities arising, the Company has restructured
certain multi-employer pension plans. The significant effects of these restructuring agreements recorded in our
Consolidated Financial Statements are:

•

In 2022, the Company incurred a $25 charge, $19 net of tax, for obligations related to withdrawal liabilities for
certain multi-employer pension funds.

In 2021, associates within the Fred Meyer and QFC divisions ratified an agreement for the transfer of liabilities
from the Sound Retirement Trust to the UFCW Consolidated Pension Plan. The Company transferred $449,
$344 net of tax, in net accrued pension liabilities and prepaid escrow funds to fulfill obligations for past service
for associates and retirees. The agreement will be satisfied by cash installment payments to the UFCW
Consolidated Pension Plan and will be paid evenly over seven years.

In 2020, certain of the Company’s associates ratified an agreement with certain UFCW local unions to
withdraw from the UFCW International Union-Industry Pension Fund (“National Fund”). Due to the
ratification of the agreement, the Company incurred a withdrawal liability charge of $962, on a pre-tax basis, to
fulfill obligations for past service for associates and retirees in the National Fund. The Company also incurred
an additional $27 commitment to a transition reserve in the new variable annuity pension plan. On an after-tax
basis, the withdrawal liability and commitment to the transition reserve totaled $754. As of January 29, 2022,
the current portion of the commitment of $233 is included in “Other current liabilities” and the long-term
portion of the commitment of $233 is included in “Other long-term liabilities” in the Company’s Consolidated
Balance Sheets. As of January 28, 2023, the current portion of the commitment of $240 is included in “Other
current liabilities” in the Company’s Consolidated Balance Sheets. In 2022 and 2021, the Company paid $226
and $523 of these commitments, respectively. The original commitment of $962 on a pre-tax basis, will be
satisfied by payment to the National Fund over three years. In 2020, in “Other” within “Changes in operating
assets and liabilities”, the Company’s Consolidated Statements of Cash Flows includes the change related to
recording the long-term portion of the withdrawal liability commitment.

The risks of participating in multi-employer pension plans are different from the risks of participating in single-

employer pension plans in the following respects:

• Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees

of other participating employers.

•

If a participating employer stops contributing to the plan, the unfunded obligations of the plan allocable to such
withdrawing employer may be borne by the remaining participating employers.

If the Company stops participating in some of its multi-employer pension plans, the Company may be required
to pay those plans an amount based on its allocable share of the unfunded vested benefits of the plan, referred to
as a withdrawal liability.

The Company’s participation in multi-employer plans is outlined in the following tables. The EIN / Pension Plan
Number column provides the Employer Identification Number (“EIN”) and the three-digit pension plan number. The
most recent Pension Protection Act Zone Status available in 2022 and 2021 is for the plan’s year-end at December 31,
2021 and December 31, 2020, respectively. Among other factors, generally, plans in the red zone are less than 65
percent funded, plans in the yellow zone are less than 80 percent funded and plans in the green zone are at least 80
percent funded. The zone status is confirmed by each plan’s actuarial valuation. The FIP/RP Status Pending /
Implemented Column indicates plans for which a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”) is
either pending or has been implemented. Unless otherwise noted, the information for these tables was obtained from the
Forms 5500 filed for each plan’s year-end at December 31, 2021 and December 31, 2020. The multi-employer
contributions listed in the table below are the Company’s multi-employer contributions made in fiscal years 2022, 2021
and 2020.

The following table contains information about the Company’s multi-employer pension plans:

EIN / Pension
Plan Number

Pension Protection
Act Zone Status
2022

2021

FIP/RP
Status

Pending/ Multi-Employer Contributions
2020

Implemented

2021

2022

Surcharge
Imposed(5)

Pension Fund
SO CA UFCW Unions & Food Employers

Joint Pension Trust Fund(1)(2)

Desert States Employers & UFCW Unions

95-1939092 - 001

Red

Yellow Implemented $

Pension Plan(1)

84-6277982 - 001 Green
Sound Variable Annuity Pension Trust(1)(3) 86-3278029 - 001 Green
Rocky Mountain UFCW Unions and

Green
Yellow

No
No

Employers Pension Plan(1)

Oregon Retail Employees Pension Plan(1)
Bakery and Confectionary Union &

Industry International Pension Fund(1)
Retail Food Employers & UFCW Local

711 Pension(1)

UFCW International Union — Industry

Variable Annuity Pension Plan(1)

(4)

Western Conference of Teamsters Pension

84-6045986 - 001 Green
Red
93-6074377 - 001

Green
Green

No
Implemented

52-6118572 - 001

Red

Implemented

51-6031512 - 001

Red

Yellow Implemented

51-6055922 - 001 Green

Green

Plan

91-6145047 - 001 Green

Green

Central States, Southeast & Southwest

Areas Pension Plan

UFCW Consolidated Pension Plan(1)
IBT Consolidated Pension Plan(1)(6)
Other
Total Contributions

36-6044243 - 001
Red
58-6101602 - 001 Green
N/A
82-2153627 - 001

Red
Green
N/A

Implemented
No
No

20
14

27
9

282

34
56
7
29
620

22
24

29
10

550

19
29

28
9

37
243
29
26
$ 1,109

12
321
18
14
619

No
No

No
No
No

(1) The Company's multi-employer contributions to these respective funds represent more than 5% of the total contributions received by the pension

funds.

(2) The information for this fund was obtained from the Form 5500 filed for the plan's year-end at March 31, 2022 and March 31, 2021.
(3) The information for this fund was obtained from the Form 5500 filed for the plan's year-end at September 30, 2021 and September 30, 2020.
(4) The information for this fund was obtained from the Form 5500 filed for the plan's year-end at June 30, 2021 and June 30, 2020.
(5) Under the Pension Protection Act, a surcharge may be imposed when employers make contributions under a collective bargaining agreement that
is not in compliance with a rehabilitation plan. As of January 28, 2023, the collective bargaining agreements under which the Company was
making contributions were in compliance with rehabilitation plans adopted by the applicable pension fund.

(6) The plan was formed after 2006, and therefore is not subject to zone status certifications.

The following table describes (a) the expiration date of the Company’s collective bargaining agreements and (b) the

expiration date of the Company’s most significant collective bargaining agreements for each of the material multi-
employer funds in which the Company participates:

Pension Fund
SO CA UFCW Unions & Food Employers Joint Pension Trust

Fund

UFCW Consolidated Pension Plan
Desert States Employers & UFCW Unions Pension Plan
Sound Variable Annuity Pension Trust
Rocky Mountain UFCW Unions and Employers Pension Plan
Oregon Retail Employees Pension Plan
Bakery and Confectionary Union & Industry International

Pension Fund

Retail Food Employers & UFCW Local 711 Pension
UFCW International Union — Industry Variable Annuity

Pension Plan

Western Conference of Teamsters Pension Plan
IBT Consolidated Pension Plan

Expiration Date
of Collective
Bargaining
Agreements

Most Significant Collective
Bargaining Agreements(1)

Count

Expiration

June 2024 to March 2025
February 2023 to July 2026
April 2023 to June 2025
June 2023 to February 2026
January 2025 to February 2025
August 2024 to March 2026

April 2024 to September 2025
April 2023 to March 2025

June 2025
April 2023 to September 2025
September 2024 to September 2027

2
3
1
5
2
3

4
1

1
5
3

June 2024 to March 2025
February 2024 to March 2026
October 2023
May 2025 to August 2025
January 2025
August 2024 to July 2025

May 2024 to October 2024
March 2025

June 2025
April 2024 to September 2025
September 2024 to September 2027

(1) This column represents the number of significant collective bargaining agreements and their expiration date for each of the Company’s pension
funds listed above. For the purposes of this table, the “significant collective bargaining agreements” are the largest based on covered employees
that, when aggregated, cover the majority of the employees for which we make multi-employer contributions for the referenced pension fund.

In 2020, the Company held escrow deposits amounting to $271 due to certain restructuring agreements. These
payments were included in “Prepaid and other current assets” in the Company’s Consolidated Balance Sheets. These
escrow deposits were paid in 2021.

Based on the most recent information available to it, the Company believes the present value of actuarial accrued

liabilities in most of these multi-employer plans exceeds the value of the assets held in trust to pay benefits. Moreover,
if the Company were to exit certain markets or otherwise cease making contributions to these funds, the Company could
trigger a withdrawal liability. Any adjustment for withdrawal liability will be recorded when it is probable that a
liability exists and it can be reasonably estimated.

The Company also contributes to various other multi-employer benefit plans that provide health and welfare benefits
to active and retired participants. Total contributions made by the Company to these other multi-employer health and
welfare plans were approximately $1,129 in 2022, $1,197 in 2021, and $1,262 in 2020.

16. PROPOSED MERGER WITH ALBERTSONS COMPANIES, INC.

As previously disclosed, on October 13, 2022, the Company entered into a merger agreement with Albertsons
pursuant to which all of the outstanding shares of Albertsons common and preferred stock (on an as converted basis)
automatically will be converted into the right to receive $34.10 per share, subject to certain reductions described below.
This price implies a total enterprise value of approximately $24,600, including the assumption of approximately $4,700
of Albertsons net debt.

In connection with obtaining the requisite regulatory clearance necessary to consummate the transaction, the
Company and Albertsons expect to make store divestitures. Subject to the outcome of the divestiture process and as
described in the merger agreement, Albertsons is prepared to establish an Albertsons subsidiary (“SpinCo”). SpinCo
would be spun-off to Albertsons shareholders immediately prior to the closing of the merger and operate as a standalone
public company. The Company and Albertsons have agreed to work together to determine which stores, if any, would
comprise SpinCo, as well as the pro forma capitalization of SpinCo. The per share cash purchase price of $34.10
payable to Albertsons shareholders in the merger would be reduced by an amount equal to (i) $6.85, which is the per
share amount of a special pre-closing cash dividend that was paid on January 20, 2023 to Albertsons shareholders of
record as of October 24, 2022 plus (ii) three times the four-wall adjusted EBITDA for the stores contributed to SpinCo.,
if any, divided by the number of shares of Albertsons common stock (including shares of Albertsons common stock
issuable upon conversion of Albertsons preferred stock) outstanding as of the record date for the spin-off. The Company
and Albertsons continue to work to determine whether any stores will be contributed to SpinCo. The current adjusted
per share cash purchase price is expected to be $27.25, pending determination of any required adjustments for SpinCo.

In connection with the merger agreement, on October 13, 2022, the Company entered into a commitment letter with

certain lenders pursuant to which the lenders have committed to provide a $17,400 senior unsecured bridge term loan
facility, which, if entered into, would mature 364 days after the closing date of the merger. The commitments are
intended to be drawn to finance the merger with Albertsons only to the extent the Company does not arrange for
alternative financing prior to closing. As alternative financing for the merger is secured, the commitments with respect to
the bridge term loan facility under the commitment letter will be reduced. Upfront fees with respect to the bridge term
loan facility are included in “Financing fees paid” in the Company’s Consolidated Statements of Cash Flows and will be
recognized as operating, general and administrative expense in the Company’s Consolidated Statements of Operations
over the commitment period.

On November 9, 2022, the Company executed a term loan credit agreement with certain lenders pursuant to which

the lenders committed to provide, contingent upon the completion of the merger with Albertsons and certain other
customary conditions to funding, (1) senior unsecured term loans in an aggregate principal amount of $3,000 maturing
on the third anniversary of the merger closing date and (2) senior unsecured term loans in an aggregate principal amount
of $1,750 maturing on the date that is 18 months after the merger closing date (collectively, the “Term Loan Facilities”).
Borrowings under the Term Loan Facilities will be used to pay a portion of the consideration and other amounts payable
in connection with the merger with Albertsons. The entry into the term loan credit agreement reduces the commitments
under the Company’s $17,400 bridge facility commitment by $4,750. Borrowings under the Term Loan Facilities will
bear interest at rates that vary based on the type of loan and the Company’s debt rating. In addition to the sources of
financing described above, the Company expects to finance the transaction with senior notes issuances, borrowings
under its commercial paper program, bank credit facility capacity and cash on hand.

The agreement provides for certain termination rights for the Company and Albertsons, including if the closing does
not occur on or prior to January 13, 2024 (the “Outside Date”), provided that the Outside Date may be extended by either
party for up to 270 days in the aggregate. The Company will be obligated to pay a termination fee of $600 if the merger
agreement is terminated by either party in connection with the occurrence of the Outside Date, and, at the time of such
termination, all closing conditions other than regulatory approval have been satisfied. The transaction is expected to
close in early 2024, subject to the receipt of required regulatory clearance and other customary closing conditions.

17. RECENTLY ISSUED ACCOUNTING STANDARDS

In September 2022, the FASB issued ASU No. 2022-04, "Liabilities - Supplier Finance Programs (Subtopic 405-
50): Disclosure of Supplier Finance Program Obligations". This guidance requires annual and interim disclosures for
entities that use supplier finance programs in connection with the purchase of goods and services. These amendments are
effective for fiscal years beginning after December 15, 2022, except for the amendment on roll forward information,
which is effective for fiscal years beginning after December 15, 2023. The Company is currently assessing the effect that
adoption of this guidance will have on its Consolidated Financial Statements.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

ITEM 9A. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.

As of January 28, 2023, our Chief Executive Officer and Chief Financial Officer, together with a disclosure review

committee appointed by the Chief Executive Officer, evaluated the Company’s disclosure controls and
procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the
Company’s disclosure controls and procedures were effective as of January 28, 2023.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

The Company is in the process of implementing a broad, multi-year, technology transformation project to

modernize mainframe, middleware and legacy systems to achieve better process efficiencies across customer service,
merchandising, sourcing, payroll and accounting through the use of various solutions. Implementation of new accounting
ERP modules for general ledger, accounts receivable, accounts payable, fixed assets and a new indirect procurement
module were implemented at the beginning of the first quarter of 2021. In the third quarter of 2022, a new payroll
module was implemented. Additional phases of the project will continue to be implemented over the next several years.
As of January 28, 2023, there have been no material additional implementations of modules since the third quarter of
2022. As the Company’s technology transformation project continues, the Company continues to emphasize the
maintenance of effective internal controls and assessment of the design and operating effectiveness of key control
activities throughout development and deployment of each phase and will evaluate as additional phases are deployed.

There were no changes in Kroger’s internal control over financial reporting that materially affected, or were

reasonably likely to materially affect, Kroger’s internal control over financial reporting during the quarter ended January
28, 2023.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting for
the Company. With the participation of the Chief Executive Officer and the Chief Financial Officer, our management
conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework and
criteria established in Internal Control — Integrated Framework (2013), issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on the evaluation, management has concluded that the Company’s
internal control over financial reporting was effective as of January 28, 2023.

The effectiveness of the Company’s internal control over financial reporting as of January 28, 2023, has been
audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report,
which can be found in Item 8 of this Form 10-K.

ITEM 9B. OTHER INFORMATION.

None.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

Not applicable.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Our board of directors 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 on Business Ethics is
available on our website at ir.kroger.com under Investors – Governance – Policy on Business Ethics. A copy of the Code
of Ethics is available in print free of charge to any shareholder who requests a copy. Shareholders may make a written
request to Kroger’s Secretary at our executive offices at 1014 Vine Street, Cincinnati, Ohio 45202. We intend to satisfy
the disclosure requirement regarding any amendment to, or a waiver from, a provision of the Policy on Business Ethics
for our principal executive officer, principal financial officer, principal accounting officer or controller, or persons
performing similar functions, by posting such information on our website.

The information required by this Item 10 with respect to executive officers is included within Item 1 in Part I of this

Annual Report on Form 10-K under the caption “Information about our Executive Officers.” The information required
by this Item not otherwise set forth in Part I above or in this Item 10 of Part III is set forth under the headings Election of
Directors, Information Concerning the Board of Directors- Committees of the Board, Information Concerning the Board
of Directors- Audit Committee and Delinquent 16(a) Reports, if required, in the definitive proxy statement to be filed by
the Company with the Securities and Exchange Commission within 120 days after the end of the fiscal year 2022 (the
“2023 proxy statement”) and is hereby incorporated by reference into this Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by this Item is set forth in the sections entitled Compensation Discussion and Analysis,
Compensation Committee Report, and Compensation Tables in the 2023 proxy statement and is hereby incorporated by
reference into this Form 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND

RELATED STOCKHOLDER MATTERS.

The following table provides information regarding shares outstanding and available for issuance under our existing

equity compensation plans:

Equity Compensation Plan Information

Plan Category

Equity compensation plans approved by security

holders

Equity compensation plans not approved by

security holders

Total

(a)

(b)

remaining available for future

Number of securities to Weighted-average
exercise price of
be issued upon exercise
outstanding options,
of outstanding options,
warrants and rights(1) warrants and rights(1)

issuance under equity
compensation plans
(excluding securities
reflected in column (a))

20,021,688

— $
$

20,021,688

30.81

—
30.81

53,470,441

—
53,470,441

(1) The total number of securities reported includes the maximum number of common shares, 3,383,338, that may be
issued under performance units granted under our long-term incentive plans. The nature of the awards is more
particularly described in the Compensation Discussion and Analysis section of the definitive 2023 proxy statement
and is hereby incorporated by reference into this Form 10-K. The weighted-average exercise price in column
(b) does not take these performance unit awards into account. Based on historical data, or in the case of the awards
made in 2020 through 2022 and earned in 2022 the actual payout percentage, our best estimate of the number of
common shares that will be issued under the performance unit grants is approximately 3,872,462.

The remainder of the information required by this Item is set forth in the section entitled Beneficial Ownership of

Common Stock in the 2023 proxy statement and is hereby incorporated by reference into this Form 10-K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

INDEPENDENCE.

The information required by this Item is set forth in the sections entitled Related Person Transactions and

Information Concerning the Board of Directors-Independence in the 2023 proxy statement and is hereby incorporated by
reference into this Form 10-K.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The information required by this Item is set forth in the section entitled Ratification of the Appointment of Kroger’s

Independent Auditor in the 2023 proxy statement and is hereby incorporated by reference into this Form 10-K.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a)1.†

Financial Statements:

PART IV

Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
Consolidated Balance Sheets as of January 28, 2023 and January 29, 2022
Consolidated Statements of Operations for the years ended January 28, 2023, January 29, 2022 and January
30, 2021
Consolidated Statements of Comprehensive Income for the years ended January 28, 2023, January 29, 2022
and January 30, 2021
Consolidated Statements of Cash Flows for the years ended January 28, 2023, January 29, 2022 and January
30, 2021
Consolidated Statement of Changes in Shareholders’ Equity for the years ended January 28, 2023, January
29, 2022 and January 30, 2021

Notes to Consolidated Financial Statements

(a)2.

Financial Statement Schedules:
There are no Financial Statement Schedules included with this filing for the reason that they are not
applicable or are not required or the information is included in the financial statements or notes thereto.

(a)3.(b)

Exhibits

2.1

3.1

3.2

4.1

4.2

10.1*

10.2*

10.3*

10.4*

10.5*

10.6

Agreement and Plan of Merger, dated as of October 13, 2022, by and among the Company, Parent and
Merger Sub, is hereby incorporated by reference to Exhibit 2.1 of the Company’s 8-K filed with the SEC on
October 14, 2022.

Amended Articles of Incorporation are hereby incorporated by reference to Exhibit 3.1 of the Company’s
Quarterly Report on Form 10-Q for the quarter ended May 22, 2010, as amended by the Amendment to
Amended Articles of Incorporation, which is hereby incorporated by reference to Exhibit 3.1 of the
Company’s Quarterly Report on Form 10-Q for the quarter ended May 23, 2015.

The Company’s Regulations are hereby incorporated by reference to Exhibit 3.1 of the Company’s Current
Report on Form 8-K filed with the SEC on June 27, 2019.

Instruments defining the rights of holders of long-term debt of the Company and its subsidiaries are not
filed as Exhibits because the amount of debt under each instrument is less than 10% of the consolidated
assets of the Company. The Company undertakes to file these instruments with the SEC upon request.

Description of Securities. Incorporated by reference to Exhibit 4.2 of the Company’s Annual Report on
Form 10-K for the fiscal year ended February 1, 2020.

The Kroger Co. Deferred Compensation Plan for Independent Directors. Incorporated by reference to
Exhibit 10.2 of the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2016.

The Kroger Co. Executive Deferred Compensation Plan. Incorporated by reference to Exhibit 10.4 of the
Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2005.

The Kroger Co. 401(k) Retirement Savings Account Restoration Plan. Incorporated by reference to
Exhibit 10.4 of the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2007.

The Kroger Co. Supplemental Retirement Plans for Certain Retirement Benefit Plan Participants.
Incorporated by reference to Exhibit 10.6 of the Company’s Annual Report on Form 10-K for the fiscal year
ended February 3, 2007.

The Kroger Co. Employee Protection Plan dated January 13, 2017. Incorporated by reference to
Exhibit 10.5 of the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2017.

Term Loan agreement, dated as of November 9, 2022, by and among The Kroger Co., the lenders from time
to time party thereto, and Citibank, N.A., as administrative agent for the lenders, incorporated by reference
to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on November 10, 2022.

10.7

10.8

10.9

10.10

10.11*

10.12*

10.13*

10.14*

10.15*

10.16*

10.17*

21.1

23.1

24.1

31.1

31.2

32.1

Amendment No. 1 to Credit Agreement, dated as of November 9, 2022, by and among The Kroger Co., the
lenders party thereto, and Bank of America, N.A., as paying agent to the Amended and Restated Credit
Agreement dated July 6, 2021, incorporated by reference to Exhibit 10.2 of the Company’s Current Report
on Form 8-K filed with the SEC on November 10, 2022.

The Kroger Co. 2008 Long-Term Incentive and Cash Bonus Plan. Incorporated by reference to Exhibit 4.2
of the Company’s Form S-8 filed with the SEC on June 26, 2008.

The Kroger Co. 2011 Long-Term Incentive and Cash Bonus Plan. Incorporated by reference to Exhibit 4.2
of the Company’s Form S-8 filed with the SEC on June 23, 2011.

The Kroger Co. 2014 Long-Term Incentive and Cash Bonus Plan. Incorporated by reference to Exhibit 4.2
of the Company’s Form S-8 filed with the SEC on July 29, 2014.

The Kroger Co. 2019 Long-Term Incentive Plan. Incorporated by reference to Exhibit 99.1 of the
Company’s Form S-8 filed with the SEC on June 28, 2019.

Form of Restricted Stock Grant Agreement under Long-Term Incentive Cash Bonus Plans. Incorporated by
reference to Exhibit 10.11 of the Company’s Annual Report on Form 10-K for the fiscal year ended
February 1, 2020.

Form of Restricted Stock Grant Agreement under Long-Term Incentive and Cash Bonus Plans. Incorporated
by reference to Exhibit 10.9 of the Company’s Annual Report on Form 10-K for the fiscal year ended
February 3, 2007.

Form of Non-Qualified Stock Option Grant Agreement under Long-Term Incentive and Cash Bonus Plan.
Incorporated by reference to Exhibit 10.13 of the Company’s Annual Report on Form 10-K for the fiscal
year ended February 1, 2020.

Form of Non-Qualified Stock Option Grant Agreement under Long-Term Incentive and Cash Bonus Plans.
Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter
ended May 24, 2008.

Form of Performance Unit Award Agreement under Long-Term Incentive and Cash Bonus Plans.
Incorporated by reference to Exhibit 10.15 of the Company’s Annual Report on Form 10-K for the fiscal
year ended February 1, 2020.

Form of Restricted Stock Grant Agreement under Long-Term Incentive and Cash Bonus Plan. Incorporated
by reference to Exhibit 10.16 of the Company’s Annual Report on Form 10-K for the fiscal year ended
January 30, 2021.

Subsidiaries of the Registrant.

Consent of Independent Registered Public Accounting Firm.

Powers of Attorney.

Rule 13a-14(a)/15d-14(a) Certification.

Section 1350 Certifications.

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104

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* Management contract or compensatory plan or arrangement.
† Filed herewith.

ITEM 16. FORM 10-K SUMMARY.

Not Applicable.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly

caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

Dated: March 28, 2023

THE KROGER CO.

/s/ W. Rodney McMullen
W. Rodney McMullen
Chairman of the Board and Chief Executive Officer
(principal executive officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the

following persons on behalf of the Company and in the capacities indicated on the 28th of March 2023.

/s/ Gary Millerchip
Gary Millerchip

/s/ Todd A. Foley
Todd A Foley

*
Nora A. Aufreiter
*
Kevin M. Brown
*
Elaine L. Chao
*
Anne Gates
*
Karen M. Hoguet
*
W. Rodney McMullen
*
Clyde R. Moore
*
Ronald L. Sargent
*
J. Amanda Sourry Knox
*
Mark S. Sutton
*
Ashok Vemuri

* By: /s/ Christine S. Wheatley

Christine S. Wheatley
Attorney-in-fact

Senior Vice President and Chief Financial Officer
(principal financial officer)

Group Vice President & Corporate Controller
(principal accounting officer)

Director

Chairman of the Board and Chief Executive Officer

Director

100

SHAREHOLDERS: EQ Shareowner Services is Registrar and Transfer Agent for Kroger’s common
shares. For questions concerning payment of dividends, changes of address, etc., individual
shareholders should contact:

EQ Shareowner Services

P. O. Box 64854

Saint Paul, MN 55164-
0854 Toll Free 1-855-
854-1369

Shareholder questions and requests for forms available on the Internet should be directed to:
www.shareowneronline.com.

FINANCIAL INFORMATION: Call (513) 762-1220 (option “1”) to request printed financial
information, including Kroger’s most recent report on Form 10-Q or 10-K, or press release. Written
inquiries should be addressed to Shareholder Relations, The Kroger Co., 1014 Vine Street,
Cincinnati, Ohio 45202-1100. Information also is available on Kroger’s corporate website at
ir.kroger.com.

Kroger has a variety of plans under which employees may acquire common shares of Kroger.
Employees of Kroger and its subsidiaries own shares through a profit sharing plan, as well as 401(k)
plans and a payroll deduction plan called the Kroger Stock Exchange. If employees have questions
concerning their shares in the Kroger Stock Exchange, or if they wish to sell shares they have
purchased through this plan, they should contact:

Computershare Plan
Managers PO Box 505039
Louisville, KY 40233-
5039

Phone 800 872 3307

Questions regarding Kroger’s 401(k) plans should be directed to the employee’s Human
Resources Department or 1-800-2KROGER. Questions concerning any of the other plans should be
directed to the employee’s Human Resources Department.

E X E C U T I V E O F F I C E R S

Mary Ellen Adcock
Senior Vice President, Operations

Carin L. Fike
Vice President and Treasurer

Stuart W. Aitken
Senior Vice President and Chief
Merchandising & Marketing Officer

Todd A. Foley
Group Vice President, Controller

Gabriel Arreaga
Senior Vice President

Valerie L. Jabbar
Senior Vice President

Timothy A. Massa
Senior Vice President and
Chief People Officer

W. Rodney McMullen
Chairman of the Board and
Chief Executive Officer

Gary Millerchip
Senior Vice President and
Chief Financial Officer

Yael Cosset
Senior Vice President and
Chief Information Officer

Kenneth C. Kimball
Senior Vice President

Christine S. Wheatley
Senior Vice President, General
Counsel and Secretary

O P E R A T I N G U N I T H E A D S

Colleen Juergensen
Central Division

Todd A. Kammeyer
Fred Meyer Stores

Ann M. Reed
Cincinnati Division

David W. Richard
QFC

Bryan H. Kaltenbach
Food 4 Less

Thomas L. Schwilke
Ralphs

Joe Kelley
King Soopers/City Market

Kenneth C. Kimball
Smith’s

Colleen R. Lindholz
Kroger Health

Michael Marx
Roundy’s

Lori Raya
Mid-Atlantic Division

Keith Shoemaker
Dallas Division

Victor Smith
Atlanta Division

Jeff B. Talbot
Kroger Personal Finance

Nicholas Tranchina
Murray’s Cheese

Dana Zurcher
Columbus Division

Jake Cannon
Louisville Division

Micheal E. Cristal
Delta Division

Tammy DeBoer
Harris Teeter

Ken DeLuca
Michigan Division

Steve Dreher
Dillons Food Stores

Monica Garnes
Fry’s Food & Drug

Laura Gump
Houston Division

Sonya Hostetler
Nashville Division

Erik Jensen
Home Chef

2
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www.thekrogerco.com

The Kroger Co.

1014 Vine Street · Cincinnati, Ohio 45202 · 513-762-4000