The Kroger Co Annual Report 2023

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FY2023 Annual Report · The Kroger Co

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Notice of 2024 Annual Meeting of Shareholders

2024 Proxy Statement

and

2023 Annual Report on Form 10-K

Dear Fellow Shareholders,

I am incredibly inspired by what Kroger and our associates accomplished in 2023. During a time of ongoing
economic uncertainty, our associates delivered more value and more access to fresh food for millions of people
across America. When our customers needed us most, we are there with the affordable meals their families want and
love.

After four decades in the retail industry, I can confidently say few things remain constant. My colleagues often hear
me remark that a few of those things are people’s need to eat, our commitment to serving our customers and retail’s
ever-evolving nature.

I have taken a lot of time to reflect this past year. And on the heels of a global pandemic and the challenged
operating environment that followed, it’s increasingly clear I need to add Kroger’s character as a company to that
list of constants.

Kroger’s fundamental business model – to lower prices and make more fresh food accessible to more families – has
not changed. Our commitment to creating a best-in-class working environment for our associates and investing in
their long-term success has not changed. Our deep ties with local communities that inspire us to think differently
about how to feed every family in need has not changed.

For more than 140 years, Kroger has been there for our customers, our associates and our communities – and when
each of these stakeholders is served well, our shareholders also benefit. We continue to demonstrate that we have the
right operating model, the curiosity to adapt to a changing environment and the fortitude to solve difficult problems.

Kroger’s foundation is stable and strong, and we are well-positioned to continue growing, bringing value to
customers, creating exciting career opportunities for associates, providing much-needed food for our communities
and rewarding our shareholders for many years to come.

Being a leader in the retail industry, offering affordable groceries to more customers, industry-leading benefits to
more associates and life-changing investments to more communities isn’t easy. I firmly believe Kroger, supported
by our amazing associates, can – and will – do it.

2023 in Review
Customers experienced continued economic uncertainty throughout last year. Facing a combination of reducing
SNAP benefits, increasing interest rates and decreasing savings, we made the right choices to help families stretch
their dollars. We believe everyone deserves access to fresh, healthy food, with zero compromise on convenience and
selection, no matter where they live and what their budget is.

As our results demonstrate, our Leading with Fresh, Accelerating with Digital strategy and focus areas of Fresh, Our
Brands, Personalization and Seamless provides us the flexibility we need to operate in a challenged business
environment while serving our customers and associates.

During the year, we:

• Achieved positive identical sales growth of 0.9% without fuel, and an underlying identical sales growth

excluding the effects of the Express Scripts termination, and without fuel, of 2.3%;

• Delivered $5 billion of adjusted FIFO operating profit;
• Grew digital business to $12 billion in annual sales; and
•

Increased average hourly wages to nearly $19 or nearly $25 with comprehensive benefits, which is a 33%
increase in rate in the last five years.

And we continue to deliver for our shareholders. On a three-year basis, Kroger’s adjusted net earnings per diluted
share has grown at a compounded annual growth rate of 9.5%, which supported a total shareholder return of 42.5%
during the same period. In comparison, the S&P 500 TSR was 39.9% over the same three-year period.

I’d like to share more about how we improved across our business in 2023 and the ways we will continue to grow in
the future.

Leading with Fresh
Fresh products remain at the center of our customers’ plates. Whether shoppers are making a nutritious salad filled
with seasonal ingredients, flipping homemade burgers at a backyard cookout or indulging in our signature Murray’s
Cheese with a glass of wine, fresh food makes every meal better. And we are fulfilling our commitment to bring the
freshest items to our customers, no matter how they shop.

With more than 2,100 End-to-End Fresh-certified stores, our customers’ produce has more days of freshness in their
homes. This means shoppers can enjoy produce at its peak for longer, which leads to less food waste and healthier
meals. The stores that implemented End-to-End Fresh increased sales in the produce department and across the
entire store. We are delivering on our commitment to provide fresher foods, and our customers are noticing and
rewarding us with their loyalty.

Beyond our produce aisles, we have a renewed focus on fresh flavors and convenient meals. Our customers are more
curious about food than ever before, which makes our work a lot more fun. In 2023, Kroger launched Mercado, a
new Hispanic-inspired brand, under the Our Brands product roster. Boasting more than 50 products, this line is the
perfect example of our innovative teams bringing exciting flavors to our customers at an approachable price point.
Our Brands will launch more than 800 new products in 2024, providing more opportunities for customers to explore
our outstanding portfolio of beloved brands.

With busy schedules pushing families to do more with less time, customers are demanding more convenience meals.
Whether it’s a quick dinner for the whole family after school or a couple looking to substitute overpriced takeout
with a simple alternative, Kroger is finding more ways to capture our fair share of convenience meals typically
dominated by restaurants.

And we cannot conclude a conversation about fresh without noting the growth and opportunity Kroger Health offers
to improve our customers’ lives. Every day, we see customers struggling with diseases that could be prevented or
slowed by minor changes in their diets. By encouraging customers and patients to embrace a Food as Medicine
mindset, thinking differently about the food they eat, we hope to realize our goal to help everyone live healthy and
thriving lives.

Accelerating with Digital
Customers continue to shop with Kroger across all our channels – from in-store and Pickup to Delivery. We provide
our customers the products they want, wherever they want them. We find that when our customers can shop with us
in a way that fits their schedule, they spend more of their total food budget with Kroger and are more satisfied with
our products.

Kroger will continue to invest in our digital experience because it is an important part of our plan to continue
growing. In fact, we expect another year of double-digit sales growth in our digital business. We are particularly
focused on our Kroger Delivery network where we continue to do the hard work to enhance the customer experience
and improve operating margins to close the gap with traditional brick-and-mortar stores.

As our digital business grows, we are also investing in stores. In 2024, we will build more new stores and kick off
more renovation projects than we have in the last five years. We believe our combination of brick-and-mortar stores
and fulfillment centers is the best way to bring more fresh food to more of America.

Whether customers shop in our stores or digitally, they are saving more through our personalized shopping
experience. We know our customers better than anyone. We understand their shopping patterns, know which
products their families love and can even predict new items they may enjoy. Our personalized promotions mean the
right customer is served the right offer at the right time. Last year alone, this work led to an 18% increase in digitally
engaged households.

The more our customers use our digital products, the more impactful our alternative profit streams can be. Our
customers benefit by stretching their budgets further, and CPGs benefit by confidently sharing their products with
interested shoppers. This model is succeeding, and it will fuel our growth well into the future.

Investing in Our Associates
Kroger’s associates are the heartbeat of our stores, our distribution and fulfillment centers, manufacturing plants and
our offices. They serve our customers by making memorable moments even more special with the right meal, bottle

of wine or bouquet of flowers. They serve each other by creating technology solutions that embrace simplification
and ensure their fellow associates have zero compromise in their work experience. They serve our communities by
sharing surplus food with food banks that feed families in need every day. I am so inspired by and appreciative of
each and every associate who creates a full, fresh and friendly experience, for every customer, every day.

Kroger is a place where associates can start their career, grow skills that will serve them for a lifetime or embrace a
new beginning; and we are proud to be one of the largest unionized workforces in America. Many of our store
managers join Kroger as hourly associates. We continue to invest in our associates’ wages and comprehensive
benefits. Today, Kroger’s average hourly rate is nearly $19 or nearly $25 with comprehensive benefits. This
represents a 33% increase in rate in the last five years.

Alongside historic investments in wages and benefits, we uplift our associates as whole people. We are committed to
growing tomorrow’s leaders through industry-leading programs, including our education benefit, which offers
associates up to $21,000 toward furthering their education. To date, this program supported the continuing education
of almost 7,000 associates, 94% of whom are hourly. We provide affordable, accessible healthcare as well as free
financial coaching for all associates. Our leaders listen deeply to their teams as we continue working towards our
goal of being an employer of choice.

Investing in Our Communities
As a founding member of Feeding America, Kroger is committed to ensuring every family has access to the fresh
food they need to thrive. In 2017, we launched our Zero Hunger | Zero Waste impact plan, with the bold vision of
communities free from hunger and a company with no waste. While we have a long way to go on this journey, I am
incredibly proud of the progress our associates have made.

In 2023, we achieved three billion meals donated to families across the U.S. – nearly two years ahead of our
expectations for this milestone. And last year, we increased our commitment to donate 10 billion meals by 2030,
following our merger with Albertsons Cos. Our surplus food program is one of the ways we are able to fuel this
achievement. Once again, our stores achieved 100% participation, donating surplus food to community food banks
across the country. Full participation in any program is a challenging milestone to achieve. And these are the kinds
of results we look forward to continuing as our operations teams find more ways they can amplify our Zero Hunger |
Zero Waste work.

Any important work will be difficult and take a long time to achieve. I am excited to see the progress our teams are
making, the relationships we are building and the change it will create for our people and the planet.

Update on our proposed merger with Albertsons Companies
As I shared in our fourth quarter earnings – Kroger has a clear track record on mergers, bringing lower prices, more
associate investment, improved customer experiences and deeper community connections. A company’s character is
reflected in the actions it takes when no one is looking, and Kroger has consistently demonstrated it follows through
on its commitments.

Our proposed merger with Albertsons Cos. will secure the future of good-paying union jobs. We added more than
100,000 union jobs the last 12 years – while the grocery industry as a whole lost hundreds of thousands of union
jobs. We are making historic investments to continuously improve our associates’ wages and comprehensive
benefits.

The retail industry is more competitive than ever – customers can choose to purchase groceries and eat meals from
the likes of Kroger, Walmart, Amazon (including Whole Foods), Costco, Aldi, dollar stores and restaurants. The
competitive alternatives are endless. Even after our merger closes, we will still have to earn our customers’ business
every meal, every day.

Later this summer, we look forward to defending our proposed merger in litigation because we know it will result in
the best outcomes for America’s families: lower prices, more choices, and a more secure future for unions.

Looking to the Future
Building on 2023, I look forward to everything we will accomplish together this year.

We are relentlessly focused on helping our customers find food inspiration. From home cooks on social media to
world-renowned chefs in restaurants across the globe, our teams are capturing trends to create irresistible products
that tempt the pickiest eaters, fit our customers’ varying budget needs and make their busy lives a little bit easier. All
with zero compromise on affordability, selection and convenience. Through this work, we are bringing our vision –
that when customers Think Food, they Think Kroger – to life.

We can’t accomplish this bold vision without our amazing associates. We appreciate and respect our associates, and
we invest in their success because we hope each one of them comes to us for a job and discovers a fulfilling career.
That’s why we are making historic investments in wages and benefits, including $2.4 billion in incremental wage
investments since 2018. We will continue to invest in our associates as we solidify our place as an employer of
choice.

Every day, we are driven by our passion for food and our passion for people. This passion is fueled by Our Purpose
– to Feed the Human Spirit. Retail is a challenging industry. We are looking for ways to make our products more
affordable, meet our customers where they are and do it better than our competitors. By grounding our work in a
desire to make the world a better place, we are inspired to give our best every day.

Our Purpose is best seen in our Zero Hunger | Zero Waste impact plan. In the U.S., one in seven people go to bed
hungry, while America throws away 40% of the food it creates. This is a problem with a solution. We are committed
to working with our fellow retailers, our amazing community food banks and the brightest entrepreneurs to find a
way to end hunger in America.

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

With gratitude,

Rodney McMullen
Chairman & CEO, The Kroger Co.

Safe Harbor Statement

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

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 2023 Zero Heroes:

Fred Meyer Division
Pat Sears
Anatoliy Bondarchuk

Mid-Atlantic Division
Dee Dee Hamby

Atlanta Division
Rachel Dickens
Pam Shepard
Maria Decastro

Central Division
Ashley Kelly
Brenda Gerardot

Fry’s Division
Angelica Portillo
Chuck McBride
Manisha Shah

Cincinnati-Dayton Division
Judi Clark

Houston Division
Debra Van Matre

King Soopers Division
Christopher Vellos
Robert Burton
Mubin Aslamy

Louisville Division
Lorrie Brosmer
Brittany Farmer
Tiana Hamilton
Stacey Harrison

Mariano’s Division
Tiffany Gue
Ebony Vazquez
Loran Henderson
Shannon Loria

Michigan Division
Tracey Regits

Columbus Division
Colleen Burrows

Dallas Division
Shana Brown
Romeka Myles

Delta Division
Sherbert Ware
Laura Sparks
Mae Watson

Dillons Division
Krista O’Bryant
Alejandra Martinez
Debbie Jackson

Food 4 Less Midwest
Elisa Jackson
Goyce Rates

Nashville Division
Linda Whitfield

Ralphs Division
Jackie Flores

Mar Berlanga-Cruz

Debra Sutton

Roundy’s Division
Sue Pagenkopf
Cyle Jewell

QFC Division
Kurt Mincin
Sheree Cunningham Muse

Smith’s Division
Jennifer Jenkins
Luana Webb
Tammy May

Food 4 Less
Maria Villalobos
Carina Martinez

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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.

Proxy Summary

Overview of Voting Matters and Board Recommendations

No. 1 Election of Directors

Proposals

No. 2 Advisory Vote to Approve Executive Compensation

No. 3 Ratification of Independent Auditors

Nos. 4 – 7 Shareholder Proposals

Board Recommendation

FOR
Each Director Nominee
recommended by
your Board

FOR

AGAINST
Each Proposal

Corporate Governance Highlights

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

Board Governance Practices

✓ Strong Board oversight of enterprise risk.

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

✓ Commitment to Board refreshment and diversity.

✓ 5 of 11 director nominees are women.

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

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

Director.

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

✓ All five Board Committees are fully independent.

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

independent third party.

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

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

planning.

✓ Balanced tenure.

✓ Robust shareholder engagement program.

✓ Robust code of ethics.

Environmental, Social, & Governance (ESG) Practices

✓ Long-standing Board Committee dedicated to oversight of topics related to corporate responsibility—

Public Responsibilities Committee — formed in 1977.

o Amended the Committee Charter in 2021 to more specifically reflect the Committee’s focused and

prioritized approach to material topics related to sustainability and social impact

✓ Annual ESG report sharing progress on our goals for Kroger’s ESG strategy and Zero Hunger | Zero Waste
impact plan, including Food Access & Affordability, Health and Nutrition, Climate Impact, Waste and
Circularity, and Responsible Sourcing.

o The 2023 ESG report represented the 17th year of describing our progress and initiatives regarding

sustainability and other matters of corporate responsibility

Includes data-focused disclosures informed by frameworks consistent with shareholder
expectations:

▪ SASB’s Food Retailers and Distributors Standard

▪ GRI Global Sustainability Reporting Standards

▪ Task Force on Climate-related Financial Disclosures (TCFD) framework

✓ Ongoing engagement with shareholders and other stakeholders to listen and learn from diverse perspectives

on a wide range of sustainability and social impact topics.

Shareholder Rights

✓ Annual director election.

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

✓ No poison pill.

✓ Shareholders have the right to call a special meeting.

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

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

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

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

Compensation Governance

✓ Robust clawback and recoupment policy in compliance with NYSE listing rules.

✓ Pay program tied to performance and business strategy.

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

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

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

officers.

✓ No tax gross-up payments to executives.

Environmental, Social, & Governance (ESG) Strategy

Kroger’s ESG Strategy is called Thriving Together. This strategy reflects the evolution of the Company’s long

history of operating responsibly, advancing economic opportunity and sustainability in our own operations and
supply chain, and giving back meaningfully to our communities.

Our objective is to achieve positive and lasting change through a shared-value framework that benefits people

and our planet and creates more resilient systems for the future. The centerpiece of Kroger’s strategy is our Zero

Hunger | Zero Waste social and environmental impact plan. Introduced in 2017, Zero Hunger | Zero Waste is an
industry-leading platform for collective action and systems change at global, national, and local levels.

Our strategy aims to address material topics of importance to our business and key stakeholders, including our
associates, customers, shareholders, and others. Key topics — informed by a structured materiality assessment and
engagement with our shareholders and other stakeholders — align to three strategic pillars: People, Planet and
Systems. Please see more details here in Kroger’s annual ESG Report: https://www.thekrogerco.com/wp-
content/uploads/2023/09/Kroger-Co-2023-ESG-Report_Final.pdf. The information on, or accessible through, this
website is not part of, or incorporated by reference into, this proxy statement.

Director Nominee Highlights

2024 Director Nominee Snapshot

Diversity and Tenure

Skills and Experience

Key Attributes and Skills of All Kroger Director Nominees

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

duties

• 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

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

• Comprehension of the responsibility of a public

company director and the fiduciary duties owed to
shareholders

• Demonstrated focus on promoting equality

• 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

•

2023 Compensation Highlights

Executive Compensation Philosophy

Executive Summary

We delivered strong performance in 2023. Kroger achieved strong results in 2023 as we executed
on our Leading with Fresh and Accelerating with Digital strategy, building on growth in 2021 and
2022. We are delivering a fresh, affordable, and seamless shopping experience for our customers,
with zero compromise on quality, selection, or convenience. We are delivering on our financial
commitments through our strong, resilient Value Creation Model. In 2023, we achieved financial
performance results of ID sales, without fuel, of 0.9% with underlying ID sales without fuel of 2.3%1,
and adjusted FIFO operating profit, including fuel, of $5.0 billion2.

Our executive compensation program aligns with long-term shareholder value creation. 92% of
our CEO’s target total direct compensation and, on average, 84% of the other NEOs’ compensation is
at risk and performance-based, tied to achievement of performance targets that are important to our
shareholders or our long-term share price performance.

The annual performance incentive was earned below target. The annual incentive program, based
on a grid of identical sales, excluding fuel, and adjusted FIFO operating profit, including fuel, paid
out at 24.02% of target, in line with the goals and targets set by the Committee.

The long-term performance incentive payout reflects alignment with performance over fiscal
years 2021, 2022, and 2023. Long-term performance unit equity awards granted in 2021 and tied to
commitments made to our investors and other stakeholders regarding long-term sales growth,
adjusted FIFO operating profit growth, free cash flow generation, our commitment to Fresh, and
relative Total Shareholder Return were earned at 83.34% of target.

We prioritized investment in our people. We strive to create a culture of opportunity for more than
414,000 associates and take seriously our role as a leading employer in the United States. In 2023, we
invested more than ever in our associates by continuing to raise our average hourly wage to nearly
$19, or nearly $25, including industry-leading benefits.

1 ID Sales without fuel would have grown 2.3% in 2023 if not for the reduction in pharmacy sales from the termination of our agreement with
Express Scripts effective December 31, 2022.
2 See pages 29-36 of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024, filed with the SEC on April 2, 2024, for a
reconciliation of GAAP operating profit to adjusted FIFO operating profit.
12

our associates who supervise a team of others, which range from store department leaders through our
NEOs. These performance goals are factored into compensation decisions for these leaders, including
salary increases and the amount of the annual grant of equity awards.

Summary of Key Compensation Practices

To achieve our objectives, we seek to ensure that compensation is competitive and that there is a direct link

between pay and performance. To do so, we are guided by the following principles:

• Compensation must be designed to retract and retain the individuals to be an executive at Kroger;
• A significant portion of pay should be performance-based, with the percentage of total pay tied to

performance increasing proportionally with an executive’s level of responsibility;

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

superior performance, including both a short- and long-term focus;

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

ownership to align the interests of executives and shareholders;

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

measured against metrics that directly drive our business strategy;

• Compensation plans should provide a direct line of sight to company performance;
• Compensation programs should be aligned with market practices; and
• Compensation programs should serve to both motivate and retain talent.

Named Executive Officers (NEOs) for 2023

For the 2023 fiscal year ended February 3, 2024, the NEOs were:

Name

Title

W. Rodney McMullen

Chairman and Chief Executive Officer

Gary Millerchip

Stuart W. Aitken

Yael Cosset

Senior Vice President and Chief Financial Officer

Senior Vice President and Chief Merchant & Marketing Officer

Senior Vice President and Chief Information Officer

Timothy A. Massa

Senior Vice President and Chief People Officer

Fellow Kroger Shareholders:

Notice of 2024 Annual Meeting of Shareholders

We are pleased to invite you to join us for Kroger’s 2024 Annual Meeting of Shareholders on June 27, 2024 at
11:00 a.m. eastern time. The 2024 Annual Meeting of Shareholders will once again be a completely virtual
meeting conducted via webcast. We believe this is the most effective approach for enabling the highest
possible attendance.

You will be able to participate in the virtual meeting online, vote your shares electronically, and submit questions
during the meeting by visiting www.virtualshareholdermeeting.com/KR2024.

When:
Where:
Items of Business:

June 27, 2024, at 11:00 a.m. eastern time.
Webcast at www.virtualshareholdermeeting.com/KR2024

1. To elect 11 director nominees
2. To approve our executive compensation, on an advisory basis.
3. To ratify the selection of our independent auditor for fiscal year 2024.
4. To vote on four shareholder proposals, if properly presented at the meeting.
5. To transact other business as may properly come before the meeting.

Who can Vote:

Holders of Kroger common shares at the close of business on the record date April 30, 2024 are
entitled to notice of and to vote at the meeting.

How to Vote:

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

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

card, voting instruction form, or notice.

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

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

availability of proxy materials, or voting instruction form.

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

www.virtualshareholdermeeting.com/KR2024.

Attending the
Meeting:

Shareholders holding shares at the close of business on the record date may attend the virtual
meeting. You will be able to attend the Annual Meeting, vote and submit your questions in
advance of and real-time during the meeting via a live audio webcast by visiting
www.virtualshareholdermeeting.com/KR2024. To participate in the meeting, you must have
your sixteen-digit control number that is shown on your Notice of Internet Availability of Proxy
Materials or on your proxy card if you receive the proxy materials by mail. There is no physical
location for the Annual Meeting. You may only attend the Annual Meeting virtually.

Our Board of Directors unanimously recommends that you vote “FOR ALL” of Kroger’s director
nominees on the proxy card, “FOR” the management proposals 2 and 3, and “AGAINST” the shareholder
proposals 4 through 7.

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

meeting.

May 15, 2024
Cincinnati, Ohio

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

Proxy Statement

May 15, 2024

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

(“Kroger”, “we”, “us”, “our”) in connection with the solicitation of proxies by the Board of Directors of Kroger (the
“Board”) for use at the Annual Meeting of Shareholders to be held on June 27, 2024 at 11:00 a.m. eastern time, and
at any adjournments thereof. The Annual Meeting will be held virtually and can be accessed online at
www.virtualshareholdermeeting.com/KR2024. There is no physical location for the 2024 Annual Meeting of
Shareholders.

Our principal executive offices are located at 1014 Vine Street, Cincinnati, Ohio 45202-1100. Our telephone
number is 513-762-4000. This notice, proxy statement, and annual report, and the accompanying proxy card are first
being sent or given to shareholders on or about May 15, 2024.

Important Notice Regarding the Availability of Proxy Materials for the Shareholder
Meeting to be Held on June 27, 2024

The Notice of 2024 Annual Meeting, Proxy Statement and 2023 Annual Report and the means to vote by internet
are available at www.proxyvote.com.

Kroger 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 oversight of topics related to corporate responsibility—

Public Responsibilities Committee — formed in 1977.

o Amended the Committee Charter in 2021 to more specifically reflect the Committee’s focused and

prioritized approach to material topics related to sustainability and social impact

o The 2023 ESG report represented the 17th year of describing our progress and initiatives regarding

sustainability and other matters of corporate responsibility

Includes data-focused disclosures informed by frameworks consistent with shareholder
expectations:

▪ SASB’s Food Retailers and Distributors Standard

▪ GRI Global Sustainability Reporting Standards

▪ Task Force on Climate-related Financial Disclosures (TCFD) framework

✓ Ongoing engagement with shareholders and other stakeholders to listen and learn from diverse perspectives

on a wide range of sustainability and social impact topics.

Shareholder Rights

✓ Annual director election.

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

✓ No poison pill.

✓ Shareholders have the right to call a special meeting.

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

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

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

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

Compensation Governance

✓ Robust clawback and recoupment policy in compliance with NYSE listing rules.

✓ Pay program tied to performance and business strategy.

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

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

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

officers.

✓ No tax gross-up payments to executives.

Environmental, Social, & Governance (ESG) Strategy

Kroger’s ESG Strategy is called Thriving Together. This strategy reflects the evolution of the Company’s long

history of operating responsibly, advancing economic opportunity and sustainability in our own operations and
supply chain, and giving back meaningfully to our communities.

Our objective is to achieve positive and lasting change through a shared-value framework that benefits people

and our planet and creates more resilient systems for the future. The centerpiece of Kroger’s strategy is our Zero
Hunger | Zero Waste social and environmental impact plan. Introduced in 2017, Zero Hunger | Zero Waste is an
industry-leading platform for collective action and systems change at global, national, and local levels.

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

Living Our Purpose: Food Access, Health, & Nutrition

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

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

• We serve millions of customers daily with low prices, special promotions and personalized offers to help

stretch budgets and make cooking at home more delicious and affordable.

• We offer customers easy ways to enjoy fresh, nutritious foods and live a healthier lifestyle when shopping
with Kroger in stores and online, including through health services offered by our pharmacies, The Little
Clinic and our dietitians.

• Kroger has established processes to manage surplus food safely and efficiently, directing as much as
possible to feed people in our communities. Since introducing Zero Hunger | Zero Waste in 2017,
associates have rescued nearly 696 million pounds of surplus food to help end hunger in our communities.

•

In the same period, Kroger directed a total of $1.5 billion in charitable giving for hunger relief in our
communities.

• With food and funds combined, Kroger directed 3.2 billion meals to our communities since 2017. We

achieved our goal to donate 3 billion meals by 2025 nearly two years ahead of schedule.

Living Our Values: Diversity & Inclusion

We offer access to employment, benefits, and more, providing good jobs with opportunities for advancement
for individuals ages 15 to 95 with a wide range of experience, skills, and career aspirations. Many associates come
to us for a part-time job and discover a fulfilling career. We strive to hire people who reflect the communities we
serve and create a respectful and welcoming work environment where everyone can thrive.

We continue to implement Kroger’s Framework for Action, a plan to accelerate and promote greater change in

the workplace and communities we serve. As part of this plan, we:

• Disclose the company’s EEO-1 report.

•

Include diverse candidates in every external executive officer and Board director search.

• Build an inclusive culture through our hiring, development and advancement processes. We maintain

recruiting relationships with a wide range of organizations, including diversity networks, historically Black
colleges and universities, Hispanic-serving institutions, military organizations, neurodiverse groups, and
others.

• Engage and support diverse-owned national and local suppliers.

• Advance inclusion at national and local levels with strategic charitable giving and community-based

initiatives, including $7.6 million in grants from The Kroger Co. Foundation’s Racial Equity Fund.

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

Climate Impact

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

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

• Kroger’s current commitment is to reduce Scope 1 and 2 GHG emissions by 30% by 2030 using a 2018

baseline. We are in the process of reviewing this GHG reduction target against the requirements of the
Science Based Targets initiative.

• Reducing food waste is another way Kroger reduces climate impacts. In 2022, we continued to reduce retail
food waste generated, achieving a cumulative reduction of 26.2% vs. 2017. In 2023, we introduced a new
retail food waste recycling solution to accelerate progress toward our goal of achieving 95%+ food waste
diversion from landfill.

Resource Conservation

As a responsible business, we conserve natural resources to help safeguard people and our planet. Our current

goal is to divert 90% or more of waste from landfills company-wide and to identify alternative methods of waste
management.

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

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

• Kroger continues to work with TerraCycle to offer a first-of-its-kind recycling program for flexible plastic
packaging across the Our Brands portfolio. Kroger customers can collect flexible snack and chip bags,
pouches, pet food packaging, and more — items typically not eligible for curbside recycling — for easy and
free mail-in recycling.

• To protect biodiversity and advance more sustainable agriculture, Kroger set a new nature-based goal to

require all fresh produce suppliers to use Integrated Pest Management practices by the end of 2028 or 2030,
based on the grower’s size.

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

Business Integration

Kroger is committed to strong corporate and ESG governance. Business and functional leaders are engaged in
our sustainability and social impact strategy and accountable for results. Operationalizing this strategy is a journey;
however, we believe our centralized structure, vertical integration and commitment to responsible sourcing enables
our progress.

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

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

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

Company’s ESG strategy and key topics. In 2023, areas of focused engagement included Kroger’s climate-
and nature-related goals and approach to responsible sourcing.

• A core sustainability and social impact team leads internal cross-functional working groups focused on

policy, issues management and strategy implementation for key topics, including food and product access
and affordability, climate impacts, sustainable packaging, and supply chain 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 evolve our human rights due diligence framework and social compliance program to
ensure suppliers uphold the Kroger Vendor Code of Conduct. In 2023, Kroger published reports from two
human rights impact assessments in different sectors of our global supply chain and began onboarding
suppliers to the Ethical Charter Implementation Plan to respect human rights for farmworkers in U.S.
produce and floral supply chains.

• We offer a wide assortment of Fair Trade Certified products in the Our Brands assortment to support

communities around the world.

• Our long-standing commitment to seafood sustainability includes partnerships and programs aimed at

improving marine ecosystems through conservation and fishery improvement practices.

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

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

• We continue to transition our approach to animal welfare to reflect the Five Domains of Animal Welfare,

an internationally respected framework that emphasizes current animal science and welfare outcome-based
standards.

Proposals to Shareholders

Item No. 1 – Election of Directors

You are being asked to elect 11 director nominees for a one-year term. The Committee memberships stated
below are those in effect as of the date of this proxy statement.

FOR

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

As of the date of this proxy statement, Kroger’s Board of Directors consists of 11 members. Each nominee, if

elected at the 2024 Annual Meeting, will serve until the annual meeting in 2025 or until his or her successor has
been elected by the shareholders or by the Board pursuant to Kroger’s Regulations, and qualified. Each of our
director nominees identified in this proxy statement has consented to being named as a nominee in our proxy
materials and has accepted the nomination and agreed to serve as a director if elected by Kroger’s shareholders.

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

The experience, qualifications, attributes, and skills that led the Corporate Governance Committee and the

Board to conclude that the following individuals should serve as directors are set forth opposite each individual’s
name. The chart below shows the skills and experience that we consider important for our directors in light of our
current business, strategy, and structure. In addition, all of our Director Nominees demonstrate the following
qualities:

Key Attributes and Skills of All Kroger Director Nominees

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

duties

• 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

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

• Comprehension of the responsibility of a public

company director and the fiduciary duties owed to
shareholders

• Demonstrated focus on promoting equality

• 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

•

Board Nominees for Directors for Terms of Office Continuing until 2024

Age
64

Director Since

2014

Committees:
Finance
Public Responsibilities1

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

Nora A. Aufreiter

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

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

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 Howard University Center for
Supply Chain Excellence and the George Washington University National
Advisory Council for the School of Engineering. He is also a member of the
Executive Leadership Council.

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

Age
61

Director Since

2021

Committees:
Compensation and Talent
Development
Public Responsibilities

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

Elaine L. Chao

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

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

Age
71

Director Since

2021

Committees:
Corporate Governance
Public Responsibilities

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

Anne Gates

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

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

Age
64

Director Since

2015

Committees:
Audit1
Corporate Governance

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

1 Denotes Chair of Committee

Karen M. Hoguet

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

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

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
67

Director Since

2019

Committees:
Audit
Finance1

Qualifications:
Business Management
Retail
Consumer
Financial Expertise
Risk Management
ESG

Age
63

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, 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
70

Director Since

1997

Committees:
Compensation & Talent
Development1
Corporate Governance

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

Age
68

Director Since

2006

Committees:
Audit
Corporate Governance1
Public Responsibilities

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

1 Denotes Chair of Committee

Age
60

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, the Audit and Risk
Committee, and the Sustainability Committee. She is also a supervisory director
of Trivium Packaging B.V., a sustainable packaging company.

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

Mark S. Sutton

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

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

Ashok Vemuri

Mr. Vemuri was Chief Executive Officer and a Director of Conduent
Incorporated, a global digital interactions company, from its inception as a
result of the spin-off from Xerox Corporation in January 2017 to 2019. He
previously served as Chief Executive Officer of Xerox Business Services, LLC
and as an Executive Vice President of Xerox Corporation from July 2016 to
December 2016. Prior to that, he was President, Chief Executive Officer, and a
member of the Board of Directors of IGATE Corporation, a New Jersey-based
global technology and services company now part of Capgemini, from 2013 to
2015. Before joining IGATE, Mr. Vemuri spent 14 years at Infosys Limited, a
multinational consulting and technology services company, in a variety of
leadership and business development roles and served on the board of Infosys
from 2011 to 2013. Prior to joining Infosys in 1999, Mr. Vemuri worked in the
investment banking industry at Deutsche Bank and Bank of America. In the past
five years, he served as a director of Conduent Incorporated. Mr. Vemuri is a
member of the Board of Directors of Opal Fuels and is chair of the Audit
Committee.

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

Age
62

Director Since

2017

Committees:
Compensation & Talent
Development
Finance

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

Age
56

Director Since
2019

Committees:
Audit
Finance

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

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

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; and
•

leading annual CEO evaluation process.

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

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

independence;

insight into corporate governance;

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

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

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

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, under which directors retire at the annual meeting
following their 72nd birthday.

Outside Board Service

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

Board Diversity

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

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

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

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

ethnic diversity on our Board. Further, the Board aims to foster a diverse and inclusive culture throughout the
Company and believes that the Board nominees are well suited to do so. The Corporate Governance Committee and
Board believe that our director nominees for election at our 2024 Annual Meeting bring to our Board a variety of
different experiences, skills, and qualifications that contribute to a well-functioning diverse Board that effectively
oversees the Company’s strategy and management. The charts below show the diversity of our director nominees:

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, 2023 meetings, and responsibilities of each Committee are summarized below:

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

Meetings in 2023: 5

Members:

Anne Gates, Chair
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,
General Counsel, and Secretary, Vice President and Chief
Ethics & Compliance Officer, and Senior Vice President and
Chief Financial Officer individually at least once per year

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

Meetings in 2023: 4

Members:

Clyde R. Moore, Chair
Kevin M. Brown
Amanda Sourry
Mark S. Sutton

Corporate Governance Committee

Meetings in 2023: 2

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 the 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 2023: 4

Members:

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

Public Responsibilities Committee

Meetings in 2023: 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

food and operational waste
food access
responsible sourcing

✓ climate impacts
✓ packaging
✓
✓
✓
✓ supplier diversity
✓ people safety, food safety, and pharmacy safety
• Examines and reviews the Company’s Sustainability and

Social Impact strategy

• Reviews the Company’s community engagement and

philanthropy

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

Brand stewardship

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

Shareholder Engagement

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

priority for both our Board and management team. We have a longstanding history of engaging with our
shareholders through our investor relations program and our year-round governance outreach program, including
participation for our independent directors. In 2023, under the direction of the Board, we requested engagement
meetings with 39 shareholders representing 59% of our outstanding shares and subsequently met with 16
shareholders representing 39% of our outstanding shares (many of those shareholders we met with more than once).
Some investors we contacted either did not respond or confirmed that a discussion was not needed at that time.

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

Business Strategy

• Kroger’s growth strategy, priorities, and value drivers

• Our strong value creation model and recent performance

ESG Practices & Disclosures

• Discussions with investors and NGOs help inform our ESG strategy, Thriving Together, our topic

management approach, and long-term sustainability and social impact goals

• Board oversight of ESG strategy and updated Committee responsibilities

• Annual ESG reporting and disclosures, including our alignment with the TCFD, SASB, and GRI reporting

frameworks

• The centerpiece of our strategy is Zero Hunger | Zero Waste, an industry-leading platform for collective
action and systems change to end hunger in our communities and eliminate waste across our Company

Human Capital Management

• Our Framework for Action includes steps we are taking to ensure our workforce reflects the communities

we serve

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

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

• Workforce diversity reporting, including EEO-1 demographic disclosure and annual pay studies

• Board oversight of the Company’s approach to respecting human rights for workers in our supply chain

Compensation Structure

• Overview of compensation program design and alignment of pay and performance

• Consideration of short- and long-term metrics, including financial and non-financial metrics, such as ESG

metrics

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

Board and Board Oversight

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

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

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

• Kroger’s latest formal ESG materiality assessment, conducted in alignment with principles of double
materiality, and discussions with environmentally and socially conscious investors and NGOs helped
inform our ESG strategy and long-term goals. Overall shareholders expressed appreciation for the
opportunity to have an ongoing discussion and were complimentary of Kroger’s ESG practices.
Specifically, shareholders recognized the actions we took to formalize our ESG strategy, Thriving
Together, and how our Board oversees this strategy, including our goals and initiatives. These
conversations provided valuable insights into our shareholders’ evolving perspectives, which were shared
with our full Board.

Board’s Response to Shareholder Proposals

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

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

In response to last year’s shareholder proposals voting outcomes, we have published our Statement on Pay
Equity which can be found at https://www.thekrogerco.com/wp-content/uploads/2024/03/Kroger-Statement-on-Pay-
Equity.pdf. The information on, or accessible through this website is not part of, or incorporated by reference, into
this proxy statement.

Director Nominee Selection Process

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

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

These criteria are:

•

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

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

•

highest standards of personal character and conduct;

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

•

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

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 2025
annual meeting, written notice must be submitted to Kroger’s Secretary, and received at our executive offices, in
accordance with Kroger’s Regulations, not later than March 31, 2025. Such notice should include the name, age,
business address, and residence address of such person, the principal occupation or employment of such person, the
number of Kroger common shares owned of record or beneficially by such person and any other information relating
to the person that would be required to be included in a proxy statement relating to the election of directors. The
Secretary will forward the information to the Corporate Governance Committee for its consideration. The Corporate
Governance Committee will use the same criteria in evaluating candidates submitted by shareholders as it uses in
evaluating candidates identified by the Corporate Governance Committee, as described above. See “Director
Nominee Selection Process.”

Additionally, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of
director nominees other than our nominees must provide notice to Kroger’s Secretary that sets forth the information
required by Rule 14a-19 of the Exchange Act no later than April 28, 2025, and must comply with the additional
requirements of Rule 14a-19(b).

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

2025 annual meeting of shareholders. To be eligible, shareholders must have owned at least 3% of our common
shares for at least three years. Up to 20 shareholders are able to aggregate for this purpose. Nominations must be
submitted to our Corporate Secretary at our principal executive offices no earlier than December 16, 2024 and no
later than January 15, 2025.

Corporate Governance Guidelines

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

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

Independence

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

•

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

The Board also considered that Kroger purchases from International Paper Company, where Mark Sutton is

Chairman and Chief Executive Officer and from Dell Technologies Inc. where Kevin Brown is an officer. The
Board determined that these transactions do no impair independence as they are in the ordinary course of business
on the same terms offered to similar purchases and do not exceed applicable independence thresholds.

Audit Committee Independence and Expertise

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

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

Code of Ethics

The Board has adopted The Kroger Co. Policy on Business Ethics, applicable to all officers, associates, and

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

Communications with the Board

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

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

Executive Officer Succession Planning

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

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

Attendance

The Board held 13 meetings in fiscal year 2023. During fiscal 2023, all incumbent directors attended at least

75% of the aggregate number of meetings of the Board and Committees on which that director served. Members of

the Board are expected to use their best efforts to attend all annual meetings of shareholders. All Board members
attended last year’s virtual annual meeting.

Independent Compensation Consultants

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

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

In fiscal 2023, Kroger paid Korn Ferry $399,000 for work performed for the Compensation Committee.
Kroger, on management’s recommendation, retained Korn Ferry to provide other services for Kroger in fiscal 2023
for which Kroger paid $962,453. These other services primarily related to the proposed merger with Albertsons,
salary surveys, coaching services, and Kroger Health review. The Compensation Committee expressly approved
Korn Ferry performing these additional services. After taking into consideration 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 2023, and no

member of the Compensation Committee is a former officer of Kroger or was a party to any related person
transaction involving Kroger required to be disclosed under Item 404 of Regulation S-K. During fiscal 2023, none of
our executive officers served on the board of directors or on the compensation committee of any other entity that has
or had executive officers serving as a member of Kroger’s Board of 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
Committee incorporates its risk oversight function into its regular reports to the Board and also discusses with
management its policies with respect to risk assessment and risk management.

Cybersecurity Governance

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

our compliance risks and actions taken to mitigate that risk. In addition, the Audit Committee is charged with
oversight of data privacy and cybersecurity risks. Protection of our customers’ data is a fundamental priority for our
Board and management team. Kroger’s CIO and CISO provide a quarterly update at each Committee meeting on
cybersecurity risks and related mitigating actions to the Audit Committee, meet with the full Board at least annually,
and inform the Committee immediately if a cybersecurity incident is deemed material. They report to the Audit
Committee and the Board on compliance and regulatory issues, provide updates concerning continuously-evolving
threats and mitigating actions, and present a NIST Cybersecurity Framework Scorecard. Additionally, the CIO and
CISO discuss and present strategies to address geopolitical threats that may impact operations as well as
technological changes, such as AI and quantum computing. In overseeing cybersecurity risks, the Audit Committee
focuses on aggregated, thematic issues with a risk-based approach. Oversight of cybersecurity risk incorporates
strategy metrics, third party assessments, and internal audit and controls. An independent third party also regularly
reports to the Audit Committee and the full Board on cybersecurity, and outside counsel advises the Board on best
practices for cybersecurity oversight by the Board, and the evolution of that oversight over time. Management also
reports on strategic key risk indicators, ongoing initiatives, and significant incidents and their impact. We experience
cybersecurity threats and incidents from time to time. We are not aware of any material risks from cybersecurity
threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably
likely to materially affect us, and we have not experienced a cybersecurity threat or incident that has materially
affected Kroger in at least the last three years. There can be no assurance that cybersecurity threats will not have a
material effect on us in the future.

For more information please see Item 1C. Cybersecurity in the Company’s Form 10-K for the year ended February
3, 2024, filed with the SEC on April 2, 2024.

Board Oversight of ESG Topics

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

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

Audit

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 strategy and goals

Public Responsibilities

• Environmental Sustainability
✓ Climate Impacts
✓ Resource Conservation
✓

Food Waste (Zero Waste)

• Social Impact

Food Access and Affordability (Zero Hunger)

✓
✓ Health & Nutrition
✓
Philanthropy
✓ Responsible Supply Chain & Sourcing

➢ Human Rights
➢ Animal Welfare

• Safety
✓
✓
✓

Food
People
Pharmacy
• Advocacy & Public Policy

✓ Government Relations
✓

Political action (KroPAC)

• Communications & Brand Stewardship

✓ Associate & External Communications

• Stakeholder Relations

Kroger’s commitment to corporate responsibility is not new. Our Public Responsibilities Committee was
established in 1977. For the past 17 years, our Company has prepared and produced an annual report describing our
progress and initiatives regarding sustainability and other key topics. For the most recent information, please visit
https://www.thekrogerco.com/esgreport/. The information on, or accessible through, this website is not part of, or
incorporated by reference into, this proxy statement.

In addition, our full Board oversees issues related to diversity and inclusion within the workplace. Diversity
and inclusion have been deeply rooted in Kroger’s values for decades. Our Human Resources & Labor Relations
function – with human resources professionals in place across our lines of business and retail divisions – leads our
Framework for Action and fosters an associate experience that reflects our values, measures progress toward goals,
and identifies potential opportunities for improvement.

2023 Director Compensation

Director Compensation

The following table describes the fiscal year 2023 compensation for independent directors. Mr. McMullen does

not receive compensation for his Board service.

Name

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
$122,839
$112,626
$104,627
$140,215
$133,007
$124,964
$172,610
$104,627
$104,627
$114,794

Stock Awards(1)
$198,528
$198,528
$198,528
$198,528
$198,528
$198,528
$198,528
$198,528
$198,528
$198,528

Change in Pension
Value and Nonqualified
Deferred
Compensation(2)
$0
$0
$0
$0
$0
—
$5,762
$0
$0
$0

Total
$321,367
$311,154
$303,155
$338,743
$331,535
$323,492
$376,900
$303,155
$303,155
$313,322

(1) Amounts reported in the Stock Awards column represent the aggregate grant date fair value of the annual
incentive share award, computed in accordance with FASB ASC Topic 718. On July 13, 2023, each
independent director then serving received 4,224 incentive shares with a grant date fair value of $198,528.

(2) The amount reported for Mr. Sargent represents preferential earnings on nonqualified deferred compensation.
For a complete explanation of preferential earnings, please refer to footnote 4 to the Summary Compensation
Table. Mr. Moore’s pension value decreased by $17,179 which represents the change in actuarial present value
of his accumulated benefit under the pension plan for independent directors. This change in value of
accumulated pension benefits is not included in the Director Compensation Table 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 2023 is primarily due to the
increase in the discount rate as well as the change in value due to aging, partially offset by the mortality
assumption change.

Annual Compensation

Each independent director receives an annual cash retainer of $105,000. The Lead Director receives an
additional annual retainer of $40,000 per year; the members of the Audit Committee each receive an additional
annual retainer of $10,000; the Chair of the Audit Committee receives an additional annual retainer of $25,000; and
the Chair of each of the other Committees receives an additional annual retainer of $20,000. Each independent
director also receives an annual grant of incentive shares (Kroger common shares) with a value of approximately
$200,000.

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

to attract and retain directors who meet the qualifications for service on the Board. Independent director
compensation was adjusted in 2023 and will be reviewed from time to time as the Corporate Governance Committee
deems appropriate.

Pension Plan

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

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

Nonqualified Deferred Compensation

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

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

Cash Deferrals

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

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

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

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

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

of Kroger common shares.

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

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

Incentive Share Deferrals

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

Director Stock Ownership Guidelines

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

more details on the Stock Ownership Guidelines, see page 62.

Beneficial Ownership of Common Stock

The following table sets forth the common shares beneficially owned as of April 30, 2024 by Kroger’s
directors, the NEOs, and the directors and executive officers as a group. The percentage of ownership is based on
727,594,870 of Kroger common shares outstanding on April 30, 2024. Shares reported as beneficially owned
include shares held indirectly through Kroger’s defined contribution plans and other shares held indirectly, as well
as shares subject to stock options exercisable on or before June 29, 2024. Except as otherwise noted, each beneficial
owner listed in the table has sole voting and investment power with regard to the common shares beneficially owned
by such owner. Unless otherwise indicated, the address of each of the beneficial owners listed below is c/o The
Kroger Co., Corporate Secretary, 1014 Vine Street, Cincinnati, OH 45202.

Name

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 (23 persons, including
those named above)

Amount and Nature of
Beneficial Ownership(1)
548,627
53,016
15,228
12,438
510,663
47,728
23,776
536,035
6,551,175
106,693
122,147
186,560
15,228
42,847
29,124
10,177,799

Options Exercisable on
or before June 29, 2024 –
included in column (a)
328,086
—
—

316,043
—
—
305,174
2,801,970
11,646
—
—
—
—
—
4,429,738

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

a group beneficially owned 1.4% of Kroger common shares.

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

shares.

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

independent directors in the following amounts: Ms. Aufreiter, 10,286; Ms. Chao, 8,354; Ms. Gates, 16,703;
Mr. Sargent, 61,649; Mr. Sutton, 7,080.

(4) This amount includes 2,075 shares held by Ms. Hoguet’s spouse. She disclaims beneficial ownership of these

shares.

The following table sets forth information regarding the beneficial owners of more than five percent of Kroger

common shares as of April 30, 2024 based on reports on Schedule 13G filed with the SEC.

Name

BlackRock, Inc.

The Vanguard Group

Address

50 Hudson Yards
New York, NY 10001
100 Vanguard Blvd.
Malvern, PA 19355

Amount and Nature of
Ownership

59,194,278(1)

81,623,904(2)

Percentage of Class

8.2%

11.35%

(1) Reflects beneficial ownership by BlackRock Inc., as of December 31, 2023, as reported on Amendment No. 16

to Schedule 13G filed with the SEC on January 25, 2024, reporting sole voting power with respect to
53,181,488 common shares, and sole dispositive power with regard to 59,194,278 common shares.

(2) Reflects beneficial ownership by The Vanguard Group as of December 29, 2023, as reported on Amendment

No. 9 to Schedule 13G filed with the SEC on February 13, 2024, reporting shared voting power with respect to
854,883 common shares, sole dispositive power of 78,809,048 common shares, and shared dispositive power of
2,814,856 common shares.

Related Person Transactions

The Board has adopted a written policy requiring that any Related Person Transaction may be consummated or
continue only if the Audit Committee approves or ratifies the transaction in accordance with the policy. A “Related
Person Transaction” is one (a) involving Kroger, (b) in which one of our directors, nominees for director, executive
officers, or greater than five percent shareholders, or their immediate family members, have a direct or indirect
material interest; and (c) the amount involved exceeds $120,000 in a fiscal year. Pursuant to our policy, our Audit
Committee has pre-approved transactions with Related Persons that in the ordinary course of business if the
aggregate amount involved in any fiscal year does not exceed the greater of $1,000,000 or 2 percent of such other
company’s consolidated gross revenues; provided that such transactions are reported to the Audit Committee at
regular committee meetings.

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

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

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

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

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

Our Named Executive Officers for Fiscal 2023

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 Merchant & Marketing Officer

Senior Vice President and Chief Information Officer

Timothy A. Massa

Senior Vice President and Chief People Officer

Fiscal 2023 Financial and Strategic Performance Highlights

Driven by our unwavering purpose to Feed the Human Spirit, Kroger achieved strong results in 2023 as we

executed on our Leading with Fresh and Accelerating with Digital strategy, building on growth in 2021 and 2022.
Our associates are customer-focused, delivering the products customers want, when and how they want them, with
zero compromise on quality, convenience, and selection.

In 2023, we achieved financial performance results of ID sales, without fuel, of 0.9%, with underlying ID sales
without fuel of 2.3%1 and adjusted FIFO operating profit of $5.0 billion. We have built a digital platform that offers
a seamless shopping experience, allowing customers to shift effortlessly between store, pickup and delivery
solutions. In 2023, we increased delivery sales, increased digitally engaged households, and grew loyalty as our
customers more deeply engaged with personalized coupons and fuel rewards.

Our associates enable our success, and we are committed to investing in theirs by continuing to improve wages,
comprehensive benefits, and career development opportunities. Over the last five years, we have invested more than
$2.4 billion in incremental wage investments.

Continued strategic efforts to streamline our operations allowed us to achieve cost savings greater than

$1 billion to balance these investments without compromising food affordability for our customers across our
communities.

As part of our Zero Hunger | Zero Waste social and environmental impact plan, in 2023, we donated nearly

455 million meals to feed families across America.

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

2023 Advisory Vote to Approve Executive Compensation and Shareholder Engagement

At the 2023 annual meeting, we held our annual advisory vote on executive compensation. Approximately 91%
of the votes cast were in favor of the advisory vote. As part of our ongoing dialogue with our shareholders regarding
governance matters, in 2023, we requested meetings with 39 shareholders representing 59% of our outstanding
shares during proxy season and off-season engagement and 16 shareholders representing 39% of our outstanding
shares accepted our invitation to share feedback. Some investors we contacted either did not respond or confirmed
that a discussion was not needed at that time.

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

During shareholder engagement, we specifically discuss our shareholders’ perspectives on ESG metrics in
executive compensation programs. Our investors are all supportive of decisions to incorporate ESG metrics, but
none are prescriptive about how to do so. Our investors share our view that a range of ESG matters are essential to
our current and future success, and acknowledge that ESG priorities are embedded into our strategic and operational
priorities. Management collects and reports the feedback to the Compensation Committee, and the Committee
decided, beginning in 2022, to integrate our core values of Diversity, Equity & Inclusion into compensation
decisions made for our associates who supervise a team of others, which range from store department leaders

1 ID Sales without fuel would have grown 2.3% in 2023 if not for the reduction in pharmacy sales from the termination of our agreement with
Express Scripts effective December 31, 2022.

through our NEOs. Specifically, one of several performance goals established for these associates and senior officers
relate to improvement in the Diversity, Equity, & Inclusion category score as measured by our annual Associate
Insights Survey and active mentorship and development of at least one other associate with a different background.
These performance goals are factored into compensation decisions for these associates and senior officers, including
salary increases and the amount of the annual grant of equity awards, consistent with our program design as
described herein.

2023 Compensation Program Overview

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

charts.

Fiscal Year 2023 CEO Compensation

The Compensation Committee establishes Mr. McMullen’s target direct compensation such that only 8% of his

compensation is fixed. The remaining 92% of target compensation is at-risk, meaning that the actual compensation
Mr. McMullen receives will depend on the extent to which the Company achieves the performance metrics set by
the Compensation Committee, and with respect to all of the equity vehicles, the future value of Kroger common
shares.

The table below compares fiscal 2023 to 2022 target direct compensation. Target total direct compensation is a
more accurate reflection of how the Compensation Committee benchmarks and establishes CEO compensation than
the disclosure provided in the Summary Compensation Table, which includes a combination of actual base salary
and annual incentive compensation earned in the fiscal year, the grant date fair market value of at-risk equity
compensation to be earned in future fiscal years, and the actuarial value of future pension benefits.

Mr. McMullen’s total target direct compensation shown below was based on our independent compensation

consultant’s examination of pay levels and the Committee’s intention to achieve median pay levels among our peer
group. Mr. McMullen’s base salary and target annual incentive remained unchanged in fiscal 2023. The only
increase was to his long-term equity compensation to position his total target direct compensation to market median.
Target total compensation, which is the sum of target annual compensation and target long- term compensation, is
positioned around market median.

($000s)

Annual

Target
Annual
Incentive
2,800
2,800

Year
2023
2022

Salary
1,400
1,400

Long-Term

Total
Annual
4,200
4,200

Performance
Units
6,250
5,750

Restricted
Stock
3,750
3,450

Stock
Options
2,500
2,300

Total
LTI
12,500
11,500

Target
TDC
16,700
15,700

Increase
+6.4%

CEO and Named Executive Officer Target Pay Mix

The amounts used in the charts below are based on 2023 target total direct compensation for the CEO and the

average of other NEOs. As illustrated below, 92% of the CEO’s target total direct compensation is at-risk. On
average, 84% of the other NEOs’ compensation is at risk.

CEO Pay Mix

Average of Other NEOs

Our Compensation Philosophy and Objectives

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

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

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

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

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

Kroger.

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

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

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

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

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

to align the interests of NEOs and shareholders.

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

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

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

• Compensation programs should be aligned with market practices.

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

Summary of Key Compensation Practices

What we do:

✓ Alignment of pay and performance

What we do not do:
× No employment contracts with executive officers

✓ Stock ownership guidelines for executives

× No special severance or change in control

✓ 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

programs applicable only to executive officers

× No cash component in long-term incentive plans

× No tax gross-up payments for executives

× No special executive life insurance benefit

× No re-pricing or backdating of stock options

without shareholder approval

× No guaranteed salary increases or bonuses

× No payment of dividends or dividend equivalents

until performance units are earned

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

Establishing Each Component of Executive Compensation

The Compensation Committee recommends, and the independent members of the Board determine, each
component of the CEO’s compensation. The CEO recommends, and the Compensation Committee determines, each
component of the other NEOs’ compensation. The Compensation Committee and the Board made changes to
compensation in March of 2023. Equity awards were granted in March and salary and annual incentive plan
increases were effective April 1, 2023.

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

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

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

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

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

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

Elements of Compensation

Salary

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

that is competitive with the market to attract and retain a high caliber leadership team. NEO salaries, effective April
1, 2022 and April 1, 2023 were as follows:

Name

W. Rodney McMullen

Gary Millerchip

Stuart W. Aitken

Yael Cosset

Timothy A. Massa

2022 Base Salary

$1,400,000

$825,000

$925,000

$825,000

$850,000

2023 Base Salary

$1,400,000

$900,000

$1,000,000

$875,000

$900,000

2023 Annual Incentive Plan

The NEOs participate in a corporate performance-based annual cash incentive plan. The corporate annual cash
incentive plan is a broad-based plan used across the Kroger enterprise. Approximately 54,000 associates are eligible
to receive incentive payouts based all or in part on the incentive plan described below. The value of annual cash
incentive awards that the NEOs earn each year is based upon Kroger’s overall company performance compared to
goals established by the Compensation Committee based on the business plan adopted by the Board of Directors.

A minimum level of performance must be achieved before any payout is earned, while a payout of up to 200%

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

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

results and the long-term success of the Company. Kroger’s success is based on a combination of factors, and
accordingly, the Compensation Committee believes that it is important to encourage behavior that supports multiple
elements of our business strategy.

NEO target incentive potentials for fiscal years 2022 and 2023, were as follows:

Name

2022 Target Annual Incentive

2023 Target Annual Incentive

W. Rodney McMullen

Gary Millerchip

Stuart W. Aitken

Yael Cosset

Timothy A. Massa

$2,800,000

$850,000

$775,000

$2,800,000

$950,000

$850,000

2023 Annual Incentive Plan Metrics

Metric

Rationale for Use

Sales and Profit Grid, Maximum Payout of 200% of Target

ID Sales, excluding Fuel

Adjusted FIFO Operating Profit, including Fuel

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

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

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

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

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

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

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

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

The goals established by the Compensation Committee were as follows:

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

ID Sales, excluding Fuel

)

≥4,983
M
≥5,083
$
(
≥5,183
≥5,283
≥5,383
≥5,483
≥5,583
≥ 5,683
≥5,783

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-1.30%
0%
10%
20%
30%
40%
55%
70%
100%
110%

0.95%
14%
25%
65%
75%
85%
95%
105%
115%
125%

3.20%
20%
45%
80%
90%
100%
110%
120%
130%
140%

5.45%
29%
60%
95%
105%
115%
125%
135%
155%
170%

7.70%
40%
75%
115%
130%
160%
170%
180%
190%
200%

2023 Annual Incentive Plan – Actual Results and Payout Percentage

Corporate Plan Metric

Identical Sales, excluding fuel
Adjusted FIFO Operating Profit, including fuel

2023 Performance(1)
0.9%
$5.0B

Total Payout

Payout

24.02%

(1) See grid above.

Following the close of the 2023 fiscal year, the Compensation Committee reviewed Kroger’s performance
against each of the metrics outlined above and determined the extent to which Kroger achieved those objectives. Our
performance compared to the goals established by the Compensation Committee resulted in a payout of 24.02% of
the participant’s incentive plan target for the NEOs, with the exception of Mr. Aitken.

Mr. Aitken’s annual bonus payout equaled 22.71% of his bonus potential because it included the corporate

annual plan described above and a team metric as follows. The merchandising team metric measured supermarket
ID sales excluding pharmacy and fuel, and supermarket selling gross dollars less shrink dollars for all departments
excluding pharmacy and fuel.

Corporate Annual Bonus Plan

Merchandising Team Metric

Total Payout

Payout Percentage

24.02 %

20.75 %

Weight

60 %

40 %

(24.02% x 0.6) + (20.75% x 0.4%) = 22.71%

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

officers, including the NEOs, and the independent directors retain that discretion for the CEO’s incentive payout if
they determine for any reason that the incentive payouts were not appropriate given their assessment of Company or
individual performance. No adjustments were made to the incentive payout amount in 2023.

As described above, the corporate annual incentive payout percentage is applied to each NEO’s incentive plan
target which is determined by the Compensation Committee, and the independent directors in the case of the CEO.
The actual amounts of performance-based annual incentive paid to the NEOs for 2023 are reported in the Summary
Compensation Table in the “Non-Equity Incentive Plan Compensation” column.

Long-Term Compensation Program

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

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

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

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

Each year, NEOs receive grants under the long-term compensation program, which is structured as follows:

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

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

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

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

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

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

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

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

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

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

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

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

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

Compensation Tables section.

Summary of The Three Long-Term Incentive Plans Outstanding During 2023

With respect to our long-term performance-based compensation, the Compensation Committee designed plan

metrics to align with Kroger’s long-term business plans and growth model. These metrics are the key elements in
driving Kroger’s TSR.

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

overlapping three-year performance periods. Additional detail regarding each of the three plans is provided below,
and a summary of the design of the plans outstanding during 2023 is as follows:

Performance Units and
Dividend Equivalents

Performance Metrics

2021 – 2023 LTIP

2022 – 2024 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

2023 – 2025 LTIP

• Total Sales without Fuel + Fuel Gallons;
• Value Creation Metric (iTSR) Percentage;
• Fresh Equity metric; and
• Relative Total Shareholder Return modifier

Gallons;

• Growth in Adjusted FIFO;

Operating Profit, including Fuel;
• Cumulative Adjusted Free Cash

Flow;

• Fresh Equity metric; and
• Relative Total Shareholder Return

modifier

Determination of Payout

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

Maximum Payout
Payout Date

187.5%
March 2024

187.5%
March 2025

187.5%
March 2026

2021-2023 Long-Term Incentive Plan – Metrics

The 2021-2023 Long-Term Incentive Plan has the following components which support our long-term business
plans, each accounting for 25% of the payout calculation:

Metric

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.

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

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

after the company pays for operating expenses and capital expenditures.
• 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 Rank 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 target number of

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

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 2021-2023 Long-Term Incentive Plan with
an incremental goal setting approach due to our inability to forecast reliable long-term performance targets against
the background of the economic uncertainty at the time. The Committee designed the plan to take into account the
extraordinary uncertainties going into the three-year plan, while aligning to our identical sales and operating profit
growth and productivity improvement goals, all in support of our long-term value creation model. Under the
incremental goal setting approach, the plan was designed with clearly defined financial performance goals for 2021,
and a mechanism for setting the 2022-2023 goals based on actual 2021 results.

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

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

2021-2023 Long-Term Incentive Plan – Results and Payout

The results and payout of the 2021-2023 Long-Term Incentive Plan are as follows.

Metric

Total Sales without Fuel + Fuel Gallons
Adjusted FIFO Operating Profit
Adjusted Free Cash Flow
Fresh Equity Metric

Payout for 2021 Portion of Plan (1/3)

2021 Results

Performance

$127.96B
$4.31B
$3.94B
N/A

2022-2023 Results

Goal

$123.99B
$3.48B
$1.7B

Metric

Total Sales without Fuel + Fuel Gallons
Adjusted FIFO Operating Profit
Adjusted Cumulative Free Cash Flow
Fresh Equity Metric

Payout for 2022-2023 Portion of Plan (2/3)

$135.61B
$4.80B
$4.9
43.2

$135.75B
$4.75B
$4.7B
46.1

Combined Results

Calculation

(100% x 1/3) + (97.25% x 2/3)
(100% x 1/3) + (100% x 2/3)
(100% x 1/3) + (100% x 2/3)

(98.17% x 1/4) + (100% x 1/4) + (100% x 1/4) + (0% x 1/4)
191st out of 500 in S&P 500 resulting in multiplier
between 100% and 125%

Metric

Total Sales without Fuel + Fuel Gallons
Adjusted FIFO Operating Profit
Adjusted Cumulative Free Cash Flow
Fresh Equity Measure

Payout before Modifier

Relative TSR Modifier*

Total Payout for 2021-2023 Plan

Payout
Percentage for
2021
Portion of Plan
100%
100%
100%

100%

Payout
Percentage
For 2022-2023
Portion of Plan
97.26%
100%
100%
0%
74.32%

Payout
Percentage for
Full 2021-2023
Plan
98.17%
100%
100%
0%
74.54%

111.8%

83.34%

* The Company ranked 191st in the S&P 500 over the three year period for TSR. Based on this result, the Company
is in the second quartile of TSR results within the S&P 500. Because the Company ranking falls between 125 and
375, the multiplier to be applied in order to calculate the final LTIP payout is calculated based on an interpolation of
payouts between 75% and 125%, illustrated below:

TSR Rank in S&P 500
1 to 125
250
375 to 500
Actual Result = 191

Payout Multiplier
125%
100%
75%
111.8%

The NEOs were issued the number of Kroger common shares equal to 83.34% of the target number of

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

The dividend equivalents paid on common shares earned under the 2021 – 2023 Long-Term Incentive Plan are
paid at the end of the plan and are reported in the “All Other Compensation” column of the Summary Compensation
58

Table and footnote 5 to that table, and the common shares issued under the plan are reported in the 2023 Option
Exercises and Stock Vested Table and footnote 2 to that table.

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

2022 – 2024 and 2023 – 2025 Long-Term Incentive Plan Metrics

Both the 2022 – 2024 and 2023 – 2025 Long-Term Incentive Plan metrics have been designed to reflect
commitments made to our investors and other stakeholders regarding long-term sales growth, our Value Creation
algorithm (through intrinsic Total Shareholder Return, or iTSR) and our commitment to Fresh as a strategic
differentiator. The plan also includes a modifier based on our shareholder return relative to the S&P 500 shareholder
return.

Metric

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 Rank 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 at least one business day after Kroger’s public release of its quarterly earnings results.

The Compensation Committee determines the vesting schedule for stock options and restricted stock. During
2023, the Compensation Committee granted to the NEOs stock options and restricted stock, each with a four-year
ratable vesting schedule.

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

footnote 1 to the table and the 2023 Grants of Plan Based Awards Table. Stock option awards are reported in the
“Option Awards” column of the Summary Compensation Table and the “All other Option Awards” column of the
2023 Grants of Plan Based Awards Table.

Retirement and Other Benefits

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

participate in one or more of these plans, as well as one or more excess plans designed to make up the shortfall in
retirement benefits created by limitations under the Internal Revenue Code (the “Code”) on benefits to highly
compensated individuals under qualified plans. Additional details regarding certain retirement benefits available to
the NEOs can be found below in footnote 5 to the Summary Compensation Table and the 2023 Pension Benefits
Table and the accompanying narrative.

Kroger also maintains an executive deferred compensation plan in which the CEO has elected to participate.
This plan is a nonqualified plan under which participants can elect to defer up to 100% of their cash compensation
each year. Additional details regarding our nonqualified deferred compensation plans available to the NEOs can be
found below in the 2023 Nonqualified Deferred Compensation Table and the accompanying narrative.

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

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

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

None of the NEOs are party to an employment agreement.

Perquisites

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

Process for Establishing Executive Compensation

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

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

The Compensation Committee directly engaged Korn Ferry as a compensation consultant to advise the
Compensation Committee in the design of compensation for executive officers and to advise with respect to the
unique circumstances of the 2023 compensation cycle.

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

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

• base salary;

• target performance-based annual cash incentive;

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

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

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

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

targeted amounts.

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

companies selected by the Compensation Committee. For 2023, our peer group consisted of:

Albertsons
Best Buy
Cardinal Health
Cencora, Inc (formerly known as
AmerisourceBergen)
Costco Wholesale

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

Sysco
Target
TJX Companies
Walgreens Boots Alliance
Walmart

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

addition, the Compensation Committee considered supplemental data provided by its independent compensation
consultant from “general industry” companies, a representation of the Fortune 40, excluding financial services
companies. This data provided reference points, particularly for senior executive positions where competition for
talent extends beyond the retail sector. The peer group includes a combination of food and drug retailers, other large
retailers based on revenue size, and large consumer-facing companies. Median 2023 revenue for the peer group was
$108 billion, compared to our 2023 revenue of $150 billion.

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

Multiple

Chief Executive Officer

President and Chief Operating Officer

5 times base salary

4 times base salary

Executive Vice Presidents and Senior Vice Presidents 3 times base salary

Independent Directors

5 times annual base cash retainer

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

Executive Compensation Recoupment Policy (Clawback)

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

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

Additionally, if an award based on financial statements that are subsequently restated in a way that would

decrease the value of such award, the participant will, to the extent not otherwise prohibited by law, upon the written
request of Kroger, forfeit and repay to Kroger the difference between what was received and what should have been
received based on the accounting restatement, which will be repaid in accordance with any applicable Kroger policy
or applicable law.

We have adopted a policy on incentive compensation-based recovery, which meets the requirements of
NYSE listing standards and Section 10D of the Exchange Act. The policy requires the recoupment of incentive-
based compensation paid to certain current and former executive officers in the event that the Company is required
to restate its financial results due to the Company’s material non-compliance with any financial reporting
requirement under the securities laws. Under the policy, the Company will seek recovery of erroneously awarded
incentive-based compensation received by current and former executive officers during the three-year fiscal year
period prior to the date the Company is required to prepare an accounting restatement. The Policy is administered by
the Compensation Committee of the Board.

Kroger also has an additional recoupment policy, which provides that if a material error of facts results in

the payment to an executive officer at the level of Group Vice President or higher of an annual or a long-term
incentive in an amount higher than otherwise would have been paid, as determined by the Compensation Committee,
then the officer, upon demand from the Compensation Committee, will reimburse Kroger for the amounts that would
not have been paid if the error had not occurred. This recoupment policy applies to those amounts paid by Kroger
within 36 months prior to the detection and public disclosure of the error or restatement.

Prohibition on Hedging and Pledging

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

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

Section 162(m) of the Internal Revenue Code

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

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

Executive Compensation Tables

Summary Compensation Table

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

fiscal years presented.

Name and Principal
Position

Fiscal
Year

Salary
($)

Stock
Awards
($)(1)

Option
Awards
($)(2)

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

W. Rodney McMullen
Chairman and Chief
Executive Officer

Gary Millerchip
Senior Vice President
and Chief Financial Officer

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

Yael Cosset
Senior Vice President
and Chief Information Officer

Timothy A. Massa
Senior Vice President
and Chief People Officer

2023
2022
2021

2023
2022

2021

2023
2022
2021

1,422,581
1,388,495
1,351,358

10,000,038
10,367,639
8,800,023

2,500,632
2,299,636
2,199,162

901,411
809,879
726,815

3,400,063
3,358,792
2,800,022

850,220
749,879
699,735

1,003,024
915,632

3,400,063
3,346,838

850,220
749,879

672,560
4,130,769
4,647,750

224,176
1,269,231
1,498,006

211,950
1,269,231

878,387

2,800,022

699,735

1,527,013

880,376
809,879
739,685

905,780
839,113
780,914

3,400,063
3,358,792
2,800,022

2,400,017
2,320,484
1,760,033

850,220
749,879
699,735

600,162
499,919
439,836

224,176
1,269,231
1,498,006

201,159
1,133,654
1,194,114

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

All Other
Compensation
($)(5)

Total
($)

193,388
175,750
159,640

921,373
847,554
1,010,797

15,710,572
19,209,843
18,168,730

313,928
265,342
261,842

325,497
277,694

300,214

318,427
267,548
265,342

234,018
208,794
210,350

5,689,798
6,453,123
5,986,420

5,790,754
6,559,274

6,205,371

5,673,262
6,455,329
6,002,790

4,341,136
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 2023:

Name

Restricted Stock

Performance Units

Mr. McMullen

Mr. Millerchip

Mr. Aitken

Mr. Cosset

Mr. Massa

$3,750,044

$1,275,041

$900,018

$6,249,994

$2,125,022

$2,125,022
$1,499,999

The Restricted Stock values include the annual grant of restricted stock in 2023.

The grant date fair value of the performance units reflected in the stock awards column and in the table above is
computed based on the probable outcome of the performance conditions as of the grant date. This amount is
consistent with the estimate of aggregate compensation cost to be recognized by the Company over the three-
year performance period of the award determined as of the grant date under FASB ASC Topic 718, excluding
the effect of estimated forfeitures. The assumptions used in calculating the valuations are set forth in Note 11 to
the consolidated financial statements in Kroger’s Form 10-K for fiscal year 2023.

Assuming that the highest level of performance conditions is achieved, the aggregate fair value of the 2023
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
$11,718,756
$3,984,404
$3,984,404
$3,984,404
$2,812,509

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

FASB ASC Topic 718. The assumptions used in calculating the valuations are set forth in Note 11 to the
consolidated financial statements in Kroger’s Form 10-K for fiscal year 2023.

(3) Non-equity incentive plan compensation earned for 2023 consists of amounts earned under the 2023 Annual

Incentive Plan. The 2023 Annual Incentive Plan was calculated at 24.02.% and was applied to each NEO’s
annual incentive plan target, except for Mr. Aitken. Mr. Aitken’s payout of 22.71% of his annual incentive
target was calculated based on the Annual Incentive Plan metrics and the merchandising team metrics. See
“2023 Annual Incentive Plan Results” in the Compensation Discussion and Analysis for more information on
this plan.

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

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

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

decreased by $168,788. This change in value of accumulated pension benefits is not included in the Summary
Compensation Table because the value decreased. The value of accrued benefits decreased primarily due to the
change in value of the benefit due to the increase in discount rates as well as the change in value of the benefit
due to aging. The Company froze the compensation and service periods used to calculate pension benefits for
active associates who participate in the affected pension plans, including Mr. McMullen’s, as of December 31,
2019. Beginning January 1, 2020, the affected active associates will no longer accrue additional benefits for
future service and eligible compensation received under these plans. Please see the 2023 Pension Benefits
section for further information regarding the assumptions used in calculating pension benefits.

Preferential Earnings on Nonqualified Deferred Compensation. Mr. McMullen participates in The Kroger Co.
Executive Deferred Compensation Plan (the “Deferred Compensation Plan”) and received preferential earnings
of $193,388. Under the plan, deferred compensation earns interest at a rate representing Kroger’s cost of ten-
year debt, as determined by the CFO, and approved by the Compensation Committee prior to the beginning of
each deferral year. For each participant, a separate deferral account is created each year and the interest rate
established for that year is applied to that deferral account until the deferred compensation is paid out. If the
interest rate established by Kroger for a particular year exceeds 120% of the applicable federal long-term
interest rate that corresponds most closely to the plan rate, the amount by which the plan rate exceeds 120% of
the corresponding federal rate is deemed to be above-market or preferential. For each of the deferral accounts
in which the plan rate is deemed to be above-market, Kroger calculates the amount by which the actual annual
earnings on the account exceed what the annual earnings would have been if the account earned interest at
120% of the corresponding federal rate, and discloses those amounts as preferential earnings.

(5) Amounts reported in the “All Other Compensation” column for 2023 include Company contributions to defined
contribution retirement plans, dividend equivalents paid on earned performance units, and dividends paid on
unvested restricted stock. In 2023, the total amount of perquisites and personal benefits for each of the NEOs
was less than $10,000. The following table identifies the value of each element of All Other Compensation:

Name

Mr. McMullen

Mr. Millerchip

Mr. Aitken

Mr. Cosset

Mr. Massa

Payment of
Dividend
Equivalents
on Earned
Performance
Units

369,950

117,712

73,991

Dividends
Paid on
Unvested
Restricted
Stock

244,348

79,191

80,434

80,252

53,196

Retirement Plan
Contributions(a)

307,075

117,025

127,351

120,463

106,831

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

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

2023 Grants of Plan-Based Awards

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

2023.

Estimated Possible Payouts
Under Non-Equity
Incentive Plan Awards

Estimated Future
Payouts Under
Equity Incentive
Plan Awards

Name

Grant
Date

Target
($)(1)

Maximum
($)(1)

Target
(#)(2)

Maximum
(#)(2)

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)

W. Rodney
McMullen

Gary Millerchip

Stuart W. Aitken

Yael Cosset

Timothy A.
Massa

3/9/2023
3/9/2023
3/9/2023

2,800,000

5,600,000

950,000

1,900,000

132,275

248,016

950,000

1,900,000

44,974

84,326

950,000

1,900,000

44,974

84,326

850,000

1,700,000

44,974

84,326

79,366

26,985

19,048

165,893

47.25

56,404

47.25

56,404

47.25

56,404

47.25

31,746

59,524

39,815

47.25

Grant
Date Fair
Value of
Stock
and
Option
Awards
($)

3,750,044
2,500,632
6,249,994

1,275,041
850,220
2,125,022

900,018
600,162
1,499,999

(1) These amounts relate to the 2023 performance-based annual incentive plan. The amount listed under “Target”
represents the annual incentive potential of the NEO. By the terms of the plan, payouts are limited to no more
than 200% of a participant’s annual incentive potential; accordingly, the amount listed under “Maximum” is
200% of that officer’s annual incentive potential amount. The amounts actually earned under this plan were
paid out in March 2024; are described in the Compensation Discussion and Analysis; and are included in the
Summary Compensation Table for 2023 in the “Non-Equity Incentive Plan Compensation” column and
described in footnotes 1 and 3 to that table. See “2023 Annual Cash Incentive Plan” in CD&A for more
information about the program for 2023.

(2) These amounts represent performance units awarded under the 2023 Long-Term Incentive Plan, which covers
performance during fiscal years 2023, 2024 and 2025. The amount listed under “Maximum” represents the
maximum number of common shares that can be earned by the NEO under the award or 187.5% of the target
amount. This amount is consistent with the estimate of aggregate compensation cost to be recognized by the
Company over the three-year performance period of the award determined as of the grant date 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 2023 in the “Stock
Awards” column and described in footnote 1 to that table.

(3) These amounts represent the number of shares of restricted stock granted in 2023. 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 2023 in the “Stock
Awards” column and described in footnote 1 to that table.

(4) These amounts represent the number of stock options granted in 2023. 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 2023 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 200% of the target
amount. The potential values for performance units awarded under the 2023-2025 Long-Term Incentive Plan are
more particularly described in the CD&A.

The annual restricted stock and nonqualified stock options awards granted to the NEOs vest in equal amounts

on each of the first four anniversaries of the grant date, so long as the officer remains a Kroger associate. Any
dividends declared on Kroger common shares are payable on unvested restricted stock.

2023 Outstanding Equity Awards at Fiscal Year-End

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

the NEOs as of the end of 2023. The vesting schedule for each award is described in the footnotes to this table. The
market value of unvested restricted stock and unearned performance units is based on the closing price of Kroger’s
common shares of $46.14 on February 2, 2024, the last trading day of fiscal 2023.

Option Awards

Stock Awards

Name

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
($)

300,000

235,415
358,091

573,127

349,293

348,259

246,865

130,486
35,714

9,600

13,992

27,972

34,905

30,251
82,919

51,116

63,480

41,518
11,646

11,149

33,124

99,503

63,480

41,518

11,646

10,611

8,704

29,499

82,919

63,480
41,518

11,646

27,044(5)
47,224(6)
45,324(7)
79,366(8)
24,712(9)

1,247,810

2,178,915

2,091,249
3,661,947

1,140,212

6,954(5)
15,026(6)
14,780(7)
26,985(8)
7,593(9)

320,858

693,300

681,949

1,245,088

350,341

6,954(5)
15,026(6)
14,780(7)
26,985(8)
7,340(9)

6,954(5)
15,026(6)
14,780(7)
26,985(8)
7,593(9)

320,858

693,300

681,949

1,245,088

338,668

320,858

693,300

681,949

1,245,088

350,341

82,289(1)
130,487(2)
107,144(3)
165,893(4)

21,160(1)
41,519(2)
34,938(3)
56,404(4)

24.67

38.33

37.48
22.92

28.05

24.75

29.12

34.94

57.09
47.25

24.67

38.33

37.48

22.92

28.05
24.75

22.08

29.12

34.94

57.09

47.25
22.92

28.05

24.75

29.12

34.94

57.09
47.25

28.83

22.92

28.05

24.75

29.12
34.94

57.09

47.25

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
3/9/2033

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

3/9/2033
7/13/2027

7/13/2028

3/14/2029

3/12/2030

3/11/2031

3/10/2032
3/9/2033

3/9/2027

7/13/2027

7/13/2028

3/14/2029

3/12/2030
3/11/2031

3/10/2032

3/9/2033

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
($)

64,510(10)
132,275(11)

3,182,923

6,555,550

21,036(10)
44,974(11)

1,037,916

2,228,911

21,036(10)
44,974(11)

1,037,916
2,228,911

21,036(10)
44,974(11)

1,037,916

2,228,911

Timothy A. Massa

29,970
25,889

45,065

40,561

66,336

47,022

26,097
7,764

38.33
37.48

22.92

28.05

24.75

29.12

34.94
57.09

47.25

7/15/2025
7/13/2026

7/13/2027

7/13/2028

3/14/2029

3/12/2030

3/11/2031
3/10/2032

3/9/2033

15,674(1)
26,098(2)
23,292(3)
39,815(4)

5,152(5)
9,445(6)
9,854(7)
19,048(8)
6,782(9)

237,713
435,792

454,664

878,875
312,921

14,024(10)
31,746(11)

691,943

1,573,331

(1) Stock options vest on 3/12/2024.
(2) Stock options vest in equal amounts on 3/11/2024 and 3/11/2025.
(3) Stock options vest in equal amounts on 3/10/2024, 3/10/2025, and 3/10/2026.
(4) Stock options vest in equal amounts on 3/9/2024, 3/9/2025, 3/9/2026, and 3/9/2027.
(5) Restricted stock vests on 3/12/2024.
(6) Restricted stock vests in equal amounts on 3/11/2024 and 3/11/2025.
(7) Restricted stock vests in equal amounts on 3/10/2024, 3/10/2025, and 3/10/2026.
(8) Restricted stock vests in equal amounts on 3/9/2024, 3/9/2025, 3/9/2026, and 3/9/2027.
(9) Restricted stock vests on 3/9/2024.
(10) Performance units granted under the 2022 long-term incentive plan are earned as of the last day of fiscal 2024,

to the extent performance conditions are achieved. Because the awards earned are not currently determinable,
in accordance with SEC rules, the number of units and the corresponding market value reflect a representative
amount based on performance through fiscal year 2023, including cash payments equal to projected dividend
equivalent payments.

(11) Performance units granted under the 2023 long-term incentive plan are earned as of the last day of fiscal 2025,

to the extent performance conditions are achieved. Because the awards earned are not currently determinable,
in accordance with SEC rules, the number of units and the corresponding market value reflect a representative
amount based on performance in fiscal year 2023, including cash payments equal to projected dividend
equivalent payments.

2023 Option Exercises and Stock Vested

The following table provides information regarding 2023 stock options exercised, restricted stock vested, and

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

Option Awards(1)

Stock Awards(2)

Number of
Shares
Acquired on
Exercise
(#)
194,880

—

Value
Realized on
Exercise
($)
5,912,659

—

46,000

1,013,795

Number
of Shares
Acquired on
Vesting
(#)
228,769

73,141

73,838

72,323

43,942

Value
Realized
on
Vesting
($)
11,880,857

3,792,552

3,825,427

3,753,949

2,290,693

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

W. Rodney McMullen

Gary Millerchip

Stuart W. Aitken

Yael Cosset

Timothy A. Massa

Vested Restricted Stock

Earned Performance Units

Number of
Shares

Value
Realized

Number of
Shares

Value
Realized

97,581

31,399

32,096

30,581

17,704

$4,598,611

131,188

$7,282,246

$1,475,454

$1,508,329

$1,436,851

$834,222

41,742

26,238

$2,317,098

$1,456,471

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

Performance Units. Participants in the 2021-2023 Long-Term Incentive Plan were awarded performance units

that were earned based on performance criteria established by the Compensation Committee as described in “2021-
2023 Long-Term Incentive Plan — Results and Payout” in the CD&A. Actual payouts were based on the level of
performance achieved and were paid in common shares. The number of common shares issued, and the value
realized based on the closing price of Kroger common shares of $55.51 on March 14, 2024, the date of deemed
delivery of the shares, are reflected in the table above.

2023 Pension Benefits

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

2023. Only Mr. McMullen participates in a pension plan.

Name

W. Rodney McMullen

Gary Millerchip

Stuart W. Aitken

Yael Cosset

Timothy A. Massa

Number of
Years Credited
Service
(#)(1)
34

—

Present Value of
Accumulated
Benefit
($)(2)
1,597,556

17,854,044

—

Plan Name

Pension Plan

Excess Plan

Pension Plan

Excess Plan

Pension Plan

Excess Plan

Pension Plan

Excess Plan

Pension Plan

Excess Plan

Payments during
Last fiscal year
($)

—

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

number of years of credited service is less than his actual 45 years of service.

(2) The discount rate used to determine the present values was 5.27% for The Kroger Consolidated Retirement
Benefit Plan Spin Off (the “Pension Plan”) and 5.25% for The Kroger Co. Consolidated Retirement Excess
Benefit Plan (the “Excess Plan”), which are the same rates used at the measurement date for financial reporting
purposes. Additional assumptions used in calculating the present values are set forth in Note 14 to the
consolidated financial statements in Kroger’s 10-K for fiscal year 2023.

Pension Plan and Excess Plan

In 2023, Mr. McMullen was a participant in the Pension Plan, which is a qualified defined benefit pension plan.
Mr. McMullen also participates in the Excess Plan, which is a nonqualified deferred compensation plan as defined in
Section 409A of the Code. The purpose of the Excess Plan is to make up the shortfall in retirement benefits caused
by the limitations on benefits to highly compensated individuals under the qualified defined benefit pension plans in
accordance with the Code.

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

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

Grandfathered Participants

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

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

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

• normal retirement age is 65; and

• unreduced benefits are payable beginning at age 62.

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

2023 Nonqualified Deferred Compensation

The following table provides information on nonqualified deferred compensation for the NEOs for 2023. Only

Mr. McMullen participates in a nonqualified deferred compensation plan.

Name
W. Rodney McMullen

Gary Millerchip

Stuart W. Aitken

Yael Cosset

Timothy A. Massa

Executive Contributions
in Last FY
$77,500

Aggregate Earnings
in Last FY(1)
$960,586

Aggregate Balance
at Last FYE(2)
$15,144,738

—

(1) This amount includes the aggregate earnings on Mr. McMullen’s account, including any above-market or
preferential earnings. The amount of $193,388 earned in 2023 is deemed to be preferential earnings and is
included in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the
Summary Compensation Table for 2023.

(2) The amount of $4,188,521 for Mr. McMullen was reported in the Summary Compensation Tables covering

fiscal years 2006 – 2022.

Executive Deferred Compensation Plan

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

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

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 2023
Pension Benefits section and the 2023 Nonqualified Deferred Compensation section, respectively.

The Kroger Co. Employee Protection Plan

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

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, February 3, 2024, given compensation,
age and service levels as of that date and, where applicable, based on the closing market price per Kroger common
share on the last trading day of the fiscal year ($46.14 on February 2, 2024). Amounts actually received upon the
occurrence of a triggering event will vary based on factors such as the timing during the year of such event, the
market price of Kroger common shares, and the officer’s age, length of service and compensation level.

Involuntary
Termination

Voluntary
Termination/
Retirement

Death

Disability

Change
in Control
without
Termination

Change in
Control with
Termination

$654,904

–

$0
$0
$0

–

$2,862,013
$10,320,134
$4,018,713

–

$2,862,013
$10,320,134
$4,018,713

$2,000,000

$2,862,013
$10,320,134
$4,018,713

–

$0
$0
$0

–

$8,400,000

$53,825

$2,862,013
$10,320,134
$5,375,149

–

$10,385
–

–

$0
$0
$0

–

$0
$0
$0

–

$11,539
–

–

$0
$0
$0

–

$0
$0
$0

–

$10,385
–

–

$825,156
$3,291,535
$1,338,766

$1,350,000

$11,539
–

–

$825,156
$3,279,862
$1,338,766
$1,500,000

$10,385
–

–

$825,156
$3,291,535
$1,338,766

–

$11,539
–

–

$825,156
$3,279,862
$1,338,766

–

$0
$0
$0

–

$10,385
–

–

$0
$0
$0

–

$0
$0
$0

–

$10,385
–

–

$0
$0
$919,624

–

$825,156
$3,291,535
$1,338,766

$1,312,500

$10,385
–

–

$559,069
$2,319,965
$919,624

$1,350,000

–

$825,156
$3,291,535
$1,338,766

–

$10,385
–

–

$559,069
$2,319,965
$919,624

–

$10,385
–

$10,385
$3,700,008

–

$0
$0
$0

–

$64,726
$825,156
$3,291,535
$1,795,238

–

$11,539
–

$11,539
$3,900,000

–

$0
$0
$0

–

$0
$0
$0

–

$64,822
$825,156
$3,279,862
$1,795,238

–

$10,096
$3,650,016

$34,081

$825,156
$3,291,535
$1,795,238

–

$10,385
–

$10,385
$3,500,016

–

$0
$0
$0

–

$53,286
$559,069
$2,319,965
$1,237,498

–

$10,096

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

(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 February 3, 2024. A value of $0 is
attributed to stock options with an exercise price greater than the market price on the last day of the fiscal year.
In accordance with SEC rules, no amount is reported in the “Voluntary Termination/Retirement” column
because vesting is not accelerated, but the options may continue to vest on the original schedule if the
conditions described above are met.

(3) Amounts reported in the “Death,” “Disability,” and “Change in Control” columns represent the aggregate value

of the accelerated vesting of unvested restricted stock. In accordance with SEC rules, no amount is reported in
the “Voluntary Termination/Retirement” column because vesting is not accelerated, but the restricted stock
may continue to vest on the original schedule if the conditions described above are met.

(4) Amounts reported in the “Voluntary Termination/Retirement,” “Death” and “Disability” columns represent the
aggregate value of the performance units granted in 2022 and 2023, based on performance through the last day
of fiscal 2023 and prorated for the portion of the performance period completed. Amounts reported in the
change in control column represent the aggregate value of 50% of the maximum number of performance units
granted in 2022 and 2023. Awards under the 2021 Long-Term Incentive Plan were earned as of the last day of
2023 so each NEO age 55 or over was entitled to receive (regardless of the triggering event) the amount
actually earned, which is reported in the Stock Awards column of the 2023 Option Exercises and Stock Vested
Table.

Pay Versus Performance

As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item
402(v) of Regulation S-K, we are providing the following information about the relationship between executive
“compensation actually paid,” or “CAP,” and certain financial performance of the Company. For further
information concerning the Company’s pay-for-performance philosophy and how the Company aligns executive
compensation with the Company’s performance, refer to the CD&A beginning on page 47.

PAY VERSUS PERFORMANCE TABLE*

(a)

(b)

(c)

(d)

(e)

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

2023
2022
2021
2020

15,710,572
19,209,843
18,168,730
22,373,574

16,841,015
23,325,794
36,111,316
29,840,084

5,373,738
6,117,423
5,644,957
6,932,437

5,669,814
6,281,085
9,323,327
9,191,933

(f)
Value of Initial Fixed
$100 Investment Based
on5

Total
Share-
holder
Return
($)

186.91
178.23
168.66
131.19

Peer
Group
Total
Share-
holder
Return
($)
164.01
140.77
145.25
123.01

(g)

(h)

Net
Income
($)6
(in millions)

Adjusted
FIFO
Operating
Profit
($)7
(in millions)

2,164
2,244
1,655
2,585

4,986
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, 2022 and 2023 Mr. McMullen served as our Principal Executive Officer

(“PEO”). The dollar amounts reported in column (b) are the amounts of total compensation reported for
each corresponding year in the Total column of the Summary Compensation Table (“SCT”).

2. The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr.

McMullen as computed in accordance with Item 402(v) of Regulation S-K. The amounts do not reflect the
actual amount of compensation earned by or paid to Mr. McMullen during the applicable year. In

accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made
to Mr. McMullen’s total compensation for each year to determine the CAP:

PEO SCT Total to CAP Reconciliation

Year

Reported
Summary
Compensation
Table for PEO
($)

Reported
Summary
Compensation
Table Value of
Equity
Awards(a)
($)

Equity Award
Adjustments(b)
($)

Reported
Change in the
APV of
Pension
Benefits in
Summary
Compensation
Table (c)
($)

Plus: Pension
Benefit
Adjustments(b)(c)
($)

Compensation
Actually Paid to
PEO
($)

2023

15,710,572

12,500,670

13,631,113

16,841,015

a) The amounts included in this column are the amounts reported in “Stock Awards” and “Option
Awards” column of the SCT for fiscal 2023 and are subtracted from the Reported Summary
Compensation Table for PEO.

b) The equity award and pension benefit adjustments for fiscal 2023 were calculated in accordance
with the methodology required by Item 402(v) of Regulation S-K as follow: the equity award
adjustments for each applicable year include the addition (or subtraction, as applicable) of the
following: (i) the year-end fair value of any equity awards granted in fiscal 2023 that are
outstanding and unvested as of the end of the year; (ii) the amount equal to the change as of the
end of fiscal 2023 (from the end of the prior fiscal year) in the fair value of any awards granted in
prior years that are outstanding and unvested as of the end of fiscal 2023; (iii) for awards that are
granted and vest in fiscal 2023, the fair value as of the vesting date; (iv) for awards granted in
prior years that vest in fiscal 2023, the amount equal to the change as of the vesting date (from the
end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined
to fail to meet the applicable vesting conditions during fiscal 2023, a deduction for the amount
equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends
or other earnings paid on stock or option awards in the applicable year prior to the vesting date
that are not otherwise reflected in the fair value of such award or included in any other component
of total compensation for the applicable year. The valuation assumptions used to calculate fair
values did not materially differ from those disclosed at the time of grant. The amounts deducted
or added in calculating the equity award adjustments for the PEO are provided in the table below:

PEO Equity Award Adjustments

Year End Fair Value
of Awards Granted in
the Year
($)
13,146,559

YoY Change in Fair
Value of Outstanding
& Unvested Awards
($)
(1,842,542)

Year
2023

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
($)
2,327,096

Total Equity Award
Adjustments
($)
13,631,113

c) The amounts included in this column are the amounts reported in “Change in Pension and

Nonqualifed Deferred Compensation” of the SCT for fiscal 2023. Total Pension Benefit
Adjustments are equal to the Pension Service Costs incurred during the relevant period. No Prior
Service Costs were incurred as no modifications were made to the pension plan during the relevant
period.

3. The dollar amounts reported in column (d) represent the average of the amounts reported for our non-PEO

NEOs as a group in the Total column of the SCT in fiscal 2023.

4. The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to
the Non-PEO NEOs as a group, as computed in accordance with Item 402(v) of Regulation S-K. The
dollar amounts do not reflect the actual average amount of compensation earned by or paid to these NEOs

as a group during fiscal 2023. In accordance with the requirements of Item 402(v) of Regulation S-K, the
following adjustments were made to the average total compensation for these NEOs as a group for fiscal
2023 to determine the CAP using the same methodology as described in footnote 2:

Average Non-PEO NEOs Summary Compensation Table Total to CAP Reconciliation

Year

Average
Reported
Summary
Compensation
Table for Non-
PEO NEOs
($)

2023

5,373,738

Average
Reported
Summary
Compensation
Table Value of
Equity Awards
for non-PEO
NEOs
($)
3,937,757

Average Equity
Award
Adjustments(a)
($)

Average
Reported
Change in the
APV of
Pension
Benefits in
SCT(b)
($)

Plus: Average
Pension Benefit
Adjustments
($)

Average
Compensation
Actually Paid to
non-PEO NEOs
($)

4,233,833

5,669,814

(a) The amounts deducted or added in calculating the total average equity award adjustments are

provided in the table below:

Equity Award Adjustments for Non-PEO NEOs

Average Year End
Fair Value of
Awards Granted
in the Year
($)
4,120,112

Year over Year
Average Change in
Fair Value of
Outstanding &
Unvested Awards
($)
(543,557)

Average Fair Value
as of Vesting Date
of Awards Granted
and Vested in the
Year
($)
-

Year
2023

Year over Year
Average Change in
Fair Value of Awards
Granted in Prior
Years that Vested in
the Year
($)
657,278

Total Average
Equity Award
Adjustment
($)
4,233,833

(b) Total Pension Benefit Adjustments are equal to the Pension Service Costs incurred during the relevant
period. No Prior Service Costs were incurred as no modifications were made to the pension plan
during the relevant period.

5. Cumulative TSR is calculated by dividing (a) the sum of the cumulative amount of dividends for the

measurement period, assuming dividend reinvestment, and the difference between the Company’s share
price at the end and the beginning of the measurement period by (b) the Company’s share price at the
beginning of the measurement period. The peer group selected by the Company for purposes of the TSR
benchmarking for the pay versus performance disclosures is the same peer group the Company uses for its
performance graph in the Annual Report on Form 10-K pursuant to Item 201(e) of Regulation S-K. The
Peer Group consists of Albertsons Companies, Inc. (included from June 26, 2020 when it began trading),
Costco Wholesale Corporation, CVS Health Corporation, Koninklijke Ahold Delhaize N.V., Target Corp.,
Walgreens Boots Alliance Inc. and Walmart Inc. The cumulative TSR depicts a hypothetical $100
investment in Kroger common shares on February 1, 2021, and shows the value of that investment over
time (assuming the reinvestment of dividends) for each calendar year. A hypothetical $100 investment in
the Peer Group using the same methodology is shown for comparison.

6. Net income is as reported in the Company’s audited financial statements for the applicable year in

accordance with U.S. GAAP.

7. Adjusted FIFO Operating Profit equals gross profit, excluding the LIFO charge, minus OG&A, minus rent,
and minus depreciation and amortization. For a reconciliation of non-GAAP information, see pages 29-36
of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024, filed with the SEC on April
2, 2024.

Most Important Performance Measures

The three measures listed below represent the most important financial performance measures used by the Company
to link CAP to Company performance for the 2023 fiscal year:

• 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 29-36 of our Annual Report on Form 10-K for the fiscal
year ended February 3, 2024, filed with the SEC on April 2, 2024.

COMPANY SELECTED METRIC – Adjusted FIFO Operating Profit

CAP vs. Adj. FIFO Operating Profit

P
A
C

$40,000,000

$35,000,000

$30,000,000

$25,000,000

$20,000,000

$15,000,000

$10,000,000

$5,000,000

$6,000

$5,000

$4,000

$3,000

$2,000

$1,000

t
i
f
o
r
P
g
n
i
t
a
r
e
p
O
O
F
I
F

.
j

d
A

2020

2021

2022

2023

CEO CAP

Non-CEO NEO CAP

Adj. FIFO Operating Profit

NET INCOME GRAPHICAL REPRESENTATION

CAP vs. Net Income

P
A
C

$40,000,000

$35,000,000

$30,000,000

$25,000,000

$20,000,000

$15,000,000

$10,000,000

$5,000,000

$3,000

$2,500

$2,000

$1,500

$1,000

$500

e
m
o
c
n

t
e
N

2020

2021

2022

2023

CEO CAP

Non-CEO NEO CAP

Net Income

KROGER TSR GRAPHICAL REPRESENTATION

CAP vs. TSR Performance

P
A
C

$40,000,000

$35,000,000

$30,000,000

$25,000,000

$20,000,000

$15,000,000

$10,000,000

$5,000,000

$200
$180
$160
$140
$120
$100
$80
$60
$40
$20
$-

R
S
T

2020

2021

2022

2023

CEO CAP

Non-CEO NEO CAP

TSR

Peer Group TSR

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 2023 of
$15,710,572. Using this Summary Compensation Table methodology, the annual total compensation of our median
associate for 2023 was $31,302. As a result, we estimate that the ratio of our CEO’s annual total compensation to
that of our median associate for fiscal 2023 was 502 to 1. Our median employee is a full-time associate in the
Central region. Over half of Kroger’s associates are part-time workers.

This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll

records and the methodology described below. The SEC rules for identifying the median compensated associate and
calculating the pay ratio based on that associate’s annual total compensation allow companies to adopt a variety of
methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their
compensation practices. As such, other companies may have different employment and compensation practices and
may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
Therefore, the estimated pay ratio reported above may not be comparable to the pay ratios reported by other
companies and should not be used as a basis for comparison between companies.

We identify the “median employee” from our employee population on the last day of our 12th fiscal period
(December 30, 2023), which included full-time, part-time, temporary, and seasonal employees who were employed
on that date. The consistently applied compensation measure we used was “base salary/wages paid,” which we
measured from the beginning of our payroll calendar year, January 1, 2023, through December 30, 2023; and as
reflected on 2023 W2 statements. For associates hired in 2023 or associates on leave at the end of 2023, their
earnings were annualized based on their full-time equivalent percent and rate. We did not make any other
adjustments permissible by the SEC nor did we make any other material assumptions or estimates to identify our
median employee. There were no changes in our employee population or compensation arrangements that would
have significantly affected our pay ratio calculation.

We then determined the median associate’s annual total compensation using the Summary Compensation Table
methodology as detailed in Item 402(c)(2)(x) of Regulation S-K and compared it to the annual total compensation of
Mr. McMullen as detailed in the “Total” column of the Summary Compensation Table for 2023, to arrive at the pay
ratio disclosed above. Because our median associate in fiscal 2022 was not employed for all of fiscal 2023, we
identified a substitute median associate whose compensation is substantially similar as permitted under SEC rules on

March 25, 2024 because we reasonably believed that continuing to use the prior median associate would have
significantly affected our CEO pay ratio disclosure and the CEO pay ratio would not reflect the actual ratio that was
used to calculate the pay ratio.

Compensation Policies as They Relate to Risk Management

As part of the Compensation Committee’s review of our compensation practices, the Compensation Committee
considers and analyzes the extent to which risks arise from such practices and their impact on Kroger’s business. As
discussed in this Compensation Discussion and Analysis, our policies and practices for 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:

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;

The vote on this resolution is not intended to address any specific element of compensation. Rather, the vote

relates to the compensation of our NEOs as described in this proxy statement. The vote is advisory. This means that
the vote is not binding on Kroger. The Compensation Committee of the Board is responsible for establishing
executive compensation. In so doing, the Compensation Committee will consider, along with all other relevant
factors, the results of this vote.

We ask our shareholders to vote on the following resolution:

“RESOLVED, that the compensation paid to the Company’s NEOs, as disclosed pursuant to Item 402 of
Regulation S-K, including the Compensation Discussion and Analysis, compensation tables, and the related
narrative discussion, is hereby APPROVED.”

The next advisory vote will occur at our 2025 Annual Meeting.

Item No. 3 – Ratification of the Appointment of Kroger’s Independent Auditor

You are being asked to ratify the appointment of Kroger’s independent auditor, PricewaterhouseCoopers
LLC.

FOR

The Board recommends a vote FOR the ratification of PricewaterhouseCoopers LLP as our
independent registered public accounting firm.

The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight
responsibilities regarding the Company’s financial reporting and accounting practices including the integrity of the
Company’s financial statements; the Company’s compliance with legal and regulatory requirements; the
independent public accountants’ qualifications and independence; the performance of the Company’s internal audit
function and independent public accountants; and the preparation of the 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 2023.

Selection of Independent Auditor

The Audit Committee of the Board of Directors is directly responsible for the appointment, compensation,
retention, and oversight of Kroger’s independent auditor, as required by law and by applicable NYSE rules. On
March 14, 2024, the Audit Committee appointed PricewaterhouseCoopers LLP as Kroger’s independent auditor for
the fiscal year ending February 1, 2025. PricewaterhouseCoopers LLP or its predecessor firm has been the
Company’s independent auditor since 1929.

In determining whether to reappoint the independent auditor, our Audit Committee:

• Reviews PricewaterhouseCoopers LLP’s independence and performance;

• Considers the tenure of the independent registered public accounting firm and safeguards around auditor

independence;

• Reviews, in advance, all non-audit services provided by PricewaterhouseCoopers LLP, specifically with

regard to the effect on the firm’s independence;

• Conducts an annual assessment of PricewaterhouseCoopers LLP’s performance, including an internal

survey of their service quality by members of management and the Audit Committee;

• Conducts regular executive sessions with PricewaterhouseCoopers LLP;

• Conducts regular executive sessions with the Vice President of Internal Audit;

• Considers PricewaterhouseCoopers LLP’s familiarity with our operations, businesses, accounting policies

and practices and internal control over financial reporting;

• Reviews candidates for the lead engagement partner in conjunction with the mandated rotation of the public

accountants’ lead engagement partner;

• Reviews recent Public Company Accounting Oversight Board reports on PricewaterhouseCoopers LLP and

its peer firms; and

• Obtains and reviews a report from PricewaterhouseCoopers LLP describing all relationships between the
independent auditor and Kroger at least annually to assess the independence of the internal auditor.

As a result, the members of the Audit Committee believe that the continued retention of

PricewaterhouseCoopers LLP to serve as our independent registered public accounting firm is in the best interests of
our Company and its shareholders.

While shareholder ratification of the selection of PricewaterhouseCoopers LLP as our independent auditor is

not required by Kroger’s Regulations or otherwise, the Board of Directors is submitting the selection of
PricewaterhouseCoopers LLP to shareholders for ratification, as it has in past years, as a good corporate governance

practice. If the shareholders fail to ratify the selection, the Audit Committee may, but is not required to, reconsider
whether to retain that firm. Even if the selection is ratified, the Audit Committee in its discretion may direct the
appointment of a different auditor at any time during the year if it determines that such a change would be in the best
interests of our Company and our shareholders.

A representative of PricewaterhouseCoopers LLP is expected to participate in the meeting to respond to

appropriate questions and to make a statement if he or she desires to do so.

Audit and Non-Audit Fees

The following table presents the aggregate fees billed for professional services performed by

PricewaterhouseCoopers LLP for the annual audit and quarterly reviews of our consolidated financial statements for
fiscal 2023 and 2022, and for audit-related, tax and all other services performed in 2023 and 2022.

Audit Fees(1)
Audit-Related Fees
Tax Fees(2)
All Other Fees(3)
Total

Fiscal Year Ended

February 3,
2024
($)
6,738,000
1,394,000
155,049
970
8,288,019

January 28,
2023
($)
5,886,900
982,000
153,000
5,850
7,027,750

(1) Includes annual audit and quarterly reviews of Kroger’s consolidated financial statements, the issuance
of comfort letters to underwriters, consents, and assistance with review of documents filed with the
SEC.

(2) Includes pre-approved assistance with tax compliance and assistance in connection with tax audits.
(3) Includes use of accounting research tool.

The Audit Committee requires that it approve in advance all audit and non-audit work performed by

PricewaterhouseCoopers LLP. Pursuant to the Audit Committee audit and non-audit service pre-approval policy, the
Committee will annually pre-approve certain defined services that are expected to be provided by the independent
auditors. If it becomes appropriate during the year to engage the independent accountant for additional services, the
Audit Committee must first approve the specific services before the 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 February 3, 2024, as filed with the SEC.

This report is submitted by the Audit Committee.
Anne Gates, Chair
Karen M. Hoguet
Ronald L. Sargent
Ashok Vemuri

Items 4 – 7

SHAREHOLDER PROPOSALS

Included in this proxy statement are four separate shareholder proposals that have been submitted under SEC

rules by shareholders who notified the company of their intention to present the proposals for voting at the 2024
Annual Shareholders’ Meeting. Some shareholder proposals and supporting statements may contain assertions about
Kroger that we believe are incorrect, and we have not tried to refute all such inaccuracies in the company’s
responses. All statements and citations contained in a shareholder proposal and its supporting statements are the sole
responsibility of the proponent of that shareholder proposal. Our company will provide the names, addresses, and
shareholdings (to our company’s knowledge) of the proponents of any shareholder proposal upon oral or written
request made to Corporate Secretary, The Kroger Co., 1014 Vine Street, Cincinnati, Ohio 45202-1100. The
information on, or accessible through, Kroger’s websites or report links included in this proxy statement, including
the statements that follow, is not part of, or incorporated by reference into, this proxy statement.

AGAINST

The Board recommends a vote AGAINST each of the following shareholder proposals, in each
case if properly presented at the meeting, for the reasons stated in Kroger’s statements in
opposition following each shareholder proposal.

Item No. 4 – Shareholder Proposal – Report on Public Health Costs from Sale of Tobacco Products
We have been advised that The Sisters of St. Francis of Philadelphia or an appointed representative, along with eight
co-filers, will present the following proposal for consideration during the 2024 Annual Shareholders’ Meeting.

“RESOLVED, shareholders ask that the board commission and disclose a report on the external public health
costs created by the sale of tobacco products by our company (the "Company") and the manner in which such
costs affect the vast majority of its shareholders who rely on overall market returns.

The negative health and productivity impacts from consumption of tobacco products impose $1.2 trillion in
social damage; tobacco's unpriced social burden amounts to almost 3 percent of global GDP annually.1 Yet ,
in spite of the Company dedicating an entire division , Kroger Health, to addressing its customers' healthcare
needs2, as well as the overwhelming evidence that tobacco - a known carcinogen that impairs respiratory
function - significantly prejudices the health outcomes of smokers, the Company conti nues to sell tobacco
products in its stores. In 2019 the company discontinued the sale of e-cigarettes in response to news reports
of vaping-related illnesses and deaths. The science on cigarettes and other combustible tobacco products is
settled. They cause illness and death.

These public health costs, year after year, are devastating to economic growth and further compound the
financial devastation wrought by the COVID-19 pandemic. Yet Kroger does not disclose any methodology
to address the public health costs of its tobacco sales. Thus, shareholders have no guidance as to costs the
Company is externalizing and consequent economic harm. This information is essential to shareholders, the
majority of whom are beneficial owners with broadly diversified interests.

But Kroger undermines its commitments to promoting good health and ultimately the interests of its
diversified shareholders by not disclosing the social and environmental costs and risks imposed on
stakeholders, even when these costs and risks threaten society, the economy and the performance of other
companies. All stakeholders are unalterably harmed when companies impose costs on the economy that
lower GDP, which reduces equity value.3 While the Company may profit by ignoring costs it externalizes,
diversified shareholders will ultimately pay these costs, and they have a right to ask what they are.

The Company's disclosures do not address this issue, because they do not address the public health costs
that Kroger's tobacco sales impose on shareholders as diversified investors who must fund retirement,
education, public goods and other critical social needs. This is a separate social issue of great importance. A
report would help shareholders determine whether these externalized costs and the economic harm they may
create ultimately serve their interests.”

1 https://www.cdc.gov/tobacco/data_statistics/fact_sheets/economics/econ_facts/index.htm
2 Kroger Health – Business & Community Health Solutions
3 https://www.unempfi.org/fileadmin/documents/universal_ownership_full.pdf

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

Kroger takes the responsibility of selling tobacco products very seriously and has established policies and processes
to limit the sale of these items only to customers who are legally permitted to purchase them. We offer customers a
wide range of choices across all product categories to meet wide-ranging tastes and preferences, including food and
discretionary items.

The Company supports our customers’ freedom of choice and offers a variety of ways to improve health,
including tobacco cessation.

The Kroger family of companies is committed to ethical and responsible behavior in all parts of our business. Our
behavior is rooted in Our Purpose – to Feed the Human Spirit™ – and our promise to our customers. This includes
upholding Our Values, which have been the foundation of Kroger’s culture for decades. The Audit Committee and
Public Responsibilities Committee of the Board of Directors oversee progress in regulatory compliance and
pharmacy safety measures.

We recognize our responsibility as a business to support our communities and help families by making it easier for
them to live healthier lives. We also believe in our customers’ freedom of choice, and adult customers can choose to
purchase tobacco products understanding fully the potential health impacts.

The Company designs its approach and policies to comply with regulations governing the sale of tobacco
products.

Tobacco sales, like the sales of many products, are governed by regulations, which we strictly follow. The
Company’s Tobacco Sales Policy is designed to comply with these regulations and affirm our commitment to the
health and welfare of our nation’s youth by reducing adolescent access to tobacco. The policy outlines internal
business procedures and best practices to maintain compliance at retail stores.

The Company continually reviews its product assortment, including tobacco and tobacco cessation products.
Notably, recent studies show the percentage of U.S. adults who smoke cigarettes remains near record lows.1 Sales
for both tobacco products and tobacco cessation products at Kroger have similarly decreased in recent years.

The Company encourages health and healthier choices through our core grocery business, Kroger Health
strategy, and community engagement.

We aim to serve and improve health for millions of people across the country through our business operations, ESG
strategy, and Kroger Health’s convenient and accessible services. We encourage healthy food and lifestyle choices
to support our customers and communities, offering tools, resources and services that advance population health. We
inform our customers and associates about the importance of healthy choices, and we equip Kroger Health's retail
pharmacy and health clinic teams and telehealth counselors to support people making healthier choices, including
quitting tobacco.

Specifically related to the use of tobacco products, we:

• Offer smoking cessation coaching programs that are available to all, including coaching through telehealth

services;

• Offer affordable prescription and over-the-counter smoking cessation products that are available to all; and
•

Encourage associates not to use tobacco through Company health plan incentives, coverage for
smoking cessation products, and employee assistance programs for smoking cessation.

Kroger continues to make a wide range of fresh, nutritious foods as well as health and wellness services more
affordable and convenient for millions of customers and for local communities across the U.S. As a trusted local
partner, we also provide essential support for our communities by offering a wide range of vaccinations that prevent
disease and improve population health.

1 https://news.gallup.com/poll/509720/cigarette-smoking-rate-steady-near-historical-low.aspx

Additional public reporting on tobacco use is not in the best interests of our shareholders.

Assessing the external public health costs related to the Company’s sale of a single category of products is not
reasonable or practicable given the resources and expertise required to consider all externalities and related topics
outside of our control. In light of the above, we do not believe an additional report would add meaningfully to the
extensive body of research currently available on this subject and therefore do not believe such an additional report
is necessary.

For the foregoing reasons, we urge you to vote AGAINST this proposal.

Item No. 5 – Listing of Charitable Contributions of $10,000 or more

We have been advised that The Louis B & Diana R Eichhold Trust or an appointed representative will present the
following proposal for consideration during the 2024 Annual Shareholders’ Meeting.

“Whereas the Company's charitable contributions, properly managed, are likely to enhance the reputation of the
Company;

Whereas increased disclosure regarding appropriate charitable contributions can create good will for our Company;
Whereas making the benefits of our Company's philanthropic programs better known is likely to promote the
company's interests;

Whereas feedback from employees, shareholders, and customers could help guide the Company's future charitable
giving process.

Resolved: The Proponent requests that the Board of Directors consider listing on the Company website any
recipient of $10,000 or more of direct contributions, excluding employee matching gifts.

Supporting Statement

Absent a system of accountability and transparency, some charitable contributions may be made unwisely,
potentially harming the Company's reputation and shareholder value. Corporate philanthropic gifts should be given
as much exposure as possible, lest their intended impact on goodwill is diminished. For example, if we gave to the
American Cancer Society, thousands our stakeholders might potentially approve of our interest in challenging this
disease. Likewise, our support of Planned Parenthood could win the praise of millions of Americans who have had
an abortion at one of their facilities. Educational organizations like the Southern Poverty Law Center have seen an
increase in funding since they included several conservative Christian organizations on their list of hate groups.
Our stake holders and customers might be similarly enthused if we supported them. Be it the Girl Scouts,
American Heart Association, Boys and Girls Club of America, Red Cross, or countless possible recipients, our
support should be publicly noted. Those who might disagree with our decisions can play a valuable role also. Some
charities may be controversial.

Charitable contributions come from the fruit of our employee's labor and belong to our shareholders. Both groups
represent a wide diversity of opinions. More importantly, we market ourselves to the general public and should
avoid offending segments of this most critical group. It would be unfortunate if a charitable contribution resulted in
lower employee morale and shareholder interest, much less a loss of potential revenue.

Fuller disclosure would provide enhanced feedback opportunities from which our Company could make more
beneficial choices.”

The Board of Directors Recommends a Vote Against This Proposal for the Following Reasons:
Kroger has a long history of giving back meaningfully in the communities we serve. Charitable giving is central to
Our Purpose – to Feed the Human Spirit – and strategically aligned to our mission – Kroger’s Zero Hunger | Zero
Waste impact plan. This plan enables Kroger to pursue our goal to help create communities free of hunger and waste
across the country. Additionally, we provide annual public disclosures related to charitable giving areas of focus and
grant-making.

Every year, we direct charitable contributions at the national, regional, and local levels to advance positive impacts
for people and our planet. This giving includes funds, in-kind product donations, and retail store donations of
surplus fresh food that our associates recover for local food bank partners through our leading Zero Hunger | Zero
Waste Food Rescue program. For example, in 2023, 100% of our retail stores participated in the Food Rescue
program, donating more than 114 million pounds of fresh food to our communities.

Through corporate giving and the work of our two nonprofit foundations – The Kroger Co. Foundation and The
Kroger Co. Zero Hunger | Zero Waste Foundation – we direct more than $300 million annually to partners and
causes that align with our mission. Of this, more than 75% supports hunger relief programs to feed individuals and
families where we live and work. These totals include support from our associates and customers through in-store
fundraising programs at checkout that benefit the Zero Hunger | Zero Waste Foundation. The largest share of
corporate funds, in-kind product donations, and customer donations is directed to the Feeding America-affiliated
network of local food banks, pantries, and agencies in our communities.

Other national organizations receiving significant charitable funds from Kroger include No Kid Hungry, American
Red Cross, United Service Organizations (USO), American Heart Association, and World Wildlife Fund. Notably,
Kroger is the largest cumulative corporate donor to the USO in the organization’s history, showing our long-
standing support for the nation’s active-duty military service men and women and their families. At the regional and
local levels, we support other nonprofit organizations and causes that matter most to our associates and customers.

The Company provides substantial public reporting on nonprofit foundation grant-making.

Kroger provides detailed annual disclosures on the work of our two foundations. As registered charitable
organizations with 501(c)(3) status, a list of each foundation’s annual grants is publicly available through Form 990-
PF filings.

The Kroger Co. Foundation, the Company’s private foundation established in 1987, focuses grant-making on
causes that support hunger relief; sustainability; disaster relief; diversity and inclusion; and education and youth
development. The Foundation’s 2023 Report includes grantee highlights and a view of funding levels across the
country. This report is available here: https://www.thekrogerco.com/wp-content/uploads/2022/08/Kroger-Co-
Foundation-2022-Report.pdf. The information on, or accessible through, this website is not part of, or incorporated
by reference into this proxy statement.

In 2022, the Kroger Foundation directed $8 million in grants, of which 60% aligned with hunger relief and
sustainability causes. Specific grants and grant recipients are highlighted in the foundation annual report.

The Kroger Co. Zero Hunger | Zero Waste Foundation, a nonprofit public charity established in 2018, is
designed to advance collective action and innovation to build a better food system for the future. More about the
Zero Hunger | Zero Waste Foundation is available here: https://thekrogercozerohungerzerowastefoundation.com/.
The information on, or accessible through, this website is not part of, or incorporated by reference into this proxy
statement.

More details about the Foundation’s general grant-making and signature program, the Zero Hunger | Zero Waste
Innovation Fund, are disclosed in its 2023 annual report: https://www.thekrogerco.com/wp-
content/uploads/2023/09/The-Kroger-Co-Zero-Hunger-Zero-Waste-Foundation-Report_2023.pdf. The information
on, or accessible through, this website is not part of, or incorporated by reference into this proxy statement.

In 2022, the Zero Hunger | Zero Waste Foundation directed $11.3 million in grants; of these, 96% aligned to hunger
relief and sustainability causes. Grants included $8.4 million in funds to improve food access and food security and
$2.3 million to advance more sustainable food systems. Grant highlights are included in the Zero Hunger | Zero
Waste Foundation report.

We follow established guidelines for charitable giving.

Kroger follows best practices and specific guidelines when reviewing grant requests. Our Donation Guidelines
provide direction on the types of organizations that Kroger supports and, importantly, make clear the types of
organizations to which donations will not be granted. We accept and consider donation requests from 501(c)(3)
registered nonprofit organizations through an online grant management platform. We use the Guidestar Charity
Check to confirm they meet all Internal Revenue Service requirements to receive grants and donations. The
Company’s Donation Guidelines are publicly available here: https://thekrogerco.versaic.com/login?Select-A-
Store=Enabled&ReturnTo=/default.aspx. The information on, or accessible through, this website is not part of, or
incorporated by reference into this proxy statement.

We do not make charitable donations to individuals, political campaigns, sectarian or religious organizations for
projects that serve only its own members or supporters, or organizations that discriminate based on race, color, sex,
pregnancy, disability, age, national origin, religion, sexual orientation, gender identity, genetic information, or any
other characteristic protected by applicable law.

The Company has adequate public disclosures related to charitable giving areas of focus and annual grant-
making.

We believe the extensive information and other disclosures already provided in Kroger’s annual ESG report, The
Kroger Co. Foundation annual report, The Kroger Co. Zero Hunger | Zero Waste Foundation annual report, public
filings, and our website provide ample disclosures related to charitable giving. Additional reporting on charitable
giving at this time is an unnecessary and inefficient use of shareholder resources.

For the foregoing reasons, we urge you to vote AGAINST this proposal.

Item No. 6 – Shareholder Proposal – Living Wage Policy

We have been advised that Shareholder Commons, on behalf of LGIM America, or an appointed representative,
along with four co-filers, will present the following proposal for consideration during the 2024 Annual
Shareholders’ Meeting.

“ITEM 6: Set compensation policy that optimizes portfolio value for Company shareholders BE IT RESOLVED,
shareholders ask that the board and management exercise their discretion to establish Company wage policies that
are consistent with fiduciary duties and reasonably designed to provide workers with the minimum earnings
necessary to meet a family’s basic needs, because Company compensation practices that fail to provide a living
wage are harmful to the economy and therefore to the returns of diversified shareholders.1

Supporting Statement:

Kroger increased associates’ average hourly wage to $18/hour in 2023, suggesting its lowest paid workers earn still less.
The living wage in 2022 was $25.02 per hour per worker annually for a family of four (two working adults)2. Kroger’s
CEO, meanwhile, makes 671 times more than the Company’s median employee. While Kroger’s workforce is 49.6
percent female and 40.6 percent people of color, these groups compose only 31.7 percent and 26.3 percent of store
leaders3, indicating they make up a disproportionate number of employees not earning a living wage.

1 https://theshareholdercommons.com/case-studies/labor-and-inequality-case-study/
2 https://livingwage.mit.edu/articles/103-new-data-posted-2023-living-wage-calculaor
3 https://thekrogerco.com/wp-content/uploads/2023/09/Kroger-Co-2023-ESG-Report_Final.pdf

In response to a recent survey, 75 percent of Kroger workers said they were food insecure, 14 percent said they were
homeless, and 63 percent said they earned too little to cover basic expenses.4

Such inequality and disparity harm the entire economy. For example, closing the living wage gap worldwide could
generate an additional $4.56 trillion every year through increased productivity and spending,5 translating to a more
than 4 percent increase in annual GDP. A 2020 report found that had four key racial gaps for Black Americans—
wages, education, housing, and investment—been closed in 2000, $16 trillion could have been added to the U.S.
economy. Closing those gaps in 2020 could have added $5 trillion to the U.S. economy over the ensuing five years.6
By underpaying so many of its employees, Kroger may believe it will increase margins and thus financial
performance. But gain in Company profit that comes at the expense of society and the economy is a bad trade for
Company shareholders who are diversified and rely on broad economic growth to achieve their financial objectives.
The costs and risks created by low wages and inequality will directly reduce long- term diversified portfolio returns
because a drag on GDP directly reduces returns on diversified portfolios.7

This proposal asks the Board to set a Company compensation policy of paying a living wage to prevent contributing
to inequality and racial/gender disparity. Kroger could achieve this Proposal’s objective by securing Living Wage
for US Employer certification.8 Additionally, MIT has an online living wage calculator, or Kroger can work within
frameworks promulgated by organizations such as IDH Sustainable Trade Initiative or The Living Wage Network.
Kroger should use such frameworks in a manner that allows shareholders to gauge compliance and progress, while
providing the Company with discretion as to how to achieve the living-wage goal.

Please vote for: Set compensation policy that optimizes portfolio value for Company shareholders –
Proposal 6”

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

Kroger is proud to be an employer with a culture of opportunity and advancement that has created an environment
where people from any walk of life can come for a job and discover for a career. Kroger has provided an incredible
number of people with first jobs, second chances, and lifelong careers and we take seriously our role as a leading
employer in the United States.

Proponents acknowledge Kroger’s progress in raising associate wages.

Kroger’s national average hourly rate is nearly $19 per hour and its average hourly rate inclusive of benefits like health
care and retirement is nearly $25 per hour.

In fact, Kroger has raised wages more than 33% the last five years, far outpacing inflation. The Company has invested
a total of $2.4 billion in incremental investments since 2018, which has increased our national average hourly rate of
pay from $13.66 to nearly $19, or nearly $25 per hour with comprehensive benefits.

In addition to Kroger’s historic investments in wages and benefits, the Company is committed to growing
tomorrow’s leaders through programs including free financial coaching and our education benefit, which offers
associates up to $21,000 in tuition reimbursements, available to both full and part time associates.

Kroger will continue investing in wages in 2024.

Kroger will continue making significant incremental investments in associates in 2024. These investments are
included in Kroger’s forward-looking financial model. These continued investments will further raise average hourly
rates, continue improving healthcare options, establish new training and development opportunities, and more.

The majority of Kroger’s workforce is covered under collective bargaining agreements, which facilitate pay equity
for frontline associates. Wages, healthcare and pensions are included in approximately 350 collective bargaining
agreements that cover approximately 64% of our associates. The negotiated pay structures within those agreements

4 https://www.mytimes.com/2022/02/12/business/kroger-grocery-stores-workers-pay.html
5 https//tacklinginequality.org/files/introduction.pdf
6 https://ir.citi.com/%2FPRxPvgNWu319AU1ajGf%2BsKbjJjBJSaTOSdw2DF4xynPwFB8a2jV1FaA3ldy7vY59bOtN2lxVQM=
7 https://www.epi.org/publication/secular-stagnation/
8 https://livingwageforus.org/becoming-certified/

facilitate standard and consistent pay progression based on tenure and experience. Pay parity is promoted within the
model because of the structured wage grids and inherent progression framework. Non-union hourly roles follow
similar wage progressions.
Kroger’s pay policies confirm there are no meaningful differences in pay for associates by race or gender.

Earlier this year, Kroger published a new Statement on Pay Equity to reflect findings from our annual pay analysis to
monitor the company’s performance and identify unintended discrepancies in compensation practices. In 2023 we
enhanced the methodology for pay analyses to align with evolving industry standards. Our review of associates’ total
compensation for calendar year 2023, including base pay, cash bonuses and equity, adjusting for factors such as
position, tenure, performance, geographic location and collective bargaining unit, confirms there are no meaningful
differences in pay on an adjusted basis for associates who self-identify as male, female or a person of color.

Kroger’s aim is to strike a balance between significantly increasing wages for our associates over time while
also keeping food affordable for our customers.

The Board’s fiduciary duty includes the obligation to maintain a financially sustainable and growing business over
time, which allows Kroger to create additional social and economic benefits, most notably the creation of more jobs
and growth opportunities, for more people in our communities.

Adopting a nascent, under-developed and overly-prescriptive approach to well-established pay policies, especially
one that fails to account for free-market dynamics, is unnecessary and potential harmful to the interests of Kroger’s
associates, customers, communities, and shareholders – all of whom benefit from the Company’s thoughtful approach
to wage policy and sustainable growth.

Considering the Company’ current transparency and disclosures on this topic, and its established framework that takes
into account geographical and market-based pay differences, ensures equal pay for equal work, and the fact that the
majority of our workforce is covered under collective bargaining agreements, we recommend a vote AGAINST this
motion.

For the foregoing reasons, we urge you to vote AGAINST this proposal.

Item No. 7 – Just Transition Report

We have been advised that Domini Impact Equity Fund or an appointed representative will present the following
proposal for consideration during the 2024 Annual Shareholders’ Meeting.

“Whereas:
A “just transition” is increasingly recognized as an important component of climate action to address the needs,
priorities, and realities of society while mitigating climate change and fostering resilience. The International Labor
Organization (ILO) published just transition guidelines for governments and businesses with guidance on anticipating,
preparing, and adapting to the employment impacts of climate change,1 premised on respect for rights at work and
fundamental labor protections, including against forced labor. The World Benchmarking Alliance (WBA) developed a
methodology to assess companies on their contribution to a just transition.2

Kroger acknowledges in its 10K and CDP report that climate change presents physical and transition risks that may
impact the company’s ability to operate its own facilities and supply chain. The food and agriculture industry
contributes one third of global greenhouse gas emissions, and the agricultural supply chain is vulnerable to changing
patterns of drought, extreme heat, and precipitation, as well as climate migration. In 2030, the sector may account for
60 percent of global work hours lost to heat stress. Farmworkers face heightened climate related risks, including heat
related illness and death,3 exhaustion and heat stress,4 mental health stressors, increased pesticide exposure,5 as well as
other severe human rights violations including forced labor.6

1 https://www.ilo.org/wcmsp5/groups/public/@ed_emp/@emp_ent/documents/publication/wcms_432859.pdf;
https://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/--- publ/documents/publication/wcms_711919.pdf
2 https://assets.worldbenchmarkingalliance.org/app/uploads/2021/07/Just-Transition-Methodology.pdf
3 https://insideclimatenews.org/news/31122023/california-farmworkers-dying-in-the-heat/
4 https://www.bloomberg.com/news/articles/2021-08-12/farmworkers-overheat-on-frontlines-of-climate-change
5 https://www.farmworkerjustice.org/wp-content/uploads/2022/05/EJ-Symposium-Issue-Brief-Climate- Change_FINAL.pdf
6 https://polarisproject.org/wp- content/uploads/2021/06/Polaris_Labor_Exploitation_and_Trafficking_of_Agricultural_Workers_During_the_Pand
emic.pdf

Yet, Kroger’s disclosures overlook the climate-related risks to workers, such as impacts of heat stress on job
quality and productivity for workers that harvest and deliver the commodities and products to Kroger’s stores.
Failure to identify, evaluate, and adapt to these risks can lead to business disruptions, lack of supply chain
resilience, and legal and reputational risk. In 2023 a Kroger distribution center employee died on the job due to
heat-related causes.7 Despite Kroger’s existing responsible sourcing policies, it has been connected in 2023 and
2024 to major forced labor cases in the United States involving its suppliers, which resulted in convictions or
are currently being prosecuted.8

Worker-driven social
to
the
identifying the risks of climate change and developing appropriate and enforceable protections from these
risks and others facing farmworkers, without fear of retaliation.10

responsibility

responsive

(FFP)
,

including

Program

models,

Food

been

Fair

have

Resolved: Shareholders request that the Board of Directors publish a just transition report, at reasonable cost
omitting proprietary information, disclosing how Kroger is assessing and addressing the impacts of climate
change and ensuring fundamental labor protections for workers in its agricultural supply chain, consistent with
the ILO’s just transition guidelines.

Supporting Statement: Shareholders recommend the report include, at Board discretion:

● A set of measurable, time-bound indicators, such as those recommended by the WBA,
● An evaluation of the risks facing its agricultural supply chain workers, and how, if at all Kroger is

addressing them, detailing how its efforts compare to other effective mechanisms such as the FFP, and

● Disclosure on the stakeholder engagement process used in developing its just transition report.”

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

Kroger has a long-standing commitment to corporate responsibility in our own operations and global supply chain to
provide affordable food and other essential items for communities across the U.S. We put our associates, customers
and communities first in everything we do and lead with our Values. We welcome and include the perspectives of our
associates and other workers in our supply chain in the context of goal-setting, program development and
implementation, and progress reporting.

The Company already provides robust annual reporting on sustainability and social impact topics and
engages stakeholders to inform content.

People are at the heart of Kroger’s purpose-driven approach and shared-value ESG Strategy: Thriving Together. As
outlined in our ESG report, we aim to advance positive impacts across three strategic pillars – People, Planet, and
Systems. The centerpiece of our strategy is Kroger’s Zero Hunger | Zero Waste impact plan. It reflects our people-
first approach to complex food systems issues, including food access and food security, health and nutrition, waste
and circularity, responsible sourcing, climate resilience, and climate-related impacts from agricultural production,
including food loss and waste.

Kroger’s detailed annual ESG report and other public disclosures describe our strategy and management approach:
https://www.thekrogerco.com/wp-content/uploads/2023/09/Kroger-Co-2023-ESG-Report_Final.pdf. Additional
topic-specific resources are available here: https://www.thekrogerco.com/esgreport/. The information on, or
accessible through, these websites are not part of, or incorporated by reference into this proxy statement.

Just Transition approaches are nascent and not an established reporting practice.

7 https://www.theguardian.com/us-news/2023/aug/28/kroger-worker-dies-heat-temperature
8 https://www.dol.gov/newsroom/releases/whd/whd20230202-2; https://www.levernews.com/how-krogersmerger-
push-leads-back-to-alleged-human-trafficker/
9 https://www.cbp.gov/sites/default/files/assets/documents/2021-
Aug/CBP%202021%20VTW%20FAQs%20%28Forced%20Labor%29.pdf; https://blog.dol.gov/2022/01/13/exposingthe-
brutality-of-human-trafficking; https://www.ams.usda.gov/services/grants/flsp/faq
10 https://ciw-online.org/blog/2023/11/how-the-fair-food-programs-heat-protections-are-saving-lives-and-leadingthe-
way-toward-a-worker-driven-solution/; https://www.thepacker.com/news/social-responsibility/farmingunder-
big-red-sun-worker-advocates-push-heat-stress-protections

Feedback from our shareholders and subject matter experts about Kroger’s ESG strategy and public reporting is
overwhelmingly positive. Report contents are shaped by established materiality best practices; in 2023, we
completed an assessment based on the leading principles of double materiality. As a result, our latest report includes
a number of worker-focused topics, including human capital management; diversity and inclusion; labor relations
and freedom of association; and responsible sourcing and supply chain.

The World Benchmarking Alliance Just Transition Methodology was introduced in 2021, and few examples of such
reports have been published to date. It is one of many benchmarks and topic-specific reporting frameworks that have
multiplied in recent years above and beyond established standards. In recent years, Kroger expanded our climate-
related reporting to begin aligning with the Task Force on Climate-related Financial Disclosures (TCFD), which is
most commonly cited among stakeholders during engagement.

We will continue to assess our disclosures as best practices and standards evolve, particularly for complex,
interconnected systems issues affecting people and our planet.

We are focused on reviewing our current climate-related goals and roadmap against science-aligned
frameworks and future regulatory reporting requirements.

Kroger’s current climate goal is to reduce absolute Scope 1 and 2 greenhouse gas (GHG) emissions by 30% by 2030
against a 2018 baseline. We are making solid progress toward this goal, achieving a cumulative reduction of 15.2%
in 2022. We are reviewing this goal against the requirements of the Science Based Targets initiative to determine the
feasibility of increasing the level of ambition and setting a new Scope 3 emissions reduction goal. We will provide
an update on this work in our next ESG report.

We engage a wide range of people and perspectives in our climate strategy and roadmap development. We also
assess climate risk to support business and community resilience amid changing temperatures and weather patterns
and potential business disruptions.

Kroger’s approach to responsible sourcing includes programs to engage and respect the rights of farmworkers
in agricultural supply chains.

Our sourcing and sustainability workstreams already contemplate potential impacts to workers. We set and uphold
clear expectations for respecting human rights for workers in our own operations and global supply chain. The
Company’s Human Rights Policy outlines expectations for all suppliers to agree to and comply with our Vendor Code
of Conduct, including suppliers hiring farmworkers in agricultural supply chains. Recent agricultural worker-focused
achievements include:

• Developing a human rights due diligence framework to operationalize and embed accountability for supplier

oversight within the company’s business functions.

• Conducting human rights impact assessments (HRIA) in our supply chain and publishing comprehensive
reports. For example, we engaged a third party to conduct a HRIA focused on the production of mixed
greens in California and included detailed interviews with farmworkers and rightsholders. Based on the
workers’ feedback, we are in the process of developing heat exposure guidelines for farmworkers that
address the potential impact of climate-related temperature changes and severe weather events. The full
report on this HRIA is available here: https://www.thekrogerco.com/wp-
content/uploads/2023/06/Kroger_Mixed-Greens-HRIA-Report-June-FINAL-2023.pdf. The information on,
or accessible through, this website is not part of, or incorporated by reference into this proxy statement.

• Co-leading the development and rollout of the International Fresh Produce Association’s Ethical Charter and
Ethical Charter Implementation Program (ECIP) to strengthen management systems and responsible labor
practices among domestic produce and floral suppliers and their growers. In 2023, Kroger began onboarding
suppliers to the ECIP, with program oversight from The Sustainability Consortium and the Equitable Food
Initiative, which offers capacity-building resources to enable continuous improvement.

•

Introducing a goal to promote more sustainable agricultural practices in our fresh produce supply chain by
requiring growers to use Integrated Pest Management practices, reducing both pesticide exposure for
farmworkers and nature-based impacts from food production. Kroger’s goal to Protect Pollinators and
Biodiversity is available here: https://www.thekrogerco.com/wp-content/uploads/2024/01/Kroger-Goal-to-
Protect-Pollinators-and-Biodiversity_Jan-2024_Final.pdf. The information on, or accessible through, this
website is not part of, or incorporated by reference into this proxy statement.

• Continuing Kroger’s long-standing work with Fair Trade USA to source Fair Trade Certified™ ingredients

for Our Brands products. In 2022, Kroger procured more than 20.4 million pounds of Fair Trade Certified
ingredients for Our Brands products like coffee, tea, baking ingredients, fruit-based snacks, coconut water
and milk, oils, and personal care – a 21% increase from the prior year. This resulted in $2.1 million in
Community Development Funds to benefit growers and their communities around the world.

Because of Kroger’s robust disclosure practices, adoption of peer-validated disclosure frameworks, and well-
established responsible supply chain programs, additional reporting against a nascent and still-evolving approach is
both an unnecessary and inefficient use of shareholder resources.

For the foregoing reasons, we urge you to vote AGAINST this proposal.

Shareholder Proposals and Director Nominations — 2025 Annual Meeting

Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, shareholder proposals intended

for inclusion in the proxy material relating to Kroger’s annual meeting of shareholders in June 2025 should be
addressed to Kroger’s Secretary and must be received at our executive offices not later than January 15, 2025. These
proposals must comply with Rule 14a-8 and the SEC’s proxy rules. If a shareholder submits a proposal outside of
Rule 14a-8 for the 2025 annual meeting and such proposal is not delivered within the time frame specified in the
Regulations, Kroger’s proxy may confer discretionary authority on persons being appointed as proxies on behalf of
Kroger to vote on such proposal.

In addition, Kroger’s Regulations contain an advance notice of shareholder business and director nominations
requirement, which generally prescribes the procedures that a shareholder of Kroger must follow if the shareholder
intends, at an annual meeting, to nominate a person for election to Kroger’s Board of Directors or to propose other
business to be considered by shareholders. These procedures include, among other things, that the shareholder give
timely notice to Kroger’s Secretary of the nomination or other proposed business, that the notice contain specified
information, and that the shareholder comply with certain other requirements. In order to be timely, this notice must
be delivered in writing to Kroger’s Secretary, at our principal executive 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 2025
Annual Meeting, to nominate a person for election to the Board of Directors or to propose other business, the
shareholder must deliver a notice of such nomination or proposal to Kroger’s Secretary not later than March 31,
2025 and comply with the requirements of the Regulations.

Furthermore, in addition to the requirements of SEC Rule 14a-8 or our Regulations, as applicable, as described

above, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director
nominees other than our nominees must provide notice to Kroger’s Secretary that sets forth the information required
by Rule 14a-19 of the Exchange Act no later than April 28, 2025, and must comply with the additional requirements
of Rule 14a-19(b).

Eligible shareholders may also submit director nominees for inclusion in our proxy statement for the 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 16, 2024 and no
later than January 15, 2025.

Shareholder proposals, director nominations, including, if applicable pursuant to proxy access, and advance

notices must be addressed in writing, and addressed and delivered timely to: Corporate Secretary, The Kroger Co.,
1014 Vine Street, Cincinnati, Ohio 45202-1100.

Questions and Answers about the Annual Meeting

Why are you holding a virtual meeting?

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

on our experience with virtual meetings during the COVID-19 pandemic, we believe this facilitates shareholder
attendance and participation, and has allowed a greater number of questions from a broader group of shareholders to
be asked and answered at the Meeting than in an in-person format. It also reduces our costs and in a small way the
carbon footprint of our activities. Therefore, our 2024 Annual Meeting is being held on a virtual-only basis with no
physical location. Our goal for the Annual Meeting is to enable the broadest number of shareholders to participate in
the meeting, while providing substantially the same access and exchange with Management and the Board as an in-
person meeting. We believe that we are observing best practices for virtual shareholder meetings, including by
providing a support line for technical assistance and addressing as many shareholder questions as time allows.

Who can vote?

You can vote if, as of the close of business on April 30, 2024, the record date, you were a shareholder of record

of Kroger common shares.

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

Your proxy is being solicited by Kroger’s Board of Directors. Kroger is paying the cost of solicitation. We
have hired D.F. King & Co., Inc., a proxy solicitation firm, to assist us in soliciting proxies and we will pay them a
fee estimated not to exceed $18,500, plus reasonable expenses for the solicitation.

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

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

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

Who are the members of the Proxy Committee?

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

Committee for our 2024 Annual Meeting.

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

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

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

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

How do I vote my shares held in street name?

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

How do I vote my proxy?

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

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

instruction form, or notice.

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

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

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

materials, or voting instruction form.

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

www.virtualshareholdermeeting.com/KR2024.

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

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

the virtual Annual Meeting as they would at an in-person meeting. In order to submit a question at the Annual
Meeting, you will need your 16-digit control number that is printed on the Notice or proxy card that you received in
the mail, or via email if you have elected to receive material electronically. You may log in 15 minutes before the
start of the Annual Meeting and submit questions online. You will be able to submit questions during the Annual
Meeting as well. We encourage you to submit any question that is relevant to the business of the meeting. Questions
asked during the Annual Meeting will be read and addressed during the meeting. 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/KR2024 at least 15 minutes prior to the start of the Annual Meeting to provide
time to register and download the required software, if needed. The webcast replay will be available at

www.virtualshareholdermeeting.com/KR2024 until the 2025 Annual Meeting of Shareholders. If you access the
meeting but do not enter your control number, you will be able to listen to the proceedings, but you will not be able
to vote or otherwise participate.

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

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

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

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

How do I submit a question at the Annual Meeting?

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

www.virtualshareholdermeeting.com/KR2024, simply type your question in the “ask a question” box and click
“submit”. You may also submit questions in advance of the meeting via the internet at www.proxyvote.com when
you vote your shares.

When should I submit my question at the Annual Meeting?

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

of the meeting during which shareholders may submit questions to us. We anticipate having such a question-and-
answer session at the 2024 Annual Meeting. You can submit a question up to 15 minutes prior to the start of the
Annual Meeting and up until the time we indicate that the question-and-answer session is concluded. However, we
encourage you to submit your questions before or during the formal business portion of the meeting and our
prepared statements, in advance of the question-and-answer session, in order to ensure that there is adequate time to
address questions in an orderly manner. You may also submit questions in advance of the meeting via the internet at
www.proxyvote.com when you vote your shares.

Can I change or revoke my proxy?

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

revoked before it is exercised. You may change or revoke your proxy by providing written notice to Kroger’s
Secretary at 1014 Vine Street, Cincinnati, Ohio 45202, by executing and sending us a subsequent proxy, or by
voting your shares while logged in and participating in the 2024 Annual Meeting of Shareholders.

How many shares are outstanding?

As of the close of business on April 30, 2024, the record date, our outstanding voting securities consisted of

727,594,870 common shares.

How many votes per share?

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

What voting instructions can I provide?

You may instruct the proxies to vote “For” or “Against” each proposal, or you may instruct the proxies to

“Abstain” from voting.

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

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

will vote in accordance with the recommendations of the Board.

If you hold shares in street name and do not provide your broker with specific voting instructions on proposals

1, 2, and 4 – 7, which are considered non-routine matters, your broker does not have the authority to vote on those
proposals. This is generally referred to as a “broker non-vote.” Proposal 3, ratification of auditors, is usually
considered a routine matter and, therefore, your broker may vote your shares according to your broker’s discretion.

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

shareholder vote, is set forth below.

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

Proposals

Board
Recommendation

Voting Approval
Standard

Effect of
Abstention

Effect of
broker
non-vote

No. 1 Election of Directors

No. 2 Advisory Vote to Approve
Executive Compensation

FOR

Each Director
Nominee
recommended by
your Board

FOR

No. 3 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)

Affirmative vote of the
majority of shares
participating in the
voting1

No Effect No Effect

Nos. 4 – 7 Shareholder Proposals

AGAINST
Each Proposal

Affirmative vote of the
majority of shares
participating in the voting

No Effect No Effect

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

standard.

Householding of Proxy Materials

We have adopted a procedure approved by the SEC called “householding.” Under this procedure, shareholders
of record who have the same address and last name will receive only one copy of the proxy materials unless one or
more of these shareholders notifies us that they wish to continue receiving individual copies. This procedure will
reduce our printing costs and postage fees. Householding will not in any way affect dividend check mailings.

If you are eligible for householding, but you and other shareholders of record with whom you share an address
currently receive multiple copies of our proxy materials or if you hold in more than one account, and in either case
you wish to receive only a single copy for your household or if you prefer to receive separate copies of our
documents in the future, please contact your bank or broker, or contact Kroger’s Secretary at 1014 Vine Street,
Cincinnati, Ohio 45202 or via telephone at 513-762-4000.

Beneficial shareholders can request information about householding from their banks, brokers or other holders

of record.

The management knows of no other matters that are to be presented at the meeting, but, if any should be

presented, the Proxy Committee expects to vote thereon according to its best judgment.

Available Information

The Company files Annual Reports on Form 10-K with the Securities and Exchange Commission. A copy of

the Annual Report on Form 10-K for the fiscal year ended February 3, 2024 (except for certain exhibits thereto),
including our audited financial statements and financial statement schedules, may be obtained, free of charge, upon
written request by any shareholder to Kroger’s Secretary at 1014 Vine Street, Cincinnati, Ohio 45202 or via
telephone at 513-762-4000. Copies of all exhibits to the Annual Report on Form 10-K are available upon a similar
request, subject to reimbursing the Company for its expenses in supplying any exhibit.

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

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2023 ANNUAL REPORT

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended February 3, 2024.
OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-303
THE KROGER CO.
(Exact name of registrant as specified in its charter)

Ohio
(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).

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the average bid and asked price of such common
equity, as of the last business day of the registrant’s most recently completed second fiscal quarter (August 12, 2023). $35.3 billion.
The number of shares outstanding of the registrant's common stock, as of the latest practicable date. 721,687,844, shares of Common Stock of $1 par value, as of March 27,
2024.

Documents Incorporated by Reference:

Portions of Kroger’s definitive proxy statement for its 2024 annual meeting of shareholders, which shall be filed with the Securities and Exchange Commission within 120
days after the end of the fiscal year to which this Report relates, are incorporated by reference into Part III of this Report.

The Kroger Co.
Form 10-K

For the Fiscal Year Ended February 3, 2024

Table of Contents

Business
Risk Factors
Unresolved Staff Comments
Cybersecurity
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
20
21
22
22

22
22

24
25
48
51
99
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99
99

100
100
100
100
101
101

102
102
104
105

Part I
Item 1
Item 1A
Item 1B
Item 1C
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,” “assumptions,” “believe,” “committed,”
“continue,” “could,” “deliver,” “effect,” “enable,” “estimate,” “expects,” “future,” “goal,” “growth,” “intended,”
“likely,” “may,” “model,” “objective,” “plan,” “position,” “program,” “range,” “result,” “strategy,” “strive,” “strong,”
“target,” “trend,” “will” and “would,” and similar words or phrases. Moreover, statements in the sections entitled Risk
Factors, Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), and
elsewhere in this report regarding our expectations, projections, beliefs, intentions or strategies are forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.

Various uncertainties and other factors could cause actual results to differ materially from those contained in the

forward-looking statements. These include:

• The extent to which our sources of liquidity are sufficient to meet our requirements may be affected by the state
of the financial markets and the effect that such condition has on our ability to issue commercial paper at
acceptable rates. Our ability to borrow under our committed lines of credit, including our bank credit facilities,
could be impaired if one or more of our lenders under those lines is unwilling or unable to honor its contractual
obligation to lend to us, or in the event that global pandemics, natural disasters or weather conditions interfere
with the ability of our lenders to lend to us. Our ability to refinance maturing debt may be affected by the state
of the financial markets.

• Our ability to achieve sales, earnings and incremental FIFO operating profit goals may be affected by: the risks
relating to or arising from our proposed nationwide opioid litigation settlement, including our ability to finalize
and effectuate the settlement, the scope and coverage of the ultimate settlement and the expected financial or
other effects that could result from the settlement; our proposed transaction with Albertsons, including, among
other things, our ability to consummate the proposed transaction and related divestiture plan, including on the
terms of the merger agreement and divestiture plan, on the anticipated timeline, with the required regulatory
approvals, and/or resolution of pending litigation challenging the merger; labor negotiations; potential work
stoppages; changes in the unemployment rate; pressures in labor; changes in government-funded benefit
programs; changes in the types and numbers of businesses that compete with us; pricing and promotional
activities of existing and new competitors, and the aggressiveness of that competition; our response to these
actions; the state of the economy, including interest rates, the current inflationary environment and future
potential inflationary, disinflationary and/or deflationary trends and such trends in certain commodities,
products and/or operating costs; the geopolitical environment including wars and conflicts; unstable political
situations and social unrest; changes in tariffs; the effect that fuel costs have on consumer spending; volatility of
fuel margins; manufacturing commodity costs; supply constraints; diesel fuel costs related to our logistics
operations; trends in consumer spending; the extent to which our customers exercise caution in their purchasing
in response to economic conditions; the uncertainty of economic growth or recession; stock repurchases;
changes in the regulatory environment in which we operates; our ability to retain pharmacy sales from third-
party payors; consolidation in the healthcare industry, including pharmacy benefit managers; our ability to
negotiate modifications to multi-employer pension plans; natural disasters or adverse weather conditions; the
effect of public health crises or other significant catastrophic events; the potential costs and risks associated
with potential cyber-attacks or data security breaches; the success of our future growth plans; the ability to
execute our growth strategy and value creation model, including continued cost savings, growth of our
alternative profit businesses, and our ability to better serve our customers and to generate customer loyalty and
sustainable growth through our strategic pillars of fresh, Our Brands, personalization, and seamless; and the
successful integration of merged companies and new partnerships.

• Our ability to achieve these goals may also be affected by our ability to manage the factors identified above.

Our ability to execute our financial strategy may be affected by our ability to generate cash flow.

• Our adjusted effective tax rate may differ from the expected rate due to changes in tax laws, the status of

pending items with various taxing authorities, and the deductibility of certain expenses.

We cannot fully foresee the effects of changes in economic conditions on our business.

Other factors and assumptions not identified above, including those discussed in Part 1, Item 1A of this Annual

Report, could also cause actual results to differ materially from those set forth in the forward-looking information.
Accordingly, actual events and results may vary significantly from those included in, contemplated or implied by
forward-looking statements made by us or our representatives. We undertake no obligation to update the forward-
looking information contained in this filing.

Our ability to complete our proposed transaction with Albertsons may be affected by various factors, including
those set forth in Part I, Item 1A of this Annual Report. Risk Factors included in this Annual Report on Form 10-K and
other factors as may be described in subsequent filings with the SEC.

ITEM 1.

BUSINESS.

The Kroger Co. (the “Company” or “Kroger”) was founded in 1883 and incorporated in 1902. Our Company is built
on the foundation of our retail grocery business, which includes the added convenience of our retail pharmacies and fuel
centers. Our strategy is focused on growing customer loyalty by delivering great value and convenience, and investing in
four strategic pillars: Fresh, Our Brands, Data & Personalization and Seamless.

We also utilize the data and traffic generated by our retail business to deliver incremental value and services for our

customers that generates alternative profit streams. These alternative profit streams would not exist without our core
retail business.

Our revenues are predominately earned and cash is generated as consumer products are sold to customers in our
stores, fuel centers and via our online platforms. We earn income predominately by selling products at price levels that
produce revenues in excess of the costs we incur to make these products available to our customers. Such costs include
procurement and distribution costs, facility occupancy and operational costs, and overhead expenses. Our fiscal year
ends on the Saturday closest to January 31. All references to 2023, 2022 and 2021 are to the fiscal years ended February
3, 2024, January 28, 2023 and January 29, 2022, respectively, unless specifically indicated otherwise.

We maintain a web site (www.thekrogerco.com) that includes the Kroger Fact Book and other additional
information about the Company. Kroger’s website and any reports or other information made available by Kroger
through its website are not part of or incorporated by reference into this Annual Report on Form 10-K. We make
available through our web site, free of charge, our annual reports on Form 10-K, our quarterly reports on Form 10-Q, our
current reports on Form 8-K and our interactive data files, including amendments. These forms are available as soon as
reasonably practicable after we have filed them with, or furnished them electronically to, the SEC.

Kroger is diversified across brands, product categories, channels of distribution, geographies and consumer

demographics. Our combination of assets includes the following:

Stores

As of February 3, 2024, Kroger operates supermarkets under a variety of local banner names in 35 states and the

District of Columbia. As of February 3, 2024, Kroger operated, either directly or through its subsidiaries, 2,722
supermarkets, of which 2,257 had pharmacies and 1,665 had fuel centers. Approximately 50% of our supermarkets were
operated in Company-owned facilities, including some Company-owned buildings on leased land. Our stores operate
under a variety of banners that have strong local ties and brand recognition. We connect with customers through our
expanding seamless ecosystem and the consistent delivery of a full, fresh, and friendly customer experience. Fuel sales
are an important part of our revenue, net earnings and loyalty offering. Our fuel strategy is to include a fuel center at
each of our supermarket locations when it is feasible and it is expected to be profitable. Each fuel center typically
includes five to ten islands of fuel dispensers and storage tanks with capacity for 40,000 to 50,000 gallons of fuel.
Supermarkets are generally operated under one of the following formats: combination food and drug stores (“combo
stores”); multi-department stores; marketplace stores; or price impact warehouses.

The combo store is the primary grocery store format. We believe this format is successful because the stores are

large enough to offer the specialty departments, including natural food and organic sections, pharmacies, general
merchandise, pet centers and high-quality perishables such as fresh seafood and organic produce.

Multi-department stores are significantly larger in size than combo stores. In addition to the departments offered at a

typical combo store, multi-department stores sell a wide selection of general merchandise items such as apparel, home
fashion and furnishings, outdoor living, electronics, automotive products and toys.

Marketplace stores are smaller in size than multi-department stores. They offer full-service grocery, pharmacy and

health and beauty care departments as well as an expanded perishable offering and general merchandise area that
includes apparel, home goods and toys.

Price impact warehouse stores offer a “no-frills, low cost” warehouse format and feature everyday low prices plus

promotions for a wide selection of grocery and health and beauty care items. Quality meat, dairy, baked goods and fresh
produce items provide strategic differentiation for price impact warehouse stores. The average size of a price impact
warehouse store is similar to that of a combo store.

Seamless Digital Ecosystem

We offer a convenient shopping experience for our customers regardless of how they choose to shop with us,
including Pickup, Delivery and Ship. We offer Pickup and Harris Teeter ExpressLane™ — personalized, order online,
pick up at the store services — at 2,350 of our supermarkets and provide Delivery, which allows us to offer digital
solutions to substantially all of our customers. Our Delivery solutions include orders delivered to customers from retail
store locations, customer fulfillment centers powered by Ocado and orders placed through third-party platforms. These
channels allow us to serve customers anything, anytime and anywhere with zero compromise on selection, convenience,
and price. We also provide relevant customer-facing apps and interfaces that have the features customers want that are
also reliable, easy to use and deliver a seamless customer experience across our store and digital channels.

Merchandising and Manufacturing

Our Brands products play an important role in our merchandising strategy and represented over $31 billion of our
sales in 2023. Our supermarkets, on average, stock over 12,600 private label items. Our Brands products are primarily
produced and sold in three “tiers.” Private Selection® is our main premium quality brand, offering customers culinary
foods and ingredients that deliver amazing eating experiences. The Kroger® brand, which represents the majority of our
private label items, is designed to consistently satisfy and delight customers with quality products that exceed or meet
the national brand in taste and efficacy, as well as with unique and differentiated products. Big K®, Smart Way® and
Heritage Farm® are some of our value brands, designed to deliver good quality at a very affordable price. In addition to
our three “tiers,” Our Brands offers customers a variety of natural and organic products with Simple Truth® and Simple
Truth Organic®. Both Simple Truth® and Simple Truth Organic® are free from a defined list of artificial ingredients
that some customers have told us they do not want in their food, and the Simple Truth Organic products are USDA
certified organic.

Approximately 30% of Our Brands units and 43% of the grocery category Our Brands units sold in our

supermarkets are produced in our food production plants; the remaining Our Brands items are produced to our strict
specifications by outside manufacturers. We perform a “make or buy” analysis on Our Brands products and decisions
are based upon a comparison of market-based transfer prices versus open market purchases. As of February 3, 2024, we
owned 33 food production plants. These plants consisted of 14 dairies, nine deli or bakery plants, five grocery product
plants, two beverage plants, one meat plant and two cheese plants.

Our Data

We are evolving into a more diverse business. The traffic and data generated by our retail business, including
pharmacies and fuel centers, is enabling this transformation. Kroger serves approximately 62 million households
annually and because of our rewards program, over 95% of customer transactions are tethered to a Kroger loyalty card.
Our 20 years of investment in data science capabilities is allowing us to utilize this data to create personalized
experiences and value for our customers and is also enabling our fast-growing, high operating margin alternative profit
businesses, including data analytic services and third-party media revenue. Our retail media business – Kroger Precision
Marketing – provides differentiated media capabilities for our consumer packaged goods partners and other industry
verticals. It is a key driver of our digital profitability and alternative profit.

Proposed Merger with Albertsons

As previously disclosed, on October 13, 2022, we entered into a merger agreement with Albertsons. The proposed

merger is expected to accelerate our go-to-market strategy that includes Fresh, Our Brands, Personalization and
Seamless, and continue our track record of investments across lowering prices, enhancing the customer experience, and
increasing associate wages and benefits. For additional information about the proposed merger with Albertsons, see Note
16 to the Consolidated Financial Statements.

SEGMENTS

We operate supermarkets, multi-department stores and fulfillment centers throughout the United States. Our retail
operations, which represent 97% of our consolidated sales, is our only reportable segment. We aggregate our operating
divisions into one reportable segment due to the operating divisions having similar economic characteristics with similar
long-term financial performance. In addition, our operating divisions offer customers similar products, have similar
distribution methods, operate in similar regulatory environments, purchase the majority of the merchandise for retail sale
from similar (and in many cases identical) vendors on a coordinated basis from a centralized location, serve similar types
of customers, and are allocated capital from a centralized location. Our operating divisions are organized primarily on a
geographical basis so that the operating division management team can be responsive to local needs of the operating
division and can execute company strategic plans and initiatives throughout the locations in their operating division. This
geographical separation is the primary differentiation between these retail operating divisions. The geographical basis of
organization reflects how the business is managed and how our Chief Executive Officer, who acts as our chief operating
decision maker, assesses performance internally. All of our operations are domestic. Revenues, profits and losses and
total assets are shown in our Consolidated Financial Statements set forth in Item 8 below.

SEASONALITY

The majority of our revenues are generally not seasonal in nature. However, revenues tend to be higher during the

major holidays throughout the year. Additionally, certain significant events including inclement weather systems,
particularly winter storms, tend to affect our sales trends.

HUMAN CAPITAL MANAGEMENT

Our People

We want Kroger to be a place where our customers love to shop and associates love to work. This is why we aim to

create working environments where associates feel encouraged and supported to be their best selves every day. As of
February 3, 2024, Kroger employed nearly 414,000 full- and part-time employees. Our people are essential to our
success, and we focus intentionally on attracting, developing and engaging a diverse workforce that represents the
communities we serve. We strive to create a culture of opportunity and take seriously our role as a leading employer in
the United States. Kroger has provided a large number of people with first jobs, new beginnings and lifelong careers.
We have long been guided by our values – Honesty, Integrity, Respect, Safety, Diversity and Inclusion.

Attracting & Developing Our Talent

To deliver on our customers’ experiences and remain competitive with union and non-union employers, we

continually try to improve how we attract and retain talent. In addition to competitive wages, quality benefits and a safe
work environment, we offer a broad range of employment opportunities for workers of all ages and aspirations. Many
retail roles offer opportunities to learn new skills, grow and advance careers.

Associates at all levels of Kroger have access to training and education programs to build their skills and prepare for

the roles they want. In 2023, we spent approximately $210 million on training our associates through onboarding,
leadership development programs and programs designed to upskill associates across the Company. We continue to
invest in new platforms and applications to make learning more accessible to our associates.

Beyond our own programs, associates can take advantage of our tuition reimbursement benefit, which offers up to

$3,500 annually — $21,000 over the course of employment — toward continuing education. These funds can be applied
to education programs like certifications, associate or graduate degrees. Approximately 7,000 associates, 94% of whom
are hourly, have taken advantage of our tuition reimbursement program in 2023. Kroger has invested approximately $54
million in this program since it launched in 2018.

Rewarding Our Associates

As we continue to operate in a challenging labor market, we are dedicated to attracting and retaining the right talent

across the organization to be able to continue delivering for our customers. We are investing in our associates by
expanding our industry-leading benefits, including continuing education, training and development and health and
wellness. During 2023, we increased associate wages resulting in an average hourly rate of nearly $19, and a rate of
nearly $25 with comprehensive benefits factored in, which is a 33% increase in rate in the last five years. Over the last
five years, we have now invested more than $2.4 billion in incremental wage investments. We remain committed to
supporting our associates with investments in wages and comprehensive benefits that are sustainable and will allow us to
continue to keep products affordable for the communities we serve. We expect to make continued associate investments
in 2024.

Promoting Diversity, Equity & Inclusion

Diversity and inclusion have been among Kroger’s values for decades. We strive to reflect the communities we
serve and foster a culture that inspires collaboration and feeds the human spirit. We have taken a very thoughtful and
purposeful approach to enact meaningful change and develop what we believe are the right actions to achieve true and
lasting equality. Our Framework for Action: Diversity, Equity & Inclusion plan reflects our desire to redefine, deepen,
and advance our commitment, mobilizing our people, passion, scale and resources. This ongoing commitment includes
the following framework pillars: Create a More Inclusive Culture; Develop Diverse Talent; Advance Diverse
Partnerships; Advance Equitable Communities; and Deeply Listen and Report Progress.

Creating a Safe Environment

Our associates’ safety is a top priority. It is also one of our core values. We prioritize providing the right safety
training and equipment, safe working conditions and resources to maintain and improve associates’ well-being. Through
our strategy to set clear expectations, routine monitoring, and regular communication and engagement, we reduce the
number of injuries and accidents that happen in our workplace. We track health and safety metrics centrally for an
enterprise-wide view of issues, trends and opportunities and monitor associate injury performance including total
injuries, Occupational Safety and Health Administration (“OSHA”) injury rates, and lost-time injuries, as well as
customer injury metrics like slip-and-fall injuries. We also track the completion of required training for associates, and
we regularly share these metrics with leaders and relevant team members to inform management decisions.

Supporting Labor Relations

A majority of our employees are covered by collective bargaining agreements negotiated with local unions affiliated

with one of several different international unions. There are approximately 350 such agreements, usually with terms of
three to five years. Wages, health care and pensions are included in all of these collective bargaining agreements that
cover approximately 65% of our associates. Our objective is to negotiate contracts that balance wage increases that are
competitive with union and non-union employers and provide affordable healthcare for associates with keeping groceries
affordable for the communities we serve. Our obligation is to do this in a way that maintains a financially sustainable
business.

MANAGING CLIMATE IMPACTS

Managing climate change impacts is an important part of Thriving Together, Kroger’s Environmental, Social &

Governance (“ESG”) strategy and has been a focus for our business for many years. With a large portfolio of
supermarkets, distribution warehouses and food production plants, as well as a complex supply chain, we recognize
Kroger’s effect on our climate. We continue to explore opportunities and take steps to reduce the effects of our
operations on the environment and to reduce the potential risk of a changing climate on our operations. This includes
enhancing our operational efficiency, increasing our usage of renewable energy and investing in new technologies. The
key elements of our climate strategy are included below.

Governance

Climate effects are managed by leadership with input from several departments across the business. The Public
Responsibilities Committee of the Board of Directors oversees our responsibilities as a corporate citizen and Kroger’s
practices related to environmental sustainability, including climate effects, along with other environmental and social
topics of material importance. Kroger discloses detailed energy and emissions data, as well as our approach to managing
climate-related topics, in our annual ESG Report, which can be found at www.thekrogerco.com/esgreport.

Risk assessment

To help identify and manage climate-related risks to our business, we conducted a quantitative climate risk

assessment to determine the likelihood that different physical climate risks, including drought, extreme heat and extreme
precipitation, would affect Kroger’s operations at representative facilities in different geographies and, in turn,
potentially increase operating costs for these facilities. As a result of our risk assessments, we do not currently anticipate
the modeled physical risks to adversely affect our financial condition, results of operations or cash flows for the
foreseeable future. We plan to continue these climate risk assessments moving forward.

Kroger also acknowledges that current and emerging climate-related legislation could affect our business. As a

result of state and federal requirements regarding the phase down of hydrofluorocarbon (“HFC”) refrigerants, we
anticipate steadily replacing our refrigerant infrastructure to reach required levels, which could incur significant costs to
the business. If legislation required an accelerated timeline regarding the phase down of HFC refrigerants, we could
incur higher costs. Any such legislation will affect all retailers using refrigerants in their operations.

Climate adaptation

To help prepare for and manage a variety of risk scenarios, including natural disasters and business disruptions to
our supply chain, we maintain more than 200 business continuity plans. We have installed technologies and processes to
ensure our supermarkets, food production plants, fulfillment centers and supply chain can respond quickly and remain
operational. We also monitor energy availability and costs to help anticipate how changing climate patterns, like
increasing temperatures, could affect our energy-sourcing costs and activities. Our teams also monitor transition risks
due to climate change, including the effect possible new legislation may have on our business.

Climate mitigation

For many years, Kroger has implemented emission reduction projects, including energy efficiency improvements,

refrigerant leak detection and mitigation measures, renewable energy installations and procurement and fleet
efficiencies. In 2020, we set a goal to reduce absolute greenhouse gas (“GHG”) emissions from our operations (scope 1
and 2 emissions) by 30% by 2030, against a 2018 baseline. The goal was developed using climate science and is aligned
with the Paris Agreement, specifically supporting a well-below 2°C climate scenario according to the absolute
contraction method. Kroger is reviewing its GHG reduction target against the requirements of the Science Based Targets
initiative. In 2023, we completed our first full Scope 3 emissions baseline.

Additional discussion about our approach to managing climate effects is included in our annual ESG Report. The

information in our ESG Report is not part of or incorporated by reference into this Annual Report on Form 10-K.

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

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

Mr. Aitken was named Senior Vice President and Chief Merchant and Marketing

Gabriel Arreaga

Yael Cosset

Officer in August 2020. He was elected Senior Vice President in February 2019 and
served as Group Vice President from June 2015 to February 2019. He is responsible
for sales, pricing, promotional and category planning for fresh foods, center store and
general merchandise categories, as well as analytics & execution, e-commerce and
Digital Merchandising, Sourcing and Our Brands. Prior to joining Kroger, he served
as the chief executive officer of dunnhumby USA, LLC. Mr. Aitken has over 15
years of marketing, academic and technical experience across a variety of industries,
and held various leadership roles with other companies, including Michaels Stores
and Safeway, Inc.

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.

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

Mr. Foley was named Senior Vice President and Interim Chief Financial Officer in

March 2024. Prior to that, he served as Group Vice President, Interim Chief
Financial Officer and Corporate Controller from February 2024 to March 2024. Prior
to that, he served as Group Vice President and Corporate Controller from October
2021 to February 2024. From April 2017 to September 2021, Mr. Foley served as
Vice President and Corporate Controller. Before that, he held several leadership
roles, including Vice President and Treasurer, Assistant Corporate Controller, and
Controller of Kroger’s Cincinnati/Dayton division. Mr. Foley began his career with
Kroger in 2001 as an audit manager in the Internal Audit Department after working
for PricewaterhouseCoopers in various roles, including senior audit manager.

Valerie L. Jabbar

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.

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

Mr. Massa was elected Senior Vice President in June 2018 and serves as the

company’s Chief People Officer, leading all areas of Human Resources and Labor
Relations, including total rewards, labor relations, diversity, business unit human
resources, people operations, training and development, talent hiring, retention and
engagement, corporate affairs, and associate communications. He also leads the areas
of shared services and aviation. Prior to that, Mr. Massa served as Group Vice
President of Human Resources and Labor Relations from June 2014 to June 2018.
Mr. Massa joined Kroger in October 2010 as Vice President, Corporate Human
Resources and Talent Development. Prior to joining Kroger, Mr. Massa served in
various Human Resources leadership roles for 21 years at Procter & Gamble, most
recently serving as Global Human Resources Director of Customer Business
Development.

W. Rodney McMullen

Brian W. Nichols

Christine S. Wheatley

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.

Mr. Nichols was elected Vice President, Corporate Controller in March 2024 and is
responsible for oversight of Kroger’s Corporate Accounting and Corporate Tax
departments, as well as the Company’s Accounting Centers and Accounting
Modernization, Pension Investment, and Insurance and Claims teams. Prior to that,
he served as Vice President, Assistant Corporate Controller from April 2021 to
March 2024. From May 2018 to April 2021, Mr. Nichols served as Senior Director
and Assistant Corporate Controller. Prior to that, he held several leadership roles,
including Senior Manager of Corporate and External Financial Reporting and Senior
Financial Analyst of SEC Reporting. Mr. Nichols joined Kroger in 2000 as Assistant
Controller of the Central Division.

Ms. Wheatley was elected Senior Vice President, General Counsel, and Secretary in
May 2023. Prior to this, she served as Group Vice President, Secretary and General
Counsel from May 2014 to May 2023. She joined Kroger in February 2008 as
Corporate Counsel, and thereafter served as Senior Attorney, Senior Counsel, and
Vice President. Before joining Kroger, Ms. Wheatley was engaged in the private
practice of law for 11 years, most recently as a partner at Porter Wright Morris &
Arthur in Cincinnati.

COMPETITIVE ENVIRONMENT

For the disclosure related to our competitive environment, see Item 1A under the heading “Competitive

Environment.”

ITEM 1A. RISK FACTORS.

There are risks and uncertainties that can affect our business. The significant risk factors are discussed below. The
following information should be read together with “Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” which includes forward-looking statements and factors that could cause us not to realize our
goals or meet our expectations.

OUR PROPOSED TRANSACTION WITH ALBERTSONS CREATES INCREMENTAL BUSINESS,
REGULATORY AND REPUTATIONAL RISKS

On October 13, 2022, we entered into a merger agreement with Albertsons Companies Inc. (“Albertsons”), which

sets forth the terms of our proposed transaction. In connection with the proposed transaction, Kroger and Albertsons
entered into a comprehensive divestiture plan with C&S Wholesale Grocers, LLC for the combined sale of certain stores,
distribution centers, offices and private label brands. The proposed transaction with Albertsons and the divestiture plan
entails important risks, including, among others: the expected timing and likelihood of completion of the proposed
transaction and divestiture plan, including the timing, receipt and terms and conditions of any required governmental and
regulatory clearance of the proposed transaction and divestiture plan, and/or resolution of pending litigation challenging
the merger; the effect of the proposed divestiture plan; the occurrence of any event, change or other circumstances that
could give rise to the termination of the merger agreement or divestiture agreement; the outcome of any legal
proceedings that have been instituted and may in the future be instituted against the parties and others following
announcement of the merger agreement and proposed transaction or divestiture plan; the inability to consummate the
proposed transaction or divestiture plan due to the failure to satisfy other conditions to complete the proposed transaction
or divestiture plan; risks that the proposed transaction or divestiture plan disrupts our current plans and operations; the
ability to identify and recognize, including on the expected timeline, the anticipated total shareholder return (“TSR”),
revenue and EBITDA expectations; the amount of the costs, fees, expenses and charges related to the proposed
transaction or divestiture plan; the risk that transaction and/or integration costs are greater than expected, including as a
result of conditions regulators put on any approvals of the transaction; the potential effect of the announcement and/or
consummation of the proposed transaction or divestiture plan on relationships, including with associates, suppliers and
competitors; our ability to maintain an investment grade credit rating; the risk that management’s attention is diverted
from other matters; risks related to the potential effect of general economic, political and market factors, including
changes in the financial markets as a result of inflation or measures implemented to address inflation, and any epidemic,
pandemic or disease outbreaks, on Kroger, Albertsons or the proposed transaction or divestiture plan; the risk of adverse
effects on the market price of our or Albertsons’s securities or on Albertsons’s or our operating results for any reason;
the occurrence of any event, change or other circumstances that could give rise to the termination of the merger
agreement or divestiture agreement; and other risks described in our filings with the SEC.

INTEGRATION OF NEW BUSINESS AND STRATEGIC ALLIANCES

In addition to the above, we enter into mergers, acquisitions and strategic alliances with expected benefits including,
among other things, operating efficiencies, procurement savings, innovation and sharing of best practices, that may allow
for future growth. Achieving the anticipated or desired benefits may be subject to a number of significant challenges and
uncertainties, including, without limitation, whether unique corporate cultures will work collaboratively in an efficient
and effective manner, the coordination of geographically separate organizations, the possibility of imprecise assumptions
underlying expectations regarding potential synergies, capital requirements, and the integration process (including the
integration of internal controls into our business operations), unforeseen expenses and delays and competitive factors in
the marketplace. We could also encounter unforeseen transaction and integration-related costs or other circumstances
such as unforeseen liabilities or other issues. Many of these potential circumstances are outside of our control and any of
them could result in increased costs, decreased revenue, decreased synergies and the diversion of management time and
attention. If we are unable to achieve our objectives within the anticipated time frame, or at all, the expected benefits
may not be realized fully or at all, or may take longer to realize than expected, which could have an adverse effect on our
business, financial condition, results of operations or cash flows.

COMPETITIVE ENVIRONMENT

The operating environment for the food retailing industry continues to be characterized by the proliferation of local,

regional, and national retailers, including both retail and digital formats, and intense and ever-increasing competition
ranging from online retailers, mass merchant, club stores, regional chains, deep discounters, and dollar stores, as well as
ethnic, specialty and natural food stores. With the proliferation of grocery delivery – both by retailers and third-party
delivery service providers – customers have an even wider range of retailers from which to choose. Customers continue
to expect a great shopping experience both in-store and online. The industry continues to be shaped by e-commerce,
cooking at home and prepared foods to go and other customer needs and preferences. Customers want to be able to shop
on their own terms with zero compromise whether at brick and mortar stores or online, pick-up or delivery, depending
on their particular trip needs and other factors. If we do not appropriately or accurately anticipate customer preferences
or fail to quickly adapt to these ever-changing preferences, our sales and profitability could be adversely affected. If we
fail to meet the evolving needs of our customers, our ability to compete and our financial condition, results of operations
or cash flows could be adversely affected.

We are continuing to enhance the customer connection with investments in our four strategic pillars – Seamless,

Personalization, Fresh, and Our Brands. Each of these strategies is designed to better serve our customers and to
generate customer loyalty and sustainable growth momentum. We believe our plans to continue to improve these four
strategic pillars will enable us to meet the wide-ranging needs and expectations of our customers. If we are unable to
continue to enhance the foregoing key elements of our connection with customers, or they fail to strengthen customer
loyalty, our ability to compete and our financial condition, results of operations or cash flows could be adversely
affected. Our ecosystem monetizes the traffic and data insights generated by our retail grocery business to create fast-
growing, asset-light and margin-rich revenue streams. Growth in loyal households, customer traffic and digitally
engaged customers allow us to grow profits and power the flywheel in our model. We may be unsuccessful in
implementing our alternative profit strategy, which could adversely affect our business growth and our financial
condition, results of operations or cash flows. The nature and extent to which our competitors respond to the evolving
and competitive industry by developing and implementing their competitive strategies could adversely affect our
profitability.

In addition, evolving customer preferences and the advancement of online, delivery, ship to home and mobile
channels in our industry increase the competitive environment. We must anticipate and meet these evolving customer
preferences and continue to implement technology, software and processes to be able to conveniently and cost-
effectively fulfill customer orders. Providing flexible fulfillment options and implementing new technology is complex
and may not meet customer preferences. If we are not successful in reducing or offsetting the cost of fulfilling orders
outside of our in-store channel with efficiencies, cost-savings, expense reductions, or alternative revenues, our financial
condition, results of operations or cash flows could be adversely affected.

In addition, if we do not successfully develop and maintain a relevant digital experience for our customers, our
business, financial condition, results of operations or cash flows could be adversely affected. Digital retailing is rapidly
evolving, and we must keep pace with new developments by our competitors as well as the evolving needs and
preferences of our customers. We must compete by offering a convenient shopping experience for our customers
regardless of how they choose to shop with us, and by investing in providing and maintaining relevant customer-facing
apps and interfaces that have the features customers want that are also reliable and easy to use. The future success of the
digital business will also depend on the efficiency and cost effectiveness of fulfilling orders across our modalities,
whether in store, in pickup-only locations or through customer fulfillment centers powered by Ocado.

PRODUCT SAFETY

Customers count on Kroger to provide them with safe food and drugs and other merchandise. Concerns regarding

the safety of the products that we sell could cause shoppers to avoid purchasing certain products from us, or to seek
alternative sources of supply even if the basis for the concern is outside of our control. Any lost confidence on the part of
our customers would be difficult and costly to reestablish. We could be adversely affected by personal injury or product
liability claims, product recalls, or other health and safety issues, which occur from time to time. If we sell products that
cause illness or injury to customers, resulting from product contamination or spoilage, the presence of certain substances,
or damage caused in handling, storage or transportation, we could be exposed to claims or litigation. Any issue regarding
the safety of items, whether Our Brands items manufactured by us or for us or CPG products we sell, regardless of the
cause, could have a substantial and adverse effect on our reputation, financial condition, results of operations or cash
flows.

EMPLOYEE MATTERS

Nearly two-thirds of our associates are covered by collective bargaining agreements with unions, and our

relationship with those unions, including a prolonged work stoppage affecting a substantial number of locations, could
have a material adverse effect on our financial condition, results of operations or cash flows. We are a party to
approximately 350 collective bargaining agreements. Upon the expiration of our collective bargaining agreements, work
stoppages by the affected workers could occur (and have occurred in the past) if we are unable to negotiate new
contracts with labor unions. In addition, changes to national labor policy could affect labor relations with our associates
and relationships with unions. Further, if we are unable to control health care, pension and wage costs, or if we have
insufficient operational flexibility under our collective bargaining agreements, we may experience increased operating
costs and an adverse effect on our financial condition, results of operations or cash flows.

We have committed to paying fair wages and providing the benefits that were collectively bargained with the United

Food and Commercial Workers (“UFCW”) and other labor unions representing associates. Our ability to control labor
and benefit costs is subject to numerous internal and external factors, including regulatory changes, wage rates, and
healthcare and other insurance costs. Changes to wage regulations, including further increases in the minimum wage or
ordinances related to pay or working conditions enacted by local governments, could have an effect on our future
financial condition, results of operations or cash flows. Our ability to meet our labor needs, while controlling wages and
other costs, is subject to numerous external factors, including the available qualified workforce in each area where we
are located, unemployment levels within those areas, wage rates, and changes in employment and labor laws.

Our continued success depends on the ongoing contributions of our associates, including members of our senior
management and other key personnel. We must recruit, hire, develop and retain qualified associates with an increasingly
large range of skills to meet the needs of our evolving and complex business. We compete with other retail and non-
retail businesses for these associates and invest significant resources in training and motivating them. Competition
among potential employers has resulted, and may in the future result, in increased associate costs and has from time to
time affected our ability to recruit and retain associates. We may not be able to attract or retain sufficient highly qualified
associates in the future, which could have a material adverse effect on our business, financial condition, results of
operations or cash flows.

DATA AND TECHNOLOGY

Our business is increasingly dependent on information technology systems that are complex and vital to continuing

operations, resulting in an expansion of our technological presence and corresponding risk exposure. If we were to
experience difficulties maintaining or operating existing systems or implementing new systems, we could incur
significant losses due to disruptions in our operations. As we modernize legacy systems, if we are unable to successfully
implement those systems in a coordinated manner across internal and external stakeholders, we could be subject to
business interruption or reputation risk with our customers, suppliers or associates.

Through our sales and marketing activities, we collect and store some personal information that our customers
provide to us. We also gather and retain information about our associates in the normal course of business. Under certain
circumstances, we may share information with vendors that assist us in conducting our business, as required by law, or
otherwise in accordance with our privacy policy.

Our technology systems have been, and may be in the future, disrupted from circumstances beyond our control, as

we regularly defend against and respond to data security incidents. Cyber-attackers have targeted and accessed, and may
in the future again target and, if successful, access information stored in our or our vendors’ systems in order to
misappropriate confidential customer or business information. Due to ongoing geopolitical conflicts, there is an
increased possibility of cyberattacks that could either directly or indirectly affect our operations. Although we have
implemented procedures to protect our information, and require our vendors to do the same, we cannot be certain that
our security systems will successfully defend against, or be able to effectively respond to, rapidly evolving, increasingly
sophisticated cyber-attacks as they become more difficult to detect and defend against. Further, a Kroger associate, a
contractor or other third party with whom we do business may in the future circumvent our security measures in order to
obtain information or may inadvertently cause a breach involving information. In addition, hardware, software or
applications we may use may have inherent defects, vulnerabilities, or could be inadvertently or intentionally applied or
used in a way that could compromise our information security.

Our cybersecurity program, continued investment in our information technology systems, and our processes to
evaluate and select vendors with reasonable information security controls may not effectively insulate us from potential
attacks, data breaches or disruptions to our business operations, which could result in a loss of customers or business
information, negative publicity, damage to our reputation, and exposure to claims from customers, financial institutions,
regulatory authorities, payment card associations, associates and other persons. Any such events could have an adverse
effect on our business, financial condition, results of operations or cash flows and may not be covered by our insurance.
In addition, compliance with privacy and information security laws and standards may result in significant expense due
to increased investment in technology and the development of new operational processes and may require us to devote
significant management resources to address these issues. The costs of attempting to protect against the foregoing risks
and the costs of responding to cyber-attacks are significant. Following a cyber-attack, our and/or our vendors’
remediation efforts may not be successful, and a cyber-attack could result in interruptions, delays or cessation of service,
and loss of existing or potential customers. In addition, breaches of our and/or our vendors’ security measures and the
unauthorized dissemination of sensitive personal information or confidential information about us or our customers
could expose our customers’ private information and our customers to the risk of financial or medical identity theft, or
expose us or other third parties to a risk of loss or misuse of this information, and result in investigations, regulatory
enforcement actions, material fines and penalties, loss of customers and business relationships, litigation or other actions
which could have a material adverse effect on our brands, reputation, business, financial condition, results of operations
or cash flows.

Data governance failures can adversely affect our reputation and business. Our business depends on our customers’

willingness to entrust us with their personal information. Events that adversely affect that trust, including inadequate
disclosure to our customers of our uses of their information, failures to honor new and evolving data privacy rights,
failing to keep our information technology systems and our customers’ sensitive information secure from significant
attack, theft, damage, loss or unauthorized disclosure or access, whether as a result of our action or inaction (including
human error) or that of our business associates, vendors or other third parties, could adversely affect our brand and
reputation and operating results and also could expose and/or has exposed us to mandatory disclosure to the media,
litigation (including class action litigation), governmental investigations and enforcement proceedings, material fines,
penalties and/or remediation costs, and compensatory, special, punitive and statutory damages, consent orders, and/or
injunctive relief, any of which could adversely affect our businesses, financial condition, results of operations or cash
flows. Large scale data breaches at other entities, including supply chain security vulnerabilities, increase the challenge
we and our vendors face in maintaining the security of our information technology systems and proprietary information
and of our customers’ information. There can be no assurance that such failures will not occur, or if any do occur, that
we will detect them or that they can be sufficiently remediated.

The use of data by our business and our business associates is highly regulated. Privacy and information-security
laws and regulations change, and compliance with them may result in cost increases due to, among other things, systems
changes and the development of new processes. If we, our third-party service providers, or those with whom we share
information fail to comply with laws and regulations, or self-regulatory regimes, that apply to all or parts of our
business, such as section 5 of the FTC Act, the California Consumer Privacy Act (CCPA), the Health Insurance
Portability and Accountability Act (HIPAA), or applicable international laws such as the EU General Data Protection
Regulation (GDPR), our reputation could be damaged, possibly resulting in lost business, and we could be subjected to
additional legal risk or financial losses as a result of non-compliance.

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 1,665 fuel centers, which could face increased regulation, including due

to climate change or other environmental concerns, and demand could be affected by concerns about the effect of
emissions on the environment as well as retail price increases. We are unable to predict future regulations, environmental
effects, political unrest, acts of war or terrorism, disruptions to the economy, including but not limited to pandemics and
other health crises, geopolitical conflicts and other matters that affect the cost and availability of fuel, and how our
customers will react to such factors, which could adversely affect our financial condition, results of operations or cash
flows.

ECONOMIC CONDITIONS

Our operating results could be materially affected by changes in overall economic conditions and other economic

factors that affect consumer confidence and spending, including discretionary spending. Future economic conditions
affecting disposable consumer income such as employment levels, business conditions, overall economic slowdown or
recession, changes in housing market conditions, changes in government benefits such as SNAP/EBT, student loan
relief, or child care credits, the availability of credit, interest rates, inflation, disinflation or deflation, tax rates and other
matters could reduce consumer spending. Inflation could materially affect our operating results through increases to our
cost of goods, supply chain costs and labor costs. In addition, the economic factors listed above, or any other economic
factors or circumstances resulting in higher transportation, labor, insurance or healthcare costs or commodity prices, and
other economic factors can increase our merchandise costs and operating, general and administrative expenses and
otherwise adversely affect our financial condition, results of operations or cash flows. Increased fuel prices also have an
effect on consumer spending and on our costs of producing and procuring products that we sell. A deterioration in
overall economic conditions, including the uncertainty caused by inflation rate volatility, could adversely affect our
business in many ways, including slowing sales growth, reducing overall sales and reducing gross margins. Geopolitical
and catastrophic events, such as wars and conflicts, civil unrest, acts of terrorism or other acts of violence, including
active shooter situations (which have occurred in the past at our locations), or the loss of merchandise as a result of
shrink or industry-wide theft and organized retail crime, or pandemics or other health crises, and other matters that
could reduce consumer spending, could materially affect our financial condition, results of operations or cash flows. We
regularly maintain cash balances at third-party financial institutions in excess of the Federal Deposit Insurance
Corporation (“FDIC”) insurance limit and are therefore reliant on banks and other financial institutions to safeguard and
allow ready access to these assets. If banks or financial institutions enter receivership or become insolvent in the future
in response to financial conditions affecting the banking system and financial markets, our ability to access our existing
cash, cash equivalents and investments may be threatened. We are unable to predict how the global economy and
financial markets will perform. If the global economy and financial markets do not perform as we expect, it could
adversely affect our business, financial condition, results of operations or cash flows.

Our operating results could be adversely affected by any future disease outbreak, including pandemics, epidemics,
or similar widespread health concerns. We cannot predict with certainty the extent that our operations may be affected
by any effects of the foregoing on us or on our customers, suppliers, vendors, and other business partners, and each of
their financial conditions; however, any adverse effect on these parties could materially and adversely affect us. To the
extent that any health crisis affects the U.S. and global economy and our business, it may also heighten other risks
described in this section, including but not limited to those related to consumer behavior and expectations, competition,
implementation of strategic initiatives, cybersecurity threats, payment-related risks, supply chain disruptions, labor
availability and cost, litigation and operational risk as a result of regulatory requirements.

LEGAL AND GOVERNMENT REGULATION

We are subject to various laws, regulations, and administrative practices that affect our business, including laws and

regulations involving antitrust and competition, privacy, data protection, environmental, healthcare, anti-bribery, anti-
corruption, tax, accounting, and financial reporting or other matters. These and other rapidly changing laws, regulations,
policies and related interpretations, as well as increased enforcement actions by various governmental and regulatory
agencies, create challenges for us, may alter the environment in which we do business and may increase the ongoing
costs of compliance, which could adversely affect our financial condition, results of operations and cash flows. If we are
unable to continue to meet these challenges and comply with all laws, regulations, policies and related interpretations, it
could negatively affect our reputation and our business results. Additionally, we are currently, and in the future may be,
subject to a number of inquiries, investigations, claims, proceeding, and requests for information from governmental
agencies or private parties, the adverse outcomes of which could harm our business. Failure to successfully manage these
new or pending regulatory and legal matters and resolve such matters without significant liability or damage to our
reputation may adversely affect our financial condition, results of operations and cash flows. Furthermore, if new or
pending legal or regulatory matters result in fines or costs in excess of the amounts accrued to date, that may also
materially affect our financial condition, results of operations or cash flows.

In addition, increasing governmental and societal attention to environmental, social, and governance (“ESG”)

matters, including expanding voluntary reporting, diligence, and disclosure on topics such as climate change, waste
production, water usage, human capital, labor, and risk oversight, could expand the nature, scope, and complexity of
matters that we are required to control, assess, and report and could negatively affect our reputation. Given our
commitment to our ESG strategy, we have established and publicly announced certain goals which we may refine or
even expand further in the future. The execution of this strategy to achieve these goals is subject to risks and
uncertainties, many of which may be outside of our control and prove to be more costly than we anticipate. These risks
and uncertainties include, but are not limited to, our ability to achieve our goals within the currently projected costs and
the expected timeframes; unforeseen operational and technological difficulties; the outcome of research efforts and
future technology developments; and the success of our collaborations with and reliance on third parties. Any failure, or
perceived failure, to achieve these goals or the setting or publication of certain targets could damage our reputation and
customer, investor and other stakeholder relationships, and may even result in regulatory enforcement action. Such
conditions could have an adverse effect on our business, financial condition, results of operations or cash flows.

Additionally, we must comply with numerous provisions regulating, among other things, health and sanitation
standards, food labeling and safety, equal employment opportunity, minimum wages and licensing for the sale of food,
drugs, and alcoholic beverages. We cannot predict future laws, regulations, interpretations, administrative orders, or
applications, or the effect they will have on our operations. They could, however, significantly increase the cost of doing
business. They also could require the reformulation of some of the products that we sell (or manufacture for sale to third
parties) to meet new standards. We also could be required to recall or discontinue the sale of products that cannot be
reformulated. These changes could result in additional record keeping, expanded documentation of the properties of
certain products, expanded or different labeling, or scientific substantiation. Any or all of these requirements could have
an adverse effect on our financial condition, results of operations or cash flows.

WEATHER, NATURAL DISASTERS AND OTHER EVENTS

A large number of our stores, distribution facilities and fulfillment centers are geographically located in areas that

are susceptible to hurricanes, tornadoes, floods, droughts, ice and snow storms and earthquakes. Weather conditions and
natural disasters have, and may again in the future, disrupt our operations at one or more of our facilities, interrupt the
delivery of products to our stores, substantially increase the cost of products, including supplies and materials and
substantially increase the cost of energy needed to operate our facilities or deliver products to our facilities. Moreover,
the effects of climate change, including those associated with extreme weather events, may affect our ability to procure
needed commodities at costs and in quantities that are optimal for us or at all. Adverse weather or natural disasters and
other matters that could reduce consumer spending, could materially affect our financial condition, results of operations
or cash flows.

CLIMATE IMPACT

The long-term effects of global climate change present both physical risks, such as extreme weather conditions or
rising sea levels, and transition risks, such as regulatory or technology changes, which are expected to be widespread and
unpredictable. These changes could over time affect, for example, the availability and cost of products, commodities and
energy including utilities, which in turn may affect our ability to procure goods or services required for the operation of
our business at the quantities and levels we require. In addition, many of our operations and facilities are in locations that
may be affected by the physical risks of climate change, and we face the risk of losses incurred as a result of physical
damage to stores, distribution or fulfillment centers, loss or spoilage of inventory and business interruption caused by
such events. We also use natural gas, diesel fuel, gasoline and electricity in our operations, all of which could face
increased regulation and cost increases as a result of climate change or other environmental concerns. Transitioning to
alternative energy sources, such as renewable electricity or electric vehicles, and investments in new technologies, could
incur higher costs. Regulations limiting greenhouse gas emissions and energy inputs will also increase in coming years,
which may increase our costs associated with compliance, tracking, reporting, and sourcing. These events and their
effects could otherwise disrupt and adversely affect our operations and could have an adverse effect on our financial
condition, results of operations or cash flows.

SUPPLY CHAIN

Disruption in our global supply chain could negatively affect our business. The products we sell are sourced from a

wide variety of domestic and international vendors, and any future disruption in our supply chain or inability to find
qualified vendors and access products that meet requisite quality and safety standards in a timely and efficient manner
could adversely affect our business. The loss or disruption of such supply arrangements for any reason, labor disputes,
loss or impairment of key manufacturing sites, acts of war or terrorism, disruptive global political events, quality control
issues, a supplier’s financial distress, natural disasters or health crises, regulatory actions or ethical sourcing issues, trade
sanctions or other external factors over which we have no control, could interrupt product supply and, if not effectively
managed and remedied, have an adverse effect on our business, financial condition, results of operations or cash flows.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 1C. CYBERSECURITY.

RISK MANAGEMENT AND STRATEGY

Securing Kroger’s business information, intellectual property, customer and employee data and technology systems
is essential for the continuity of our businesses, meeting applicable regulatory requirements and maintaining the trust of
our stakeholders. We have adopted enterprise cybersecurity risk mitigation and governance processes, which are set
forth in the Kroger Cybersecurity Risk Management program (“CRM”), the Kroger Third-Party Cybersecurity Risk
Management program (“TPCRM”), and the Kroger Cyber Incident Response Plan (“IR Plan”). Our approach is guided
by the principles of the CRM, which includes monitoring threats and vulnerabilities and assessing and monitoring related
controls, supporting the Corporate Information Security function, the Chief Information Security Officer (“CISO”) and
Chief Information Officer (“CIO”). Kroger’s cybersecurity policies, standards, processes, and practices are integrated
into our overarching risk management system in an effort to enhance our ability to safeguard our operations and
information, which includes quarterly cybersecurity reporting to the Board, delivered by senior leadership.

Kroger Cyber Risk Management Program

The CRM was developed in collaboration with third-party consultants and is aligned with the National Institute of
Standards and Technology (“NIST”), Risk Management Framework (“RMF”), Cybersecurity Framework (“CSF”) and
the International Organization for Standardization 27001 (“ISO 27001”). The program includes security and privacy,
risk-based controls, and incorporates lessons learned from cybersecurity incidents. Under Kroger’s CRM, cyber risks,
including cyber threats and cyber events/incidents, are assessed, treated, and monitored on a continuous basis. We
integrate lessons learned from incident response and cyber risk mitigation into our cyber risk management strategy, in an
effort to improve overall cybersecurity on an ongoing basis. Kroger's CRM program is spearheaded by specific
management positions, chosen for their expertise in the field as further discussed below.

In line with cyber risk management best practices, we have collaborated with recognized third-party experts as
needed to align the CRM’s foundational processes, metrics, monitoring, and reporting with common frameworks such as
NIST and RMF.

Third-Party Cyber Risk Management

Recognizing the potential vulnerabilities posed by third-party relationships, Kroger has implemented a
comprehensive TPCRM program. The TPCRM program is designed to assess third-party cybersecurity risks by
employing third-party risk assessments, vendor tiering, and a dedicated team tasked with recommending holistic
improvements to strengthen Kroger’s cybersecurity posture, sourcing, and contracting processes. Kroger’s Information
Security Operations Center (“iSOC”) responds to known third-party incidents on a continuous basis. The iSOC is a part
of the Corporate Information Security (“CIS”) department and is responsible for detecting, responding to, and escalating
security incidents. We partner directly with business stakeholders and technology custodians to determine an appropriate
response to manage incident risk to minimize the effect to the business. This response process is a regular and critical
function of the iSOC and is defined in a separate appendix to the IR Plan. Any material risk identified from these
incidents is escalated and communicated using formal severity and impact criteria as defined in the IR Plan.

Kroger Cyber Incident Response Plan

The IR Plan documents the processes by which information security events are detected, identified, prioritized, and
analyzed. The Kroger iSOC, CISO, legal counsel, and corporate affairs stakeholders are then engaged depending on the
incident’s scope, business effect, and potential material risk. This cross-functional team is responsible for assessing an
appropriate response and mitigation pathway. Once security events are identified through the enterprise detection and
monitoring ecosystem, the IR Plan sets forth an incident prioritization/decision workflow to determine scope, business
effect, and potential material risk. This workflow is implemented through collaboration with the iSOC, CISO, legal
counsel, and corporate affairs stakeholders.

In addition to the processes outlined above, we have also implemented an information security training program for
employees that includes security awareness training related to cyber security risks, simulated phishing emails and regular
communication to the enterprise regarding cyber security risks.

We experience cybersecurity threats and incidents from time to time. We are not aware of any material risks from
cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are
reasonably likely to materially affect us, including our business strategy, our financial condition, results of operations or
cash flows. There can be no assurance that cybersecurity threats will not have a material effect on us, including our
business strategy, our financial condition, results of operations or cash flows. Please see “Item 1A. Risk Factors” for
more information on our cybersecurity-related risks.

GOVERNANCE

Protection of our customers’ data is a fundamental priority for our Board and management team. Our risk
management team is integrated into our CIS function and is led by our CIO and CISO. The risk management team
reports to the CISO and has combined experience in information security, governance, and compliance, including
domains such as engineering, architecture, cybersecurity, and privacy. This team is responsible for defining the program,
cybersecurity governance, and gathering insights related to assessing, identifying, and managing cybersecurity threat
risks, their severity, and mitigations.

Kroger’s CIO reports to the CEO and leads technology and digital capabilities for the Kroger Co., including the
overall cybersecurity strategy. Kroger’s CIO & Chief Digital Officer, has over 20 years of both leading and transforming
technology, digital growth, and e-commerce in the retail and food industry. Kroger’s interim CISO brings nearly 20
years of experience developing and leading security and risk programs. His experience includes governance, information
security, and threat management.

The Audit Committee of Kroger’s Board of Directors is charged with oversight of data privacy and cybersecurity

risks. Kroger’s CIO and CISO provide quarterly updates on cybersecurity risks and related mitigating actions to the
Audit Committee, meet with the full Board at least annually and inform the Audit Committee immediately if a
cybersecurity incident is deemed material. They report to the Audit Committee and the Board on compliance and
regulatory issues, provide updates concerning continuously-evolving threats and mitigating actions, and present a NIST
Cybersecurity Framework Scorecard. Additionally, the CIO and CISO discuss and present strategies to address
geopolitical threats that may affect operations as well as technological changes, such as AI and quantum computing. In
overseeing cybersecurity risks, the Audit Committee focuses on aggregated, thematic issues with a risk-based approach.
Oversight of cybersecurity risk incorporates strategy metrics, third-party assessments, and internal audit and controls. An
independent third party also regularly reports to the Audit Committee and the full Board on cybersecurity, and outside
counsel advises the Board on best practices for cybersecurity oversight by the Board, and the evolution of that oversight
over time. Management also reports on strategic key risk indicators, ongoing initiatives, and significant incidents and
their effect.

ITEM 2.

PROPERTIES.

As of February 3, 2024, we operated approximately 2,800 owned or leased supermarkets, distribution warehouses
and food production plants through divisions, subsidiaries or affiliates. These facilities are located throughout the United
States. We generally own store equipment, fixtures and leasehold improvements, as well as processing and food
production equipment. The total cost of our owned assets and finance leases at February 3, 2024, was $56.7 billion while
the accumulated depreciation was $31.5 billion.

We lease certain store real estate, warehouses, distribution centers, office space and equipment. We operate in
leased facilities in approximately half of our store locations. Lease terms generally range from 10 to 20 years with
options to renew for varying terms at our sole discretion. Certain leases also include options to purchase the leased
property. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Certain leases include
escalation clauses or payment of executory costs such as property taxes, utilities or insurance and maintenance. Rent
expense for leases with escalation clauses or other lease concessions are accounted for on a straight-line basis over the
lease term. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Certain properties or portions thereof are subleased to others for periods generally ranging from one to 20 years. For
additional information on lease obligations, see Note 9 to the Consolidated Financial Statements.

ITEM 3.

LEGAL PROCEEDINGS.

Incorporated by reference herein is information regarding certain legal proceedings in which we are involved as set

forth under “Litigation” contained in Note 12 – “Commitments and Contingencies” in the notes to the Consolidated
Financial Statements in Item 8 of Part II of this Annual Report.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS

AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our common stock is listed on the New York Stock Exchange under the symbol “KR.” As of March 27, 2024, there

were 24,275 shareholders of record.

During 2023, we paid two quarterly cash dividends of $0.26 per share and two quarterly cash dividends of $0.29 per

share. During 2022, we paid two quarterly cash dividends of $0.21 per share and two quarterly cash dividends of $0.26
per share. On March 1, 2024, we paid a quarterly cash dividend of $0.29 per share. On March 14, 2024, we announced
that our Board of Directors declared a quarterly cash dividend of $0.29 per share, payable on June 1, 2024, to
shareholders of record at the close of business on May 15, 2024. We currently expect to continue to pay comparable cash
dividends on a quarterly basis, that will increase over time, depending on our earnings and other factors, including
approval by our Board.

For information on securities authorized for issuance under our existing equity compensation plans, see Item 12

under the heading “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.”

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.

Company Name/Index
The Kroger Co.
S&P 500 Index
Peer Group

Base
Period
2018
100
100
100

2019
97.94
121.56
120.67

Kroger’s fiscal year ends on the Saturday closest to January 31.

Data supplied by Standard & Poor’s.

INDEXED RETURNS
Years Ending
2021
165.19
172.46
175.27

2020
128.49
142.53
148.43

2023

2022
174.57 183.07
161.03 199.42
169.86 197.90

The foregoing Performance Graph will not be deemed incorporated by reference into any other filing, absent an

express reference thereto.

* Total assumes $100 invested on February 2, 2019, in The Kroger Co., S&P 500 Index, and the Peer Group, with

reinvestment of dividends.

** The Peer Group consists of Albertsons Companies, Inc. (included from June 26, 2020 when it began trading),
Costco Wholesale Corporation, CVS Health Corporation, Koninklijke Ahold Delhaize N.V., Target Corp.,
Walgreens Boots Alliance Inc. and Walmart Inc.

The following table presents information on our purchases of our common shares during the fourth quarter of 2023:

ISSUER PURCHASES OF EQUITY SECURITIES

Period(1)
First period - four weeks

Total Number

of Shares

Purchased(2)

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)

November 5, 2023 to December 2, 2023

7,093 $

44.09

6,900 $

1,000

Second period - four weeks

December 3, 2023 to December 30, 2023

82,059 $

44.75

64,200 $

1,000

Third period - five weeks

December 31, 2023 to February 3, 2024

Total

96,000 $
185,152 $

46.07
45.41

96,000 $
167,100 $

1,000
1,000

(1) The fourth quarter of 2023 contained two 28-day periods and one 35-day period.
(2) Includes (i) shares repurchased under a program announced on December 6, 1999 to repurchase common shares to
reduce dilution resulting from our employee stock option and long-term incentive plans, under which repurchases
are limited to proceeds received from exercises of stock options and the tax benefits associated therewith (“1999
Repurchase Program”) and (ii) 18,052 shares that were surrendered to Kroger by participants under our long-term
incentive plans to pay for taxes on restricted stock awards.

(3) Represents shares repurchased under the 1999 Repurchase Program.
(4) On September 9, 2022, our Board of Directors approved a $1.0 billion share repurchase program to reacquire shares
via open market purchase or privately negotiated transactions, block trades, or pursuant to trades intending to
comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “September 2022
Repurchase Program”). The amounts shown in this column reflect the amount remaining under the September 2022
Repurchase Program as of the specified period end dates. Amounts available under the 1999 Repurchase Program
are dependent upon option exercise activity. The September 2022 Repurchase Program and the 1999 Repurchase
Program do not have an expiration date but may be suspended or terminated by our Board of Directors at any time.
No shares have been repurchased under the September 2022 authorization. During the third quarter of 2022, we
paused our share repurchase program to prioritize de-leveraging following the proposed merger with Albertsons.

ITEM 6.

RESERVED.

Not applicable.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS.

The following discussion and analysis of financial condition and results of operations of The Kroger Co. should be
read in conjunction with the “Forward-looking Statements” section set forth in Part I and the “Risk Factors” section set
forth in Item 1A of Part I. MD&A is provided as a supplement to, and should be read in conjunction with, our
Consolidated Financial Statements and the accompanying notes thereto contained in Item 8 of this report, as well as Part
II, Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K
for the year ended January 28, 2023, which provides additional information on comparisons of fiscal years 2022 and
2021.

OUR VALUE CREATION MODEL – DELIVERING CONSISTENT AND ATTRACTIVE TOTAL
SHAREHOLDER RETURN

Kroger’s proven value creation model is allowing us to deliver today and invest for the future. The foundation of our
value creation model is our omnichannel retail business, including fuel and health and wellness. By executing on our go-
to-market strategy built on the four pillars of Fresh, Our Brands, Personalization and Seamless, we are creating a
shopping experience that builds loyalty and grows sales. Our retail business generates traffic and data which accelerates
growth in our high operating margin alternative profit businesses, like Kroger Precision Marketing. In turn, the value
generated from these businesses enables us to reinvest back into our retail business.

We are focused on enhancing our pillars and delivering an exceptional customer experience to accelerate this
flywheel effect. By expanding our store network and improving our digital capabilities, we expect to grow households
and increase sales. Kroger has evolved into a more diverse business, with a model that provides more ways than ever to
generate net earnings growth.

This will be achieved by:

• Growing identical sales without fuel. Our plan involves maximizing growth opportunities in our retail business
and is supported by continued strategic investments in our associates, greater value for our customers and our
seamless ecosystem to ensure we deliver a full, fresh and friendly experience for every customer, every time.
As more and more customers incorporate ecommerce into their permanent routines, we expect digital sales to
grow at a double-digit rate – a faster pace than other food at home sales – over time; and

• Expanding operating margin through long-term initiatives in gross margin, growing alternative profit

businesses, and productivity and cost saving initiatives that are focused on simplifying processes and utilizing
technology to enhance the associate experience without affecting the customer experience. Together, these will
enable us to improve operating margin, while balancing strategic price investments for customers and wage and
benefit investments for associates.

We expect to continue to generate strong free cash flow and are committed to being disciplined with capital

deployment in support of our value creation model and stated capital allocation priorities. Our first priority is to invest in
the business through attractive high return opportunities that drive long-term sustainable net earnings growth. We are
committed to maintaining our current investment grade debt rating and our net total debt to adjusted EBITDA ratio
target range of 2.30 to 2.50. We also expect to continue to grow our dividend over time and return excess cash to
shareholders via stock repurchases, subject to Board approval. During the third quarter of 2022, we paused our share
repurchase program to prioritize de-leveraging following the proposed merger with Albertsons.

We expect our value creation model will result in total shareholder return within our target range of 8% to 11% over

time, which does not contemplate the effect of the proposed merger with Albertsons.

2023 EXECUTIVE SUMMARY

We achieved strong results in 2023, in line with our long-term growth model and built on three consecutive years of

growth, despite navigating a challenging operating environment. By maintaining our long-term commitment to lower
prices, through personalized promotions and rewards, we are increasing customer visits and growing loyal households
through the strength of our retail business, continuing our evolution into a more diverse business, and our value creation
model is providing us multiple ways to drive sustainable future growth.

Our results provided another proof point of the strength and resilience of our value creation model, which supported

another year of strong free cash flow and adjusted net earnings per diluted share growth, excluding the 53rd week in
fiscal year 2023 (the “Extra Week”). This was the result of continued momentum across several margin expansion
initiatives, strong Our Brands performance, strong growth in alternative profit businesses, our ability to effectively
manage product cost through strong sourcing practices, lower supply chain costs and a lower year-over-year LIFO
charge. During the year, we continued to invest in wages and the associate experience as a way to support the delivery of
a full, fresh and friendly customer experience. In 2023, we increased associate wages resulting in an average hourly rate
of nearly $19, and a rate of nearly $25 with comprehensive benefits factored in, which is a 33% increase in rate in the
last five years.

The following table provides highlights of our financial performance:

Financial Performance Data
($ in millions, except per share amounts)

Sales
Sales without fuel and the Extra Week
Net earnings attributable to The Kroger Co.
Adjusted net earnings attributable to The Kroger Co. excluding the Extra Week
Net earnings attributable to The Kroger Co. per diluted common share
Adjusted net earnings attributable to The Kroger Co. per diluted common share

excluding the Extra Week

Operating profit
Adjusted FIFO operating profit excluding the Extra Week
Dividends paid
Dividends paid per common share
Identical sales excluding fuel(1)
FIFO gross margin rate, excluding fuel and the Extra Week, bps increase

(decrease)(1)

OG&A rate, excluding fuel, Adjusted Items and the Extra Week, bps increase

(decrease)(1)

(Decrease)/increase in total debt, including obligations under finance leases

compared to prior fiscal year end

Share repurchases

2023

$ 150,039
$ 130,988
2,164
$
3,335
$
2.96
$

Fiscal Year
Percentage
Change

2022

1.2 % $ 148,258
1.1 % $ 129,626
2,244
(3.6)% $
3,104
7.4 % $
3.06
(3.3)% $

$
$
$
$
$

4.56
3,096
4,799
796
1.10
0.9 %

7.8 % $
(25.0)% $
(5.5)% $
16.7 % $
17.0 % $
N/A

4.23
4,126
5,079
682
0.94
5.6 %

0.18

0.21

N/A

(0.09)

(0.19)

$
$

(1,152)
62

N/A
N/A

$
$

14
993

(1) Identical sales without fuel would have grown 2.3% in fiscal 2023 if not for the reduction in pharmacy sales from
the previously communicated termination of our agreement with Express Scripts effective December 31, 2022. In
fiscal 2023, the terminated agreement had a positive effect on the FIFO gross margin rate, excluding fuel and the
Extra Week, and a negative effect on the OG&A rate, excluding fuel, the Extra Week and the 2023 and 2022
Adjusted Items, as defined below. The overall net effect on adjusted FIFO operating profit was slightly positive.

OVERVIEW

Notable items for 2023 are:

Shareholder Return

• Achieved net earnings attributable to The Kroger Co. per diluted common share of $2.96, which represents a

3.3% decrease compared to 2022. The 2023 results include losses per diluted common share of $1.60 related to
our opioid settlement charges.

• Net earnings include $179 million, $144 million net of tax, due to the Extra Week. The Extra Week in 2023

contributed $0.20 to our net earnings per diluted common share result for 2023.

• Achieved adjusted net earnings attributable to The Kroger Co. per diluted common share excluding the Extra
Week of $4.56, which represents an 8% increase compared to 2022. Including the Extra Week, adjusted net
earnings per diluted common share increased 13% compared to 2022.

• Achieved operating profit of $3.1 billion, which represents a 25% decrease compared to 2022. The 2023 results

reflect charges of $1.5 billion related to our opioid settlement charges.

• Achieved adjusted FIFO operating profit excluding the Extra Week of $4.8 billion, which represents a 6%

decrease compared to 2022. Including the Extra Week, adjusted FIFO operating profit decreased 2% compared
to 2022.

• Generated cash flows from operations of $6.8 billion, which represents a 51% increase compared to 2022.

• Returned $0.8 billion to shareholders through dividend payments.

Other Financial Results

•

Identical sales, excluding fuel, increased 0.9%. Identical sales, excluding fuel, would have grown 2.3% in 2023
if not for the reduction in pharmacy sales from our termination of our agreement with Express Scripts effective
December 31, 2022. This terminated agreement had no material effect on profitability.

• Digital sales grew to $12 billion in annual sales. Digital sales include products ordered online and picked up at
our stores and our Delivery and Ship solutions. Excluding the Extra Week, digital sales increased 12%, which
was led by strength in our Delivery solutions, which grew by 25%. Delivery solutions growth was driven by our
Boost membership program and expansion of our Kroger Delivery network. Our Delivery solutions include
orders delivered to customers from retail store locations, customer fulfillment centers powered by Ocado and
orders placed through third-party platforms. Our Ship solutions primarily include online orders placed through
our owned platforms that are dispatched using mail service or third-party courier.

• Our LIFO charge for 2023 was $113 million, compared to $626 million in 2022. The decrease in LIFO charge

was due to lower product cost inflation year-over-year.

• Alternative profit streams contributed $1.3 billion of operating profit in 2023.

Significant Events

• During the second quarter of 2023, we recognized opioid settlement charges of $1.4 billion, $1.1 billion net of
tax, related to the nationwide opioid settlement framework to settle substantially all opioid lawsuits and claims
against Kroger. We have agreed to make settlement payments related to the nationwide settlement framework
of approximately $1.2 billion in equal installments over 11 years, and $177 million in equal installments over
six years. During the first quarter of 2023, we recognized opioid settlement charges of $62 million, $49 million
net of tax, related to all pending and future opioid litigation claims with the State of West Virginia, which are
payable over 10 years. For additional information about our opioid settlement charges in 2023, see Note 12 to
the Consolidated Financial Statements.

• On September 8, 2023, Kroger and Albertsons announced they have entered a definitive agreement with C&S
Wholesale Grocers, LLC for the combined sale of 413 stores, eight distribution centers, two offices and five
private label brands for approximately $1.9 billion cash, in connection with the proposed merger, subject to
customary adjustments. The financial terms of this divestiture plan are in line with what we expected and allow
us to reaffirm the shareholder value creation opportunity the proposed merger creates. For additional
information about the proposed merger with Albertsons, see Note 16 to the Consolidated Financial Statements.

OUR BUSINESS

The Kroger Co. (the “Company” or “Kroger”) was founded in 1883 and incorporated in 1902. Our Company is built

on the foundation of our food retail business, which includes the added convenience of our retail pharmacies and fuel
centers. Our strategy is focused on growing customer loyalty by delivering great value and convenience, and investing in
four strategic pillars: Fresh, Our Brands, Data & Personalization and Seamless.

We also utilize the data and traffic generated by our retail business to deliver incremental value and services for our
customers that generate alternative profit streams. These alternative profit streams would not exist without our core retail
business.

Our revenues are predominately earned and cash is generated as consumer products are sold to customers in our
stores, fuel centers and via our online platforms. We earn income predominately by selling products at price levels that
produce revenues in excess of the costs we incur to make these products available to our customers. Such costs include
procurement and distribution costs, facility occupancy and operational costs, and overhead expenses. Our retail
operations, which represent 97% of our consolidated sales, is our only reportable segment.

Kroger is diversified across brands, product categories, channels of distribution, geographies and consumer

demographics. Our combination of assets include the following:

Stores

As of February 3, 2024, Kroger operates supermarkets under a variety of local banner names in 35 states and the

District of Columbia. As of February 3, 2024, Kroger operated, either directly or through its subsidiaries, 2,722
supermarkets, of which 2,257 had pharmacies and 1,665 had fuel centers. We connect with customers through our
expanding seamless ecosystem and the consistent delivery of a full, fresh, and friendly customer experience. Fuel sales
are an important part of our revenue, net earnings and loyalty offering. Our fuel strategy is to include a fuel center at
each of our supermarket locations when it is feasible and it is expected to be profitable.

Seamless Digital Ecosystem

We offer a convenient shopping experience for our customers regardless of how they choose to shop with us,
including Pickup, Delivery and Ship. We offer Pickup and Harris Teeter ExpressLane™ — personalized, order online,
pick up at the store services — at 2,350 of our supermarkets and provide Delivery, which allows us to offer digital
solutions to substantially all of our customers. Our Delivery solutions include orders delivered to customers from retail
store locations, customer fulfillment centers powered by Ocado and orders placed through third-party platforms. These
channels allow us to serve customers anything, anytime, and anywhere with zero compromise on selection, convenience,
and price. We also provide relevant customer-facing apps and interfaces that have the features customers want that are
also reliable, easy to use and deliver a seamless customer experience across our store and digital channels.

Merchandising and Manufacturing

Our Brands products play an important role in our merchandising strategy and represented over $31 billion of our
sales in 2023. We own 33 food production plants, primarily bakeries and dairies, which supply approximately 30% of
Our Brands units and 43% of the grocery category Our Brands units sold in our supermarkets; the remaining Our
Brands items are produced to our strict specifications by outside manufacturers.

Our Data

We are evolving into a more diverse business. The traffic and data generated by our retail business, including
pharmacies and fuel centers, is enabling this transformation. Kroger serves approximately 62 million households
annually and because of our rewards program, over 95% of customer transactions are tethered to a Kroger loyalty card.
Our 20 years of investment in data science capabilities is allowing us to utilize this data to create personalized
experiences and value for our customers and is also enabling our fast-growing, high operating margin alternative profit
businesses, including data analytic services and third-party media revenue. Our retail media business – Kroger Precision
Marketing – provides best in class media capabilities for our consumer packaged goods partners and other industry
verticals. It is a key driver of our digital profitability and alternative profit.

Proposed Merger with Albertsons

As previously disclosed, on October 13, 2022, we entered into a merger agreement with Albertsons. The proposed

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 2023 include $179 million, $144 million net of tax, due to the Extra Week. In addition, net earnings for
2023 include the following, which we define as the “2023 Adjusted Items:”

• Charges to operating, general and administrative expenses (“OG&A”) of $316 million, $268 million net of tax,
for merger related costs and $1.5 billion, $1.2 billion net of tax, for opioid settlement charges (the “2023
OG&A Adjusted Items”).

• A gain in other income (expense) of $151 million, $116 million net of tax, for the unrealized gain on

investments (the “2023 Other Income (Expense) Adjusted Items”).

Net earnings for 2022 include the following, which we define as the “2022 Adjusted Items:”

• Charges to operating, general and administrative expenses (“OG&A”) of $25 million, $19 million net of tax, for
obligations related to withdrawal liabilities for certain multi-employer pension funds, $20 million, $15 million
net of tax, for the revaluation of Home Chef contingent consideration, $44 million, $34 million net of tax, for
merger related costs, $85 million, $67 million net of tax, for opioid settlement charges and $164 million for
goodwill and fixed asset impairment charges related to Vitacost.com (the “2022 OG&A Adjusted Items”).

• Losses in other income (expense) of $728 million, $561 million net of tax, for the unrealized loss on

investments (the “2022 Other Income (Expense) Adjusted Items”).

Net earnings for 2021 include the following, which we define as the “2021 Adjusted Items:”

• Charges to OG&A of $449 million, $344 million net of tax, for obligations related to withdrawal liabilities for a
certain multi-employer pension fund, $66 million, $50 million net of tax, for the revaluation of Home Chef
contingent consideration and $136 million, $104 million net of tax, for transformation costs (the “2021 OG&A
Adjusted Items”).

• Losses in other income (expense) of $87 million, $68 million net of tax, related to company-sponsored pension
plan settlements and $821 million, $628 million net of tax, for the unrealized loss on investments (the “2021
Other Income (Expense) Adjusted Items”).

• A reduction to income tax expense of $47 million primarily due to the completion of income tax audit

examinations covering multiple years.

The table below provides a reconciliation of net earnings attributable to The Kroger Co. to adjusted net earnings
attributable to The Kroger Co. and a reconciliation of net earnings attributable to The Kroger Co. per diluted common
share to adjusted net earnings attributable to The Kroger Co. per diluted common share excluding the 2023, 2022 and
2021 Adjusted Items:

Net Earnings per Diluted Share excluding the Adjusted Items
($ in millions, except per share amounts)

Net earnings attributable to The Kroger Co.

(Income) expense adjustments

2023
2,164 $

2022
2,244 $

2021
1,655

Adjustment for pension plan withdrawal liabilities(1)(2)
Adjustment for company-sponsored pension plan settlement charges(1)(3)
Adjustment for (gain) loss 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 opioid settlement charges(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

—
—
(116)
—
—
268
1,163
—
—
1,315

19
—
561
15
—
34
67
164
—
860

344
68
628
50
104
—
—
—
(47)
1,147

Net earnings attributable to The Kroger Co. excluding the Adjusted Items

3,479 $

3,104 $

2,802

Extra Week adjustment(1)(10)

(144)

—

Net earnings attributable to The Kroger Co. excluding the Adjusted Items and the Extra

Week adjustment

3,335 $

3,104 $

2,802

Net earnings attributable to The Kroger Co. per diluted common share

2.96 $

3.06 $

2.17

(Income) expense adjustments

Adjustment for pension plan withdrawal liabilities(11)
Adjustment for company-sponsored pension plan settlement charges(11)
Adjustment for (gain) loss on investments(11)
Adjustment for Home Chef contingent consideration(11)
Adjustment for transformation costs(11)
Adjustment for merger related costs(11)
Adjustment for opioid settlement charges(11)
Adjustment for goodwill and fixed asset impairment charges related to Vitacost.com(11)
Adjustment for income tax audit examinations(11)

Total Adjusted Items

Net earnings attributable to The Kroger Co. per diluted common share excluding the

—
—
(0.17)
—
—
0.37
1.60
—
—
1.80

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

Adjusted Items

Extra Week adjustment(11)

4.76 $

4.23 $

3.68

(0.20)

—

Net earnings attributable to The Kroger Co. per diluted common share excluding the

Adjusted Items and the Extra Week adjustment

4.56 $

4.23 $

3.68

Average numbers of common shares used in diluted calculation

725

727

754

Net Earnings per Diluted Share excluding the Adjusted Items (continued)
($ in millions, except per share amounts)

(1) The amounts presented represent the after-tax effect of each adjustment, which was calculated using discrete tax

rates.

(2) The pre-tax adjustment for pension plan withdrawal liabilities was $25 in 2022 and $449 in 2021.
(3) The pre-tax adjustment for company-sponsored pension plan settlement charges was $87.
(4) The pre-tax adjustment for (gain) loss on investments was $(151) in 2023, $728 in 2022 and $821 in 2021.
(5) The pre-tax adjustment for Home Chef contingent consideration was $20 in 2022 and $66 in 2021.
(6) The pre-tax adjustment for transformation costs was $136. Transformation costs primarily include costs related to

store and business closure costs and third-party professional consulting fees associated with business transformation
and cost saving initiatives.

(7) The pre-tax adjustment for merger related costs was $316 in 2023 and $44 in 2022. Merger related costs primarily
include third-party professional fees and credit facility fees associated with the proposed merger with Albertsons.

(8) The pre-tax adjustment for opioid settlement charges was $1,475 in 2023 and $85 in 2022.
(9) The pre-tax and after-tax adjustments for goodwill and fixed asset impairment charges related to Vitacost.com was

$164.

(10) The pre-tax Extra Week adjustment was $(179).
(11) The amount presented represents the net earnings per diluted common share effect of each adjustment.

Key Performance Indicators

We evaluate our results of operations and cash flows using a variety of key performance indicators, such as sales,
identical sales, excluding fuel, FIFO gross margin, adjusted FIFO operating profit, adjusted net earnings, adjusted net
earnings per diluted share and return on invested capital. We use these financial metrics and related computations to
evaluate our operational effectiveness and our results of operations from period to period and to plan for near and long-
term operating and strategic decisions. These key performance indicators should not be reviewed in isolation or
considered as a substitute for our financial results as reported in accordance with GAAP. These measures, which are
described in more detail in this Annual Report on Form 10-K, may not be comparable to similarly-titled performance
indicators used by other companies.

RESULTS OF OPERATIONS

Sales

Total Sales
($ in millions)

2023

Adjusted(1)

Percentage
Change(2)

2022

Percentage
Change(3)

2021

Total sales to retail customers without

fuel(4)

Supermarket fuel sales
Other sales(5)
Total sales

$ 132,284 $ 129,868
16,340
1,120
$ 150,039 $ 147,328

16,621
1,134

0.9 % $ 128,664
(12.3)% 18,632
16.4 %
962
(0.6)% $ 148,258

5.2 % $ 122,293
26.9 % 14,678
4.9 %
917
7.5 % $ 137,888

(1) The 2023 adjusted column represents the items presented in the 2023 column adjusted to remove the Extra Week.
(2) This column represents the percentage change in 2023 adjusted sales compared to 2022.
(3) This column represents the percentage change in 2022 compared to 2021.
(4) Digital sales are included in the “Total sales to retail customers without fuel” line above. Digital sales include

products ordered online and picked up at our stores and our Delivery and Ship solutions. Our Delivery solutions
include orders delivered to customers from retail store locations, customer fulfillment centers powered by Ocado
and orders placed through third-party platforms. Our Ship solutions primarily include online orders placed through
our owned platforms that are dispatched using mail service or third-party courier. Digital sales increased
approximately 12% in 2023 excluding the Extra Week, increased approximately 4% in 2022 and decreased
approximately 3% in 2021. Digital sales growth for 2023 and 2022 was led by strength in our Delivery solutions,
which grew by 25% in 2023 excluding the Extra Week and 25% in 2022. Delivery solutions growth was driven by
our Boost membership program and expansion of our Kroger Delivery network.

(5) Other sales primarily relate to external sales at food production plants, data analytic services and third-party media
revenue. The increase in 2023, compared to 2022, and the increase in 2022, compared to 2021, is primarily due to
an increase in data analytic services and third-party media revenue.

Total 2023 adjusted sales represent total sales for 2023 excluding the Extra Week. Total 2023 adjusted sales
decreased in 2023, compared to 2022, by 0.6%. The decrease was primarily due to the decrease in supermarket fuel
sales, partially offset by the increase in total sales to retail customers without fuel. Total sales, excluding fuel, adjusted
for the Extra Week, increased 1.1% in 2023, compared to 2022, which was primarily due to our identical sales increase,
excluding fuel, of 0.9%. Identical sales, excluding fuel, in 2023, compared to 2022, increased primarily due to an
increase in the number of loyal households shopping with us and an increase in basket value due to retail inflation,
partially offset by a reduction in the number of items in basket and the termination of our agreement with Express
Scripts effective December 31, 2022. Identical sales, excluding fuel, would have grown 2.3% in 2023 if not for the
approximately $1.8 billion reduction in pharmacy sales from the termination of our agreement with Express Scripts
effective December 31, 2022. Total adjusted fuel sales decreased 12.3% in 2023, compared to 2022, primarily due to a
decrease in the average retail fuel price of 11.1% and a decrease in fuel gallons sold of 1.5%. The decrease in the
average retail fuel price was caused by a decrease in the product cost of fuel.

Total sales increased in 2022, compared to 2021, by 7.5%. The increase was primarily due to increases in
supermarket fuel sales and total sales to retail customers without fuel. Total sales, excluding fuel, increased 5.2% in
2022, compared to 2021, which was primarily due to our identical sales increase, excluding fuel, of 5.6%, partially offset
by discontinued patient therapies at Kroger Specialty Pharmacy. Identical sales, excluding fuel, for 2022, compared to
2021, increased primarily due to an increase in the number of households shopping with us and an increase in basket
value due to retail inflation, partially offset by a reduction in the number of items in basket and the termination of our
agreement with Express Scripts. Identical sales without fuel would have grown 5.8% in 2022 if not for the reduction in
pharmacy sales from our termination of our agreement with Express Scripts effective December 31, 2022. Total
supermarket fuel sales increased 26.9% in 2022, compared to 2021, primarily due to an increase in the average retail fuel
price of 28.5%, partially offset by a decrease in fuel gallons sold of 1.2%, which was less than the national average
decline. The increase in the average retail fuel price was caused by an increase in the product cost of fuel.

We calculate identical sales, excluding fuel, as sales to retail customers, including sales from all departments at

identical supermarket locations, Kroger Specialty Pharmacy businesses and Delivery and Ship solutions. We define a
supermarket as identical when it has been in operation without expansion or relocation for five full quarters. We define
Kroger Specialty Pharmacy businesses as identical when physical locations have been in operation continuously for five
full quarters; discontinued patient therapies are excluded from the identical sales calculation starting in the quarter of
transfer or termination. We define Kroger Delivery identical sales powered by Ocado based on geography. We include
Kroger Delivery sales powered by Ocado as identical if the delivery occurs in an existing Kroger supermarket
geography. If the Kroger Delivery sales powered by Ocado occur in a new geography, these sales are included as
identical when deliveries have occurred to the new geography for five full quarters. Although identical sales is a
relatively standard term, numerous methods exist for calculating identical sales growth. As a result, the method used by
our management to calculate identical sales may differ from methods other companies use to calculate identical sales. It
is important to understand the methods used by other companies to calculate identical sales before comparing our
identical sales to those of other such companies. Our identical sales, excluding fuel, results are summarized in the
following table. We used the identical sales, excluding fuel, dollar figures presented below to calculate percentage
changes for 2023 and 2022.

Identical Sales
($ in millions)

Excluding fuel
Excluding fuel

2023
131,748

$
0.9 %

2022(1)
130,562

5.6 %

(1) Identical sales, excluding fuel, for 2022 were adjusted to a comparable 53 week basis by including week 1 of fiscal
2023 in our 2022 identical sales, excluding fuel, base. However, for the purpose of determining the percentage
change in identical sales, excluding fuel, from 2021 to 2022, 2022 identical sales, excluding fuel, were not adjusted
to include the sales from week 1 of 2023.

Gross Margin, LIFO and FIFO Gross Margin

We define gross margin as sales minus merchandise costs, including advertising, warehousing, and transportation.

Rent expense, depreciation and amortization expense, and interest expense are not included in gross margin.

Our gross margin rates, as a percentage of sales, were 22.24% in 2023 and 21.43% in 2022. This increase in rate

was achieved while also investing in price to maintain a competitive price position and deliver greater value for our
customers. The increase in rate in 2023, compared to 2022, resulted primarily from a decreased LIFO charge, an increase
in our fuel gross margin, strong Our Brands performance, our ability to effectively manage product cost through strong
sourcing practices, lower transportation costs, as a percentage of sales, and the effect of our terminated agreement with
Express Scripts, partially offset by higher shrink, as a percentage of sales, and increased promotional price investment.

Our LIFO charge was $113 million in 2023 and $626 million in 2022. The decrease in our LIFO charge was

attributable to lower product cost inflation for 2023 compared to 2022.

Our FIFO gross margin rate, which excludes the LIFO charge, was 22.31% in 2023, compared to 21.86% in 2022.

Our fuel sales lower our FIFO gross margin rate due to the very low FIFO gross margin rate, as a percentage of sales, of
fuel sales compared to non-fuel sales. Excluding the effect of fuel and the Extra Week, our FIFO gross margin rate
increased 18 basis points in 2023, compared to 2022. This increase in rate was achieved while also investing in price to
maintain a competitive price position and deliver greater value for our customers. This increase resulted primarily from
strong Our Brands performance, our ability to effectively manage product cost through strong sourcing practices, lower
transportation costs, as a percentage of sales, and the effect of our terminated agreement with Express Scripts, partially
offset by increased promotional price investment and higher shrink, as a percentage of sales.

Operating, General and Administrative Expenses

OG&A expenses consist primarily of employee-related costs such as wages, healthcare benefit costs, retirement plan

costs, utilities, and credit card fees. Rent expense, depreciation and amortization expense, and interest expense are not
included in OG&A.

OG&A expenses, as a percentage of sales, were 17.50% in 2023 and 16.09% in 2022. The increase in 2023,
compared to 2022, resulted primarily from planned investments in associates, costs related to strategic investments that
are expected to drive future growth and the effect of our terminated agreement with Express Scripts and the 2023 OG&A
Adjusted Items, partially offset by the 2022 OG&A Adjusted Items, broad-based cost savings initiatives that drive
administrative efficiencies, store productivity and sourcing cost reductions and lower incentive plan costs.

Our fuel sales lower our OG&A rate, as a percentage of sales, due to the very low OG&A rate, as a percentage of
sales, of fuel sales compared to non-fuel sales. Excluding the effect of fuel, the Extra Week, the 2023 OG&A Adjusted
Items, the 2022 OG&A Adjusted Items, our OG&A rate increased 21 basis points in 2023, compared to 2022. This
increase resulted primarily from planned investments in associates, costs related to strategic investments that are
expected to drive future growth and the effect of our terminated agreement with Express Scripts, partially offset by
broad-based cost savings initiatives that drive administrative efficiencies, store productivity and sourcing cost reductions
and lower incentive plan costs.

Rent Expense

Rent expense remained relatively consistent, as a percentage of sales, for 2023 compared to 2022.

Depreciation and Amortization Expense

Depreciation and amortization expense increased, as a percentage of sales, in 2023, compared to 2022, primarily due

to depreciation of equipment recorded under finance leases related to our Kroger Delivery customer fulfillment center
location openings and additional depreciation associated with higher capital investments, partially offset by the Extra
Week.

Operating Profit and FIFO Operating Profit

Operating profit was $3.1 billion, or 2.06% of sales, for 2023, compared to $4.1 billion, or 2.78% of sales, for 2022.
Operating profit, as a percentage of sales, decreased 72 basis points in 2023, compared to 2022, due to increased OG&A
and depreciation and amortization expenses, as a percentage of sales, and a decrease in fuel operating profit, partially
offset by a higher FIFO gross margin rate, a decreased LIFO charge and the Extra Week.

FIFO operating profit was $3.2 billion, or 2.14% of sales, for 2023, compared to $4.8 billion, or 3.21% of sales, for
2022. FIFO operating profit, as a percentage of sales, excluding the 2023 and 2022 Adjusted Items and the Extra Week,
decreased 15 basis points in 2023, compared to 2022, due to increased OG&A and depreciation and amortization
expenses, as a percentage of sales and a decrease in fuel operating profit, partially offset by a higher FIFO gross margin
rate.

Specific factors contributing to the trends driving operating profit and FIFO operating profit identified above are

discussed earlier in this section.

The following table provides a reconciliation of operating profit to FIFO operating profit, and to Adjusted FIFO

operating profit, excluding the 2023 and 2022 Adjusted Items:

Operating Profit excluding the Adjusted Items

($ in millions)

Operating profit
LIFO charge

FIFO Operating profit

2023

2022

3,096 $
113

4,126
626

3,209

4,752

Adjustment for pension plan withdrawal liabilities
Adjustment for Home Chef contingent consideration
Adjustment for merger related costs(1)
Adjustment for opioid settlement charges(2)
Adjustment for goodwill and fixed asset impairment charges related to Vitacost.com
Other

2023 and 2022 Adjusted items

—
—
316
1,475
—
(14)

1,777

25
20
44
85
164
(11)

327

Adjusted FIFO operating profit excluding the adjusted items above

4,986 $

5,079

Extra Week adjustment

(187)

—

Adjusted FIFO operating profit excluding the adjusted items above and the Extra Week $

4,799 $

5,079

(1) Merger related costs primarily include third-party professional fees and credit facility fees associated with the

proposed merger with Albertsons.

(2) Opioid settlement charges include settlements with the nationwide opioid settlement framework and the States of

West Virginia and New Mexico.

Interest Expense

Interest expense totaled $441 million in 2023 and $535 million in 2022. The decrease in interest expense in 2023,
compared to 2022, was primarily due to decreased average total outstanding debt throughout 2023, compared to 2022,
including both the current and long-term portions of obligations under finance leases and increased interest income
earned on our cash and temporary cash investments due to rising interest rates and higher cash and temporary cash
investment balances throughout 2023, compared to 2022, partially offset by the Extra Week.

Income Taxes

Our effective income tax rate was 23.5% in 2023 and 22.5% in 2022. The 2023 tax rate differed from the federal
statutory rate due to the effect of state income taxes and non-deductible portion of opioid settlement charges, partially
offset by the benefit from share-based payments and the utilization of tax credits. The 2022 tax rate differed from the
federal statutory rate due to the effect of state income taxes and non-deductible goodwill impairment charges related to
Vitacost.com, partially offset by the benefits from share-based payments and the utilization of tax credits.

Net Earnings and Net Earnings Per Diluted Share

Our net earnings are based on the factors discussed in the Results of Operations section.

Net earnings of $2.96 per diluted share for 2023 represented a decrease of 3.3% compared to net earnings of $3.06

per diluted share for 2022. Excluding the 2023 and 2022 Adjusted Items and the Extra Week, adjusted net earnings of
$4.56 per diluted share for 2023 represented an increase of 7.8% compared to adjusted net earnings of $4.23 per diluted
share for 2022. The increase in adjusted net earnings per diluted share resulted primarily from a decreased LIFO charge
and lower interest expense, partially offset by decreased fuel earnings, higher income tax expense and decreased FIFO
operating profit, excluding fuel.

RETURN ON INVESTED CAPITAL

We calculate return on invested capital (“ROIC”) by dividing adjusted ROIC operating profit for the prior four
quarters by the average invested capital. Adjusted operating profit for ROIC purposes is calculated by excluding certain
items included in operating profit, and adding back our LIFO charge, depreciation and amortization and rent to our U.S.
GAAP operating profit of the prior four quarters. Average invested capital is calculated as the sum of (i) the average of
our total assets, (ii) the average LIFO reserve and (iii) the average accumulated depreciation and amortization; minus
(i) the average taxes receivable, (ii) the average trade accounts payable, (iii) the average accrued salaries and wages and
(iv) the average other current liabilities, excluding accrued income taxes. Averages are calculated for ROIC by adding
the beginning balance of the first quarter and the ending balance of the fourth quarter, of the last four quarters, and
dividing by two. ROIC is a non-GAAP financial measure of performance. ROIC should not be reviewed in isolation or
considered as a substitute for our financial results as reported in accordance with GAAP. ROIC is an important measure
used by management to evaluate our investment returns on capital. Management believes ROIC is a useful metric to
investors and analysts because it measures how effectively we are deploying our assets.

Although ROIC is a relatively standard financial term, numerous methods exist for calculating a company’s ROIC.

As a result, the method used by our management to calculate ROIC may differ from methods other companies use to
calculate their ROIC. We urge you to understand the methods used by other companies to calculate their ROIC before
comparing our ROIC to that of such other companies.

The following table provides a calculation of ROIC for 2023 and 2022 on a 52 week basis ($ in millions):

Return on Invested Capital
Numerator

Operating profit on a 53 week basis in fiscal year 2023
Extra Week operating profit adjustment
LIFO charge
Depreciation and amortization
Rent on a 53 week basis in fiscal year 2023
Extra Week rent adjustment
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 opioid settlement charges
Adjusted ROIC operating profit

Denominator

Average total assets
Average taxes receivable(1)
Average LIFO reserve
Average accumulated depreciation and amortization(2)
Average accounts payable
Average accrued salaries and wages
Average other current liabilities
Average invested capital
Return on Invested Capital

Fiscal Year Ended

February 3,
2024

January 28,
2023

3,096
(187)
113
3,125
891
(17)
—
—

—
316
1,475
8,812

50,064
(197)
2,253
30,573
(10,280)
(1,535)
(3,414)
67,464
$
13.06 %

4,126
—
626
2,965
839
—
20
25

164
44
85
8,894

49,355
(137)
1,883
27,843
(10,016)
(1,741)
(3,435)
63,752
13.95 %

(1) Taxes receivable were $163 as of February 3, 2024, $231 as of January 28, 2023 and $42 as of January 29, 2022.
(2) Accumulated depreciation and amortization includes depreciation for property, plant and equipment and

amortization for definite-lived intangible assets.

CRITICAL ACCOUNTING ESTIMATES

We have chosen accounting policies that we believe are appropriate to report accurately and fairly our operating
results and financial position, and we apply those accounting policies in a consistent manner. Our significant accounting
policies are summarized in Note 1 to the Consolidated Financial Statements.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosures of contingent assets
and liabilities. We base our estimates on historical experience and other factors we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

We believe the following accounting estimates are the most critical in the preparation of our financial statements

because they involve the most difficult, subjective or complex judgments about the effect of matters that are inherently
uncertain.

Impairments of Long-Lived Assets

We monitor the carrying value of long-lived assets for potential impairment each quarter based on whether certain

triggering events have occurred. These events include current period losses combined with a history of losses or a
projection of continuing losses or a significant decrease in the market value of an asset. When a triggering event occurs,
we perform an impairment calculation, comparing projected undiscounted cash flows, utilizing current cash flow
information and expected growth rates related to specific stores, to the carrying value for those stores. If we identify
impairment for long-lived assets to be held and used, we compare the assets’ current carrying value to the assets’ fair
value. Fair value is determined based on market values or discounted future cash flows. We record impairment when the
carrying value exceeds fair market value. With respect to owned property and equipment held for disposal, we adjust the
value of the property and equipment to reflect recoverable values based on our previous efforts to dispose of similar
assets and current economic conditions. We recognize impairment for the excess of the carrying value over the estimated
fair market value, reduced by estimated direct costs of disposal. We recorded asset impairments in the normal course of
business totaling $69 million in 2023 and $68 million in 2022. We record costs to reduce the carrying value of long-lived
assets in the Consolidated Statements of Operations as OG&A expense.

The factors that most significantly affect the impairment calculation are our estimates of future cash flows. Our

cash flow projections look several years into the future and include assumptions on variables such as inflation, the
economy and market competition. Application of alternative assumptions and definitions, such as reviewing long-lived
assets for impairment at a different level, could produce significantly different results.

Business Combinations

We account for business combinations using the acquisition method of accounting. All the assets acquired, liabilities

assumed and amounts attributable to noncontrolling interests are recorded at their respective fair values at the date of
acquisition once we obtain control of an entity. The determination of fair values of identifiable assets and liabilities
involves estimates and the use of valuation techniques when market value is not readily available. We use various
techniques to determine fair value in such instances, including the income approach. Significant estimates used in
determining fair value include, but are not limited to, the amount and timing of future cash flows, growth rates, discount
rates and useful lives. The excess of the purchase price over fair values of identifiable assets and liabilities is recorded as
goodwill. See Note 2 for further information about goodwill.

Goodwill

Our goodwill totaled $2.9 billion as of February 3, 2024. We review goodwill for impairment in the fourth quarter
of each year and also upon the occurrence of triggering events. We perform reviews of each of our operating divisions
and other consolidated entities (collectively, “reporting units”) that have goodwill balances. Generally, fair value is
determined using a multiple of earnings, or discounted projected future cash flows, and we compare fair value to the
carrying value of a reporting unit for purposes of identifying potential impairment. We base projected future cash flows
on management’s knowledge of the current operating environment and expectations for the future. We recognize
goodwill impairment for any excess of a reporting unit's carrying value over its fair value, not to exceed the total amount
of goodwill allocated to the reporting unit.

In 2022, we recorded a goodwill impairment charge for Vitacost.com totaling $160 million. The talent and

capabilities gained through the merger with Vitacost in 2014 have been key to advancing Kroger’s digital platform and
growing our digital business to more than $10 billion in annual sales. As our digital strategy has evolved, our primary
focus looking forward will be to effectively utilize our Pickup and Delivery capabilities. This reprioritization resulted in
reduced long-term profitability expectations and a decline in the market value for one underlying channel of business
and led to the impairment charge. Vitacost.com will continue to operate as an online platform providing great value
natural, organic, and eco-friendly products for customers.

The annual evaluation of goodwill performed in 2023, 2022 and 2021 did not result in impairment for any of our
reporting units other than Vitacost.com described above. Based on current and future expected cash flows, we believe
additional goodwill impairments are not reasonably likely. A 10% reduction in fair value of our reporting units would
not indicate a potential for impairment of our goodwill balance.

The 2023 fair value of our Kroger Specialty Pharmacy (“KSP”) reporting unit was estimated using multiple
valuation techniques: a discounted cash flow model (income approach), a market multiple model and a comparable
mergers and acquisition model (market approaches), with each method weighted in the calculation. The income
approach relies on management’s projected future cash flows, estimates of revenue growth rates, margin assumptions
and an appropriate discount rate. The market approaches require the determination of an appropriate peer group, which is
utilized to derive estimated fair values based on selected market multiples. Our KSP reporting unit has a goodwill
balance of $243 million.

For additional information relating to our results of the goodwill impairment reviews performed during 2023, 2022

and 2021, see Note 2 to the Consolidated Financial Statements.

The impairment review requires the extensive use of management judgment and financial estimates. Application of
alternative estimates and assumptions could produce significantly different results. The cash flow projections embedded
in our goodwill impairment reviews can be affected by several factors such as inflation, business valuations in the
market, the economy, market competition and our ability to successfully integrate recently acquired businesses.

Multi-Employer Pension Plans

We contribute to various multi-employer pension plans based on obligations arising from collective bargaining
agreements. These multi-employer pension plans provide retirement benefits to participants based on their service to
contributing employers. The benefits are paid from assets held in trust for that purpose. Trustees are appointed in equal
number by employers and unions. The trustees typically are responsible for determining the level of benefits to be
provided to participants as well as for such matters as the investment of the assets and the administration of the plans.

We recognize expense in connection with these plans as contributions are funded or when commitments are
probable and reasonably estimable, in accordance with GAAP. We made cash contributions to these plans of $635
million in 2023, $620 million in 2022 and $1.1 billion in 2021. The decrease in 2023 and 2022, compared to 2021 is due
to the contractual payments we made in 2021 related to our commitments established for the restructuring of certain
multi-employer pension plan agreements.

We continue to evaluate and address our potential exposure to under-funded multi-employer pension plans as it

relates to our associates who are beneficiaries of these plans. These under-fundings are not our liability. When an
opportunity arises that is economically feasible and beneficial to us and our associates, we may negotiate the
restructuring of under-funded multi-employer pension plan obligations to help stabilize associates’ future benefits and
become the fiduciary of the restructured multi-employer pension plan. The commitments from these restructurings do
not change our debt profile as it relates to our credit rating since these off-balance sheet commitments are typically
considered in our investment grade debt rating. We are currently designated as the named fiduciary of the UFCW
Consolidated Pension Plan and the International Brotherhood of Teamsters (“IBT”) Consolidated Pension Fund and have
sole investment authority over these assets. Significant effects of these restructuring agreements recorded in our
Consolidated Financial Statements are:

•

In 2022, we incurred a $25 million charge, $19 million net of tax, for obligations related to withdrawal
liabilities for certain multi-employer pension funds.

In 2021, we incurred a $449 million charge, $344 million net of tax, for obligations related to withdrawal
liabilities for a certain multi-employer pension fund.

As we continue to work to find solutions to under-funded multi-employer pension plans, it is possible we could

incur withdrawal liabilities for certain funds.

Based on the most recent information available to us, we believe the present value of actuarially accrued liabilities

in most of these multi-employer plans exceeds the value of the assets held in trust to pay benefits, and we expect that our
contributions to most of these funds will increase over the next few years. We have attempted to estimate the amount by
which these liabilities exceed the assets, (i.e., the amount of underfunding), as of December 31, 2023. Because we are
only one of a number of employers contributing to these plans, we also have attempted to estimate the ratio of our
contributions to the total of all contributions to these plans in a year as a way of assessing our “share” of the
underfunding. Nonetheless, the underfunding is not a direct obligation or liability of ours or of any employer.

As of December 31, 2023, we estimate our share of the underfunding of multi-employer pension plans to which we
contribute was approximately $2.5 billion, $1.9 billion net of tax, which remained consistent with the estimated amount
of underfunding as of December 31, 2022. Our estimate is based on the most current information available to us
including actuarial evaluations and other data (that include the estimates of others), and such information may be
outdated or otherwise unreliable.

We have made and disclosed this estimate not because, except as noted above, this underfunding is a direct liability

of ours. Rather, we believe the underfunding is likely to have important consequences. In the event we were to exit
certain markets or otherwise cease making contributions to these plans, we could trigger a substantial withdrawal
liability. Any adjustment for withdrawal liability will be recorded when it is probable that a liability exists and can be
reasonably estimated, in accordance with GAAP.

The amount of underfunding described above is an estimate and could change based on contract negotiations,
returns on the assets held in the multi-employer pension plans, benefit payments or future restructuring agreements. The
amount could decline, and our future expense would be favorably affected, if the values of the assets held in the trust
significantly increase or if further changes occur through collective bargaining, trustee action or favorable legislation. On
the other hand, our share of the underfunding could increase, and our future expense could be adversely affected if the
asset values decline, if employers currently contributing to these funds cease participation or if changes occur through
collective bargaining, trustee action or adverse legislation. We continue to evaluate our potential exposure to under-
funded multi-employer pension plans. Although these liabilities are not a direct obligation or liability of ours, any
commitments to fund certain multi-employer pension plans will be expensed when our commitment is probable and an
estimate can be made.

The American Rescue Plan Act ("ARP Act"), which was signed into law on March 11, 2021, established a special
financial assistance program for financially troubled multi-employer pension plans. Under the ARP Act, eligible multi-
employer plans can apply to receive a cash payment in an amount projected by the Pension Benefit Guaranty
Corporation to pay pension benefits through the plan year ending 2051. At the end of 2023, we expect certain multi-
employer pension plans in which we participate, for which our estimated share of underfunding is approximately $1.1
billion, $850 million net of tax, to apply for funding in 2024, which may reduce a portion of our share of unfunded
multi-employer pension plan liabilities.

See Note 15 to the Consolidated Financial Statements for more information relating to our participation in these

multi-employer pension plans.

NEW ACCOUNTING STANDARDS

Refer to Note 17 to the Consolidated Financial Statements for recently issued accounting standards not yet adopted

as of February 3, 2024.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow Information

The following table summarizes our net increase (decrease) in cash and temporary cash investments for 2023 and

2022:

Net cash provided by (used in)

Operating activities
Investing activities
Financing activities

Net increase (decrease) in cash and temporary cash investments

Net cash provided by operating activities

Fiscal Year

2023

2022

6,788
(3,750)
(2,170)
868

4,498
(3,015)
(2,289)
(806)

We generated $6.8 billion of cash from operations in 2023, compared to $4.5 billion in 2022. Net earnings including

noncontrolling interests, adjusted for non-cash items, generated approximately $6.0 billion of operating cash flow in
2023 compared to $7.7 billion in 2022. The change in operating assets and liabilities, including working capital, was
$808 million in 2023 compared to $(3.2) billion in 2022. The change in operating assets and liabilities, including
working capital, was primarily due to the following:

• Cash flows for FIFO inventory were more favorable for 2023, compared to 2022, primarily due to a smaller

effect of inflation in the current year on inventory balances and maintaining inventory at optimal levels through
improved inventory management planning;

• An increase in long-term liabilities at the end of 2023, compared to the end of 2022, primarily due to an

increase in the noncurrent portion of our accrued opioid settlement charges;

• Cash flows for accounts payable were more favorable in 2023, compared to 2022, due to increased accounts

payable at the end of 2023, compared to the end of 2022, primarily due to timing of payments and
management’s focus on working capital improvements;

• A decrease in income taxes receivable at the end of 2023, compared to the end of 2022, primarily due to

applying our overpayment in 2022 to our estimated tax payments for 2023; and

• Cash flows for accounts receivable were more favorable in 2023, compared to 2022, due to decreased pharmacy
receivables at the end of 2023, compared to the end of 2022, primarily due to timing of cash receipts and the
termination of our agreement with Express Scripts.

Net cash used by investing activities

Investing activities used cash of $3.8 billion in 2023, compared to $3.0 billion in 2022. The amount of cash used by

investing activities increased in 2023, compared to 2022, primarily due to increased payments for property and
equipment in 2023.

Net cash used by financing activities

We used $2.2 billion of cash for financing activities in 2023, compared to $2.3 billion in 2022. The amount of cash
used for financing activities decreased in 2023, compared to 2022, primarily due to decreased treasury stock purchases,
partially offset by increased payments on long-term debt including obligations under finance leases.

Capital Investments

Capital investments, including changes in construction-in-progress payables and excluding the purchase of leased
facilities, totaled $3.6 billion in 2023 and $3.3 billion in 2022. Capital investments for the purchase of leased facilities
totaled $21 million in 2022. We did not purchase any leased facilities in 2023. Our capital priorities align directly with
our value creation model and our target to consistently grow net earnings. Our capital program includes initiatives to
enhance the customer experience in stores, improve our process efficiency and enhance our digital capabilities through
technology developments. Capital investments increased in 2023, compared to 2022, due to increasing our store capital
investments compared to prior years. These investments are expected to drive sales growth and improve operating
efficiency by removing cost and waste from our business.

The table below shows our supermarket storing activity and our total supermarket square footage for 2023, 2022 and

2021:

Beginning of year
Opened
Opened (relocation)
Closed (operational)
Closed (relocation)
End of year

Supermarket Storing Activity

2023
2,719
5
2
(1)
(3)
2,722

2022
2,726
3
1
(10)
(1)
2,719

2021
2,742
4
4
(20)
(4)
2,726

Total supermarket square footage (in millions)

180

179

Debt Management

Total debt, including both the current and long-term portions of obligations under finance leases, decreased $1.2
billion to $12.2 billion as of year-end 2023 compared to 2022. This decrease resulted primarily from the payment of
$600 million of senior notes bearing an interest rate of 3.85% and the payment of $500 million of senior notes bearing an
interest rate of 4.00%.

Common Share Repurchase Programs

We maintain share repurchase programs that comply with Rule 10b5-1 of the Securities Exchange Act of 1934, as

amended (the “Exchange Act”) and allow for the orderly repurchase of our common shares, from time to time. The
share repurchase programs do not have an expiration date but may be suspended or terminated by our Board of Directors
at any time. We made open market purchases of our common shares totaling $821 million in 2022. During the third
quarter of 2022, we paused our share repurchase program to prioritize de-leveraging following the proposed merger with
Albertsons.

In addition, we also repurchase common shares under a program announced on December 6, 1999 to repurchase
common shares to reduce dilution resulting from our employee stock option and long-term incentive plans, under which
repurchases are limited to proceeds received from exercises of stock options and the tax benefits associated therewith
(“1999 Repurchase Program”). This program is solely funded by proceeds from stock option exercises, and the tax
benefit from these exercises. We repurchased approximately $62 million in 2023 and $172 million in 2022 of our
common shares under the 1999 Repurchase Program.

On September 9, 2022, our Board of Directors approved a $1.0 billion share repurchase program to reacquire shares

via open market purchase or privately negotiated transactions, block trades, or pursuant to trades intending to comply
with Rule 10b5-1 under the Exchange Act (the “September 2022 Repurchase Program”). No shares have been
repurchased under the September 2022 authorization. During the third quarter of 2022, we paused our share repurchase
program to prioritize de-leveraging following the proposed merger with Albertsons. As of February 3, 2024, there was
$1.0 billion remaining under the September 2022 Repurchase Program.

Dividends

The following table provides dividend information for 2023 and 2022 ($ in millions, except per share amounts):

Cash dividends paid
Cash dividends paid per common share

Liquidity Needs

2023

2022

$
$

796
1.10

$
$

682
0.94

We held cash and temporary cash investments of $1.9 billion, as of the end of 2023, which reflects our elevated
operating performance over the last few years and paused share repurchase program. We actively manage our cash and
temporary cash investments in order to internally fund operating activities, support and invest in our core businesses,
make scheduled interest and principal payments on our borrowings and return cash to shareholders through cash
dividend payments and share repurchases. Our current levels of cash, borrowing capacity and balance sheet leverage
provide us with the operational flexibility to adjust to changes in economic and market conditions. We remain
committed to our dividend, and growing our dividend over time, subject to board approval, as well as share repurchase
programs and we will evaluate the optimal use of any excess free cash flow, consistent with our capital allocation
strategy.

The table below summarizes our short-term and long-term material cash requirements, based on year of maturity or

settlement, as of February 3, 2024 (in millions of dollars):

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)
Opioid settlement
commitments(7)

Purchase obligations(8)
Total

2024

2025

2026

2027

2028

Thereafter

Total

25 $

92 $ 1,305 $

450
243
961
281
1,374

446
240
898
159
—

418
240
838
108
—

611 $
387
242
784
68
—

642 $
375
238
722
40
—

7,512 $ 10,187
6,239
4,163
2,562
1,359
9,941
5,738
761
105
1,374
—

296
827

1,447
3,904
$ 4,457 $ 2,380 $ 3,412 $ 2,542 $ 2,427 $ 21,197 $ 36,415

568
1,752

143
267

143
307

143
360

154
391

(1) The contractual obligations table excludes funding of pension and other postretirement benefit obligations, which
totaled approximately $65 million in 2023. For additional information about these obligations, see Note 14 to the
Consolidated Financial Statements. This table also excludes contributions under various multi-employer pension
plans, which totaled $635 million in 2023. For additional information about these multi-employer pension plans, see
Note 15 to the Consolidated Financial Statements.

(2) The liability related to unrecognized tax benefits has been excluded from the contractual obligations table because a

reasonable estimate of the timing of future tax settlements cannot be determined.

(3) As of February 3, 2024, we had no outstanding commercial paper and no borrowings under our credit facility.
(4) Amounts include contractual interest payments using the interest rate as of February 3, 2024 and stated fixed and

swapped interest rates, if applicable, for all other debt instruments.

(5) The amounts included for self-insurance liability related to workers’ compensation claims have been stated on a

present value basis.

(6) Amounts include funds owed to third parties for projects currently under construction. These amounts are reflected

in “Accounts payable” in our Consolidated Balance Sheets.

(7) Amounts include scheduled opioid settlement commitments related to the nationwide opioid settlement framework
and the State of West Virginia. For additional information about our opioid settlement charges, see Note 12 to the
Consolidated Financial Statements.

(8) Amounts include commitments, many of which are short-term in nature, to be utilized in the normal course of
business, such as several contracts to purchase raw materials utilized in our food production plants and several
contracts to purchase energy to be used in our stores and food production plants. Our obligations also include
management fees for facilities operated by third parties and outside service contracts. Any upfront vendor
allowances or incentives associated with outstanding purchase commitments are recorded as either current or long-
term liabilities in our Consolidated Balance Sheets. We included our future commitments for customer fulfillment
centers for which we have placed an order as of February 3, 2024. We did not include our commitments associated
with additional customer fulfillment centers that have not yet been ordered. We expect our future commitments for
customer fulfillment centers will continue to grow as we place orders for additional customer fulfillment centers.

We expect to meet our short-term and long-term liquidity needs with cash and temporary cash investments on hand

as of February 3, 2024, cash flows from our operating activities and other sources of liquidity, including borrowings
under our commercial paper program and bank credit facility. Our short-term and long-term liquidity needs include
anticipated requirements for working capital to maintain our operations, pension plan commitments, interest payments
and scheduled principal payments of debt and commercial paper, servicing our lease obligations, self-insurance
liabilities, capital investments, scheduled opioid settlement payments and other purchase obligations. We may also
require additional capital in the future to fund organic growth opportunities, additional customer fulfillment centers, joint
ventures or other business partnerships, property development, acquisitions, dividends and share repurchases. In
addition, we generally operate with a working capital deficit due to our efficient use of cash in funding operations and
because we have consistent access to the capital markets. We believe we have adequate coverage of our debt covenants
to continue to maintain our current investment grade debt ratings and to respond effectively to competitive conditions.

As previously disclosed, on October 13, 2022, we entered into a merger agreement with Albertsons. We expect to
meet our liquidity needs for the proposed merger with cash and temporary cash investments on hand as of the merger
closing date, cash flows from our operating activities and other sources of liquidity, including borrowings under our
commercial paper program, senior notes issuances, bank credit facility and other sources of financing. In connection
with the proposed merger, we entered into a commitment letter for a bridge term loan facility and executed a term loan
credit agreement. For additional information about the proposed merger with Albertsons, see Note 16 to the
Consolidated Financial Statements.

For additional information about our debt activity in 2023, see Note 5 to the Consolidated Financial Statements.

Factors Affecting Liquidity

We can currently borrow on a daily basis approximately $2.75 billion under our commercial paper program. At
February 3, 2024, we had no outstanding commercial paper. Commercial paper borrowings are backed by our credit
facility and reduce the amount we can borrow under the credit facility. If our short-term credit ratings fall, the ability to
borrow under our current commercial paper program could be adversely affected for a period of time and increase our
interest cost on daily borrowings under our commercial paper program. This could require us to borrow additional funds
under the credit facility, under which we believe we have sufficient capacity. However, in the event of a ratings decline,
we do not anticipate that our borrowing capacity under our commercial paper program would be any lower than $500
million on a daily basis. Factors that could affect our credit rating include changes in our operating performance and
financial position, the state of the economy, conditions in the food retail industry and changes in our business model.
Further information on the risks and uncertainties that can affect our business can be found in the “Risk Factors” section
set forth in Item 1A of Part I of this Annual Report on Form 10-K. Although our ability to borrow under the credit
facility is not affected by our credit rating, the interest cost and applicable margin on borrowings under the credit facility
could be affected by a downgrade in our Public Debt Rating. “Public Debt Rating” means, as of any date, the rating that
has been most recently announced by either S&P or Moody’s, as the case may be, for any class of non-credit enhanced
long-term senior unsecured debt issued by Kroger. As of March 27, 2024, we had no commercial paper borrowings
outstanding.

Our credit facility requires the maintenance of a Leverage Ratio (our “financial covenant”). A failure to maintain
our financial covenant would impair our ability to borrow under the credit facility. This financial covenant is described
below:

• Our Leverage Ratio (the ratio of Net Debt to Adjusted EBITDA, as defined in the credit facility) was 1.10 to 1
as of February 3, 2024. If this ratio were to exceed 3.50 to 1, we would be in default of our revolving credit
facility and our ability to borrow under the facility would be impaired.

Our credit facility is more fully described in Note 5 to the Consolidated Financial Statements. We were in

compliance with our financial covenant at February 3, 2024.

As of February 3, 2024, we maintained a $2.75 billion (with the ability to increase by $1.25 billion), unsecured
revolving credit facility that, unless extended, terminates on July 6, 2026. Outstanding borrowings under the credit
facility, commercial paper borrowings, and some outstanding letters of credit reduce funds available under the credit
facility. As of February 3, 2024, we had no outstanding commercial paper and no borrowings under our revolving credit
facility. The outstanding letters of credit that reduce funds available under our credit facility totaled $2 million as of
February 3, 2024.

In connection with the proposed merger with Albertsons, on October 13, 2022, we entered into a commitment letter

with certain lenders pursuant to which the lenders have committed to provide a 364-day $17.4 billion senior unsecured
bridge term loan facility. The commitments are intended to be drawn to finance the proposed merger with Albertsons
only to the extent we do not arrange for alternative financing prior to closing. As alternative financing for the proposed
merger is secured, the commitments with respect to the bridge term loan facility under the commitment letter will be
reduced.

On November 9, 2022, we executed a term loan credit agreement with certain lenders pursuant to which the lenders

committed to provide, contingent upon the completion of the proposed merger with Albertsons and certain other
customary conditions to funding, (1) senior unsecured term loans in an aggregate principal amount of $3.0 billion
maturing on the third anniversary of the proposed merger closing date and (2) senior unsecured term loans in an
aggregate principal amount of $1.75 billion maturing on the date that is 18 months after the proposed merger closing
date (collectively, the “Term Loan Facilities”). Borrowings under the Term Loan Facilities will be used to pay a portion
of the consideration and other amounts payable in connection with the proposed merger with Albertsons. The duration of
the Term Loan Facilities will allow us to achieve our net total debt to adjusted EBITDA ratio target range of 2.30 to 2.50
within the first 18 to 24 months after the proposed merger closing date. The entry into the term loan credit agreement
reduced the commitments under our bridge facility commitment letter from $17.4 billion to $12.65 billion. Borrowings
under the Term Loan Facilities will bear interest at rates that vary based on the type of loan and our debt rating.

In addition to the available credit mentioned above, as of February 3, 2024, we had authorized for issuance $5
billion of securities remaining under a shelf registration statement filed with the SEC and effective on May 20, 2022.

We maintain surety bonds related primarily to our self-insured workers’ compensation claims. These bonds are
required by most states in which we are self-insured for workers’ compensation and are placed with predominately third-
party insurance providers to insure payment of our obligations in the event we are unable to meet our claim payment
obligations up to our self-insured retention levels. These bonds do not represent liabilities of ours, as we already have
reserves on our books for the claims costs. Market changes may make the surety bonds more costly and, in some
instances, availability of these bonds may become more limited, which could affect our costs of, or access to, such
bonds. Although we do not believe increased costs or decreased availability would significantly affect our ability to
access these surety bonds, if this does become an issue, we would issue letters of credit, in states where allowed, to meet
the state bonding requirements. This could increase our cost or decrease the funds available under our credit facility if
the letters of credit were issued against our credit facility. We had $473 million of outstanding surety bonds as of
February 3, 2024. These surety bonds expire during fiscal year 2024 and are expected to be renewed.

We have standby letters of credit outstanding as part of our insurance program and for other business purposes. The

letters of credit for our insurance program collateralize obligations to our insurance carriers in connection with the
settlement of potential claims. We have also provided a letter of credit which supports our commitment to build a certain
number of fulfillment centers. The balance of this letter of credit reduces primarily upon the construction of each
fulfillment center. If we do not reach our total purchase commitment, we will be responsible for the balance remaining
on the letter of credit. We had $314 million of outstanding standby letters of credit as of February 3, 2024. These
standby letters of credit expire during fiscal year 2024 or early fiscal year 2025 and most are expected to be renewed.
Letters of credit do not represent liabilities of ours and are not reflected in our Consolidated Balance Sheets.

We also are contingently liable for leases that have been assigned to various third parties in connection with facility
closings and dispositions. We could be required to satisfy obligations under the leases if any of the assignees are unable
to fulfill their lease obligations. Due to the wide distribution of our assignments among third parties, and various other
remedies available to us, we believe the likelihood that we will be required to assume a material amount of these
obligations is remote. We have agreed to indemnify certain third-party logistics operators for certain expenses, including
multi-employer pension plan obligations and withdrawal liabilities.

In addition to the above, we enter into various indemnification agreements and take on indemnification obligations

in the ordinary course of business. Such arrangements include indemnities against third-party claims arising out of
agreements to provide services to us; indemnities related to the sale of our securities; indemnities of directors, officers
and employees in connection with the performance of their work; and indemnities of individuals serving as fiduciaries
on benefit plans. While our aggregate indemnification obligation could result in a material liability, we are not aware of
any current matter that could result in a material liability.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

FINANCIAL RISK MANAGEMENT

In addition to the risks inherent in our operations, we are exposed to market risk from a variety of sources, including
changes in interest rates, commodity prices, the fair value of certain equity investments and defined benefit pension and
other post-retirement benefit plans. Our market risk exposures are discussed below.

Interest Rate Risk

We manage our exposure to interest rates and changes in the fair value of our debt instruments primarily through the
strategic use of our commercial paper program, variable and fixed rate debt, and interest rate swaps. Our current program
relative to interest rate protection contemplates hedging the exposure to changes in the fair value of fixed-rate debt
attributable to changes in interest rates. To do this, we use the following guidelines: (i) use average daily outstanding
borrowings to determine annual debt amounts subject to interest rate exposure, (ii) limit the average annual amount
subject to interest rate reset and the amount of floating rate debt to a combined total amount that represents 25% of the
carrying value of our debt portfolio or less, (iii) include no leveraged products, and (iv) hedge without regard to profit
motive or sensitivity to current mark-to-market status.

When we use derivative financial instruments, it is primarily to manage our exposure to fluctuations in interest rates.

We do not enter into derivative financial instruments for trading purposes. As a matter of policy, all of our derivative
positions are intended to reduce risk by hedging an underlying economic exposure. Because of the high correlation
between the hedging instrument and the underlying exposure, fluctuations in the value of the instruments generally are
offset by reciprocal changes in the value of the underlying exposure. The interest rate derivatives we use are
straightforward instruments with liquid markets.

As of February 3, 2024 and January 28, 2023, we maintained five forward-starting interest rate swap agreements

with a maturity date of August 1, 2027 with an aggregate notional amount totaling $5.4 billion. A forward-starting
interest rate swap is an agreement that effectively hedges the variability in future benchmark interest payments
attributable to changes in interest rates on the forecasted issuance of fixed-rate debt. We entered into these forward-
starting interest rate swaps in order to lock in fixed interest rates on our forecasted issuances of debt. The fixed interest
rates for these forward-starting interest rate swaps range from 3.00% to 3.78%. The variable rate component on the
forward-starting interest rate swaps is the Secured Overnight Financing Rate (“SOFR”).

A notional amount of $2.4 billion of these forward-starting interest rate swaps was designated as a cash-flow hedge
as defined by GAAP. Accordingly, the changes in fair value of these forward-starting interest rate swaps are recorded to
other comprehensive income and reclassified into net earnings when the hedged transaction affects net earnings. As of
February 3, 2024, the fair value of the interest rate swaps designated as cash flow hedges was recorded in “Other assets”
for $125 million and accumulated other comprehensive income for $95 million, net of tax. As of January 28, 2023, the
fair value of the interest rate swaps designated as cash flow hedges was recorded in “Other long-term liabilities” for
$116 million and accumulated other comprehensive loss for $89 million, net of tax.

The remainder of the notional amount of $3.0 billion of the forward-starting interest rate swaps was not designated

as a cash-flow hedge. Accordingly, the changes in the fair value of these forward-starting interest rate swaps not
designated as cash-flow hedges are recognized through net earnings. As of February 3, 2024, the fair value of these
swaps was recorded in “Other Assets” for $35 million and “Other long-term liabilities” for $3 million. In 2023, we
recognized an unrealized gain of $174 million that is included in “Gain (loss) on investments” in our Consolidated
Statements of Operations. As of January 28, 2023, the fair value of these swaps was recorded in “Other long-term
liabilities” for $142 million. In 2022, we recognized an unrealized loss of $142 million related to these swaps that is
included in “Gain (loss) on investments” in our Consolidated Statements of Operations.

Annually, we review with the Finance Committee of our Board of Directors compliance with the guidelines

described above. The guidelines may change as our business needs dictate.

The tables below provide information about our underlying debt portfolio as of February 3, 2024 and January 28,
2023. The amounts shown for each year represent the contractual maturities of long-term debt, excluding finance leases,
as of February 3, 2024 and January 28, 2023. Interest rates reflect the weighted average rate for the outstanding
instruments. The variable rate debt is based on a reference rate using the forward yield curve as of February 3, 2024 and
January 28, 2023. The Fair Value column includes the fair value of our debt instruments as of February 3, 2024 and
January 28, 2023. We had no outstanding interest rate derivatives classified as fair value hedges as of February 3, 2024
or January 28, 2023. See Notes 5, 6 and 7 to the Consolidated Financial Statements.

2024 2025 2026

2027

2028

Thereafter Total

Fair Value

(in millions)

February 3, 2024
Expected Year of Maturity

Debt
Fixed rate principal payments(1)
Average interest rate(1)
Variable rate principal payments
Average interest rate

$ (23) $ (19)

2.41 % 3.03 %
(9) $ (81)
$
7.19 % 3.07 %

$ (1,311)

$ (616)

$
3.00 % 3.68 %
$
$

—
—

(625)
$
4.50 %
(22)
$
7.94 %

(7,521)

$ (10,115) $

(9,256)

4.56 %
(33)
7.19 %

(145) $

(145)

(1) The fixed rate principal payments exclude debt discounts and deferred financing costs of $73 million, of which $7

million is current and $66 million is long-term. The weighted average interest rate calculation excludes the effects of
debt discounts and deferred financing costs.

2023

2024 2025 2026

2027

Thereafter Total

Fair Value

(in millions)

January 28, 2023
Expected Year of Maturity

Debt
Fixed rate principal payments(1)
Average interest rate(1)
Variable rate principal payments
Average interest rate

$ (1,127) $ (10)

$ (10)

$ (1,392)

3.89 % 2.67 % 2.68 %
(35) $ (22)
$
6.32 % 7.07 % 1.70 %

$ (81)

$
3.04 %
—
$
—

(612)
$
3.68 %
—
$
—

(8,085)

$ (11,236) $ (10,455)

4.56 %
—
$
—

(138) $

(138)

(1) The fixed rate principal payments exclude debt discounts and deferred financing costs of $82 million, of which $9

million is current and $73 million is long-term. The weighted average interest rate calculation excludes the effects of
debt discounts and deferred financing costs.

Based on our year-end 2023 variable rate debt levels, a 10 percent change in interest rates would be immaterial. See

Note 6 to the Consolidated Financial Statements for further discussion of derivatives and hedging policies.

Commodity Price Risk

We are subject to commodity price risk generated by our purchases of meat, seafood and dairy products, among
other food items. We purchase, manufacture and sell various commodity related food products and risk arises from the
price volatility of these commodities. The price and availability of these commodities directly affects our results of
operations. To help manage or minimize the effect of commodity price risk exposure on our operations, we use a
combination of pricing features embedded within supply contracts, such as fixed-price and price-to-be-fixed contracts,
and have the ability to increase or decrease retail prices to our customers as commodity prices change.

We are exposed to changes in the prices of diesel and unleaded fuel. The majority of our fuel contracts utilize index-

based pricing formulas plus or minus a fixed locational/supplier differential. We expect to take delivery of these
commitments in the normal course of business, and, as a result, these contracts qualify as normal purchases. While many
of the indices are aligned, each index may fluctuate at a different pace, driving variability in the prices paid for fuel.
Because of this, our operating results may be affected should the market price of fuel suddenly change by a significant
amount, which can affect our operating results either positively or negatively in the short-term.

We manage our exposure to diesel fuel price changes through the strategic use of diesel fuel hedge contracts. When

we use fuel hedge contracts, it is primarily to manage our exposure to fluctuations in diesel fuel prices for our logistics
operations. We do not enter into fuel hedge arrangements for trading purposes. As a matter of policy, all of our hedge
positions are intended to reduce risk by hedging an underlying economic exposure. Because of the high correlation
between the hedging instrument and the underlying exposure, fluctuations in the value of the instruments generally are
offset by reciprocal changes in the value of the underlying exposure. The diesel fuel hedge contracts we use are
straightforward instruments with liquid markets. As of February 3, 2024, our outstanding diesel fuel hedge contracts had
a total notional amount of $48 million. The fair value and effect to the Consolidated Statement of Operations of these
contracts is insignificant.

We have entered into fixed price contracts to purchase electricity and natural gas for a portion of our energy needs.

We expect to take delivery of these commitments in the normal course of business, and, as a result, these contracts
qualify as normal purchases.

As of February 3, 2024, we had no commodity derivative contracts outstanding other than the diesel fuel hedge

contracts described above. As of January 28, 2023, we had no commodity derivative contracts outstanding.

Equity Investment Risk

We are exposed to market price volatility for our equity investments in certain financial instruments, measured
using Level 1 inputs, which are measured at fair value through net earnings. Fair value adjustments flow through “Gain
(loss) on investments” in our Consolidated Statements of Operations. The change in fair value of certain Level 1
investments resulted in an unrealized loss of $66 million in 2023, $586 million in 2022 and $821 million in 2021. As of
February 3, 2024, the fair value of our investments in certain Level 1 financial instruments was $578 million. As of
January 28, 2023, the fair value of our investment in certain Level 1 financial instrument was $401 million. As of
February 3, 2024, a 10% change in the fair value of these investments would be approximately $58 million. For
additional details on these investments, see Note 7 to the Consolidated Financial Statements.

Company-Sponsored Benefit Plans

We sponsor defined benefit pension plans and post-retirement healthcare plans for certain eligible employees.
Changes in interest rates affect our liabilities associated with these retirement plans, as well as the amount of expense
recognized for these retirement plans. Increased interest rates could result in a lower fair value of plan assets and
increased pension expense in the following years. The target plan asset allocations are established based on our liability-
driven investment (“LDI”) strategy. An LDI strategy focuses on maintaining a close to fully-funded status over the long-
term with minimal funded status risk. This is achieved by investing more of the plan assets in fixed income instruments
to more closely match the duration of the plan liability. As of February 3, 2024, our defined benefit pension plans had
total investment assets of $2.4 billion. As of January 28. 2023, our defined benefit pension plans had total investment
assets of $2.5 billion. Declines in the fair value of plan assets could diminish the funded status of our defined benefit
pension plans and potentially increase our requirement to make contributions to these plans. For additional details, see
Note 14 to the Consolidated Financial Statements.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Consolidated Financial Statements of The Kroger Co.
For the Fiscal Year Ended February 3, 2024

Table of Contents

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
52
55
56
57
58
59
60

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of The Kroger Co.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of The Kroger Co. and its subsidiaries (the
“Company”) as of February 3, 2024 and January 28, 2023, and the related consolidated statements of
operations, of comprehensive income, of shareholders' equity and of cash flows for each of the three years in
the period ended February 3, 2024, including the related notes (collectively referred to as the “consolidated
financial statements”). We also have audited the Company's internal control over financial reporting as of
February 3, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position of the Company as of February 3, 2024 and January 28, 2023, and the results of its
operations and its cash flows for each of the three years in the period ended February 3, 2024 in conformity
with accounting principles generally accepted in the United States of America. Also in our opinion, the
Company maintained, in all material respects, effective internal control over financial reporting as of
February 3, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by
the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining
effective internal control over financial reporting, and for its assessment of the effectiveness of internal
control over financial reporting, included in Management’s Report on Internal Control over Financial
Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated
financial statements and on the Company's internal control over financial reporting based on our audits. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement, whether due to error or fraud, and whether effective internal
control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of
material misstatement of the consolidated financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over
financial reporting included obtaining an understanding of internal control over financial reporting, assessing
the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audits also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our
opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the
consolidated financial statements that was communicated or required to be communicated to the audit
committee and that (i) relates to accounts or disclosures that are material to the consolidated financial
statements and (ii) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a
separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Assessment – Kroger Specialty Pharmacy (“KSP”) Reporting Unit

As described in Notes 1 and 2 to the consolidated financial statements, the Company’s consolidated goodwill
balance was $2.9 billion as of February 3, 2024 and the goodwill associated with the KSP reporting unit was
$243 million. Management reviews goodwill annually for impairment in the fourth quarter of each year, and
also upon the occurrence of triggering events. The fair value of a reporting unit is compared to its carrying
value for purposes of identifying potential impairment. Goodwill impairment is recognized for any excess of
the reporting unit’s carrying value over its fair value, not to exceed the total amount of goodwill allocated to
the reporting unit. The fair value of the Company's KSP reporting unit was estimated using multiple valuation
techniques, a discounted cash flow model (income approach), a market multiple model and comparable
mergers and acquisition model (market approaches), with each method weighted in the calculation. The
income approach relies on management’s estimates of revenue growth rates, margin assumptions, and
discount rate to estimate future cash flows. The market approaches require the determination of an
appropriate peer group, which is utilized to derive estimated fair values based on selected market multiples.

The principal considerations for our determination that performing procedures relating to the goodwill
impairment assessment of the KSP reporting unit is a critical audit matter are (i) the significant judgment by
management when developing the fair value measurement of the reporting unit; (ii) the high degree of auditor
judgment, subjectivity, and effort in performing procedures to evaluate management’s cash flow projections
and significant assumptions related to revenue growth rates, margin assumptions, discount rate, peer group
determination, and market multiple selection; and (iii) the audit effort involved the use of professionals with
specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with
forming our overall opinion on the consolidated financial statements. These procedures included testing the
effectiveness of controls relating to management’s goodwill impairment assessment, including controls over
the valuation of the Company’s KSP reporting unit. These procedures also included, among others, testing
management’s process for developing the fair value estimate, evaluating the appropriateness of the income
and market approach models, testing the completeness, accuracy, and relevance of the underlying data used
in the models and evaluating the significant assumptions used by management related to the revenue growth
rates, margin assumptions, discount rate, peer group determination, and market multiple selection.
Evaluating management’s assumptions relating to revenue growth rates and margin assumptions involved
evaluating whether the assumptions used by management were reasonable considering (i) the current and
past performance of the reporting unit, (ii) the consistency with external market and industry data, and (iii)
whether these assumptions were consistent with evidence obtained in other areas of the audit. Evaluating the
Company’s peer group determinations included evaluating the appropriateness of the identified peer
companies. Professionals with specialized skill and knowledge were used to assist in the evaluation of the
Company’s discounted cash flow and market models, and certain significant assumptions related to the
discount rate, peer group determination, and market multiples.

/s/ PricewaterhouseCoopers LLP
Cincinnati, Ohio
April 2, 2024

We have served as the Company’s auditor since 1929.

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
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

February 3, January 28,

2024

2023

1,883
1,215
2,136
9,414
(2,309)
609
12,948

25,230
6,692
899
2,916
1,820

1,015
1,127
2,234
9,756
(2,196)
734
12,670

24,726
6,662
899
2,916
1,750

50,505

49,623

198
670
10,381
1,323
3,486
16,058

12,028
6,351
1,579
385
2,503

1,310
662
10,179
1,746
3,341
17,238

12,068
6,372
1,672
436
1,823

38,904

39,609

Preferred shares, $100 par per share, 5 shares authorized and unissued
Common shares, $1 par per share, 2,000 shares authorized; 1,918 shares issued in 2023 and 2022
Additional paid-in capital
Accumulated other comprehensive loss
Accumulated earnings
Common shares in treasury, at cost, 1,198 shares in 2023 and 1,202 shares in 2022

—
1,918
3,922
(489)
26,946
(20,682)

11,615
(14)

—
1,918
3,805
(632)
25,601
(20,650)

10,042
(28)

11,601

10,014

50,505

49,623

Total Shareowners’ Equity - The Kroger Co.

Noncontrolling interests

Total Equity

Total Liabilities and Equity

The accompanying notes are an integral part of the consolidated financial statements.

THE KROGER CO.
CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended February 3, 2024, January 28, 2023 and January 29, 2022

(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)

2023
(53 weeks)

2021
2022
(52 weeks)
(52 weeks)
$ 150,039 $ 148,258 $ 137,888

116,675
26,252
891
3,125

116,480
23,848
839
2,965

107,539
23,203
845
2,824

3,096

4,126

3,477

Interest expense
Non-service component of company-sponsored pension plan benefits

(costs)

Gain (loss) on investments

(441)

(535)

(571)

30
151

39
(728)

(34)
(821)

Net earnings before income tax expense

2,836

2,902

2,051

Income tax expense

Net earnings including noncontrolling interests
Net income attributable to noncontrolling interests

667

653

385

2,169
5

2,249
5

1,666
11

Net earnings attributable to The Kroger Co.

2,164 $

2,244 $

1,655

Net earnings attributable to The Kroger Co. per basic common share

2.99 $

3.10 $

2.20

Average number of common shares used in basic calculation

718

744

Net earnings attributable to The Kroger Co. per diluted common share

2.96 $

3.06 $

2.17

Average number of common shares used in diluted calculation

725

727

754

The accompanying notes are an integral part of the consolidated financial statements.

THE KROGER CO.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years Ended February 3, 2024, January 28, 2023 and January 29, 2022

(In millions)
Net earnings including noncontrolling interests

2022
2023
(53 weeks)
(52 weeks)
$ 2,169 $ 2,249

2021
(52 weeks)
$ 1,666

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 income (loss)

(46)
183

(83)
(89)

156
—

143

(165)

163

Comprehensive income
Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to The Kroger Co.

2,312
5

2,084
5
$ 2,307 $ 2,079

1,829
11
$ 1,818

(1) Amount is net of tax (benefit) expense of $(14) in 2023, $(26) in 2022 and $48 in 2021.
(2) Amount is net of tax expense (benefit) of $56 in 2023 and $(27) in 2022.
(3) Amount is net of tax expense of $2 in 2023, $2 in 2022 and $3 in 2021.

The accompanying notes are an integral part of the consolidated financial statements.

Years Ended February 3, 2024, January 28, 2023 and January 29, 2022

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:

Depreciation and amortization
Asset impairment charges
Goodwill and fixed asset impairment charges related to Vitacost.com
Operating lease asset amortization
LIFO charge
Share-based employee compensation
Company-sponsored pension plans (benefit) expense
Deferred income taxes
Gain on the sale of assets
(Gain) loss on investments
Other
Changes in operating assets and liabilities:

Store deposits in-transit
Receivables
Inventories
Prepaid and other current assets
Accounts payable
Accrued expenses
Income taxes receivable and payable
Operating lease liabilities
Other

2023
(53 weeks)

2022
(52 weeks)

2021
(52 weeks)

2,169

2,249

1,666

3,125
69
—
625
113
172
(9)
(155)
(56)
(151)
78

(88)
14
342
72
545
(222)
68
(695)
772

2,965
68
164
614
626
190
(26)
161
(40)
728
(8)

(45)
(222)
(1,370)
(36)
44
(167)
(190)
(622)
(585)

2,824
64
—
605
197
203
50
(31)
(44)
821
64

13
(61)
80
232
903
(134)
16
(618)
(660)

Net cash provided by operating activities

6,788

4,498

6,190

Cash Flows from Investing Activities:

Payments for property and equipment, including payments for lease buyouts
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
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 increase (decrease) 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

(3,904)
101
53

(3,078)
78
(15)

(2,614)
153
(150)

(3,750)

(3,015)

(2,611)

15
(1,301)
(796)
—
50
(62)
—
(76)

—
(552)
(682)
(84)
134
(993)
—
(112)

56
(1,442)
(589)
(5)
172
(1,647)
166
(156)

(2,170)

(2,289)

(3,445)

868

(806)

134

1,015
1,883

$
$

(3,904)
—
344
(3,560)

488
751

1,821
1,015

(3,078)
21
(281)
(3,338)

545
698

$
$

1,687
1,821

(2,614)
—
(542)
(3,156)

607
513

$
$

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 2,722 supermarkets, 2,257 pharmacies and 1,665 fuel centers in 35 states and the District of
Columbia while also operating online through a digital ecosystem to offer customers an omnichannel shopping
experience. The Company also manufactures and processes food for sale by its supermarkets and online. The
accompanying financial statements include the consolidated accounts of the Company, its wholly-owned subsidiaries
and other consolidated entities. Intercompany transactions and balances have been eliminated.

Reclassifications

The Company reclassified $3.1 billion of liabilities from other current liabilities to accounts payable on the
Consolidated Balance Sheet for the year ended January 28, 2023 to conform to the current year presentation. This
reclassification was made to better align the presentation of liabilities associated with our third-party financing
arrangements and other current liabilities on the Consolidated Balance Sheet with management’s internal reporting. A
similar reclassification was made to the Consolidated Statement of Cash Flows resulting in a change to accounts payable
and accrued expenses within net cash provided by operating activities for the years ended February 3, 2024, January 28,
2023, and January 29, 2022. The reclassification did not affect total current liabilities on the Company’s Consolidated
Balance Sheet or total operating cash flows on the Consolidated Statement of Cash Flows.

Fiscal Year

The Company’s fiscal year ends on the Saturday nearest January 31. The last three fiscal years consist of the 53-

week period ended February 3, 2024 and the 52-week periods ended January 28, 2023 and January 29, 2022.

Pervasiveness of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”)

requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities.
Disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported
amounts of consolidated revenues and expenses during the reporting period is also required. Actual results could differ
from those estimates.

Cash, Temporary Cash Investments and Book Overdrafts

Cash and temporary cash investments represent store cash and short-term investments with original maturities of
less than three months. Book overdrafts are included in “Accounts payable” and “Accrued salaries and wages” in the
Consolidated Balance Sheets.

Deposits In-Transit

Deposits in-transit generally represent funds deposited to the Company’s bank accounts at the end of the year
related to sales, a majority of which were paid for with debit cards, credit cards and checks, to which the Company does
not have immediate access but settle within a few days of the sales transaction.

Inventories

Inventories are stated at the lower of cost (principally on a last-in, first-out “LIFO” basis) or market. In total,
approximately 91% of inventories in 2023 and 89% of inventories in 2022 were valued using the LIFO method. The
remaining inventories, including substantially all fuel inventories, are stated at the lower of cost (on a FIFO basis) or net
realizable value. Replacement cost was higher than the carrying amount by $2,309 at February 3, 2024 and $2,196 at
January 28, 2023. The Company follows the Link-Chain, Dollar-Value LIFO method for purposes of calculating its
LIFO charge.

The item-cost method of accounting to determine inventory cost before the LIFO adjustment is followed for

substantially all store inventories at the Company’s supermarket divisions. This method involves counting each item in
inventory, assigning costs to each of these items based on the actual purchase costs (net of vendor allowances and cash
discounts) of each item and recording the cost of items sold. The item-cost method of accounting allows for more
accurate reporting of periodic inventory balances and enables management to more precisely manage inventory. In
addition, substantially all of the Company’s inventory consists of finished goods and is recorded at actual purchase costs
(net of vendor allowances and cash discounts).

The Company evaluates inventory shortages throughout the year based on actual physical counts in its facilities.

Allowances for inventory shortages are recorded based on the results of these counts to provide for estimated shortages
as of the financial statement date.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost or, in the case of assets acquired in a business combination, at
fair value. Depreciation and amortization expense, which includes the depreciation of assets recorded under finance
leases, is computed principally using the straight-line method over the estimated useful lives of individual assets.
Buildings and land improvements are depreciated based on lives varying from 10 to 40 years. All new purchases of
store equipment are assigned lives varying from three to nine years. Leasehold improvements are amortized over the
shorter of the lease term to which they relate, which generally varies from four to 25 years, or the useful life of the
asset. Food production plant, fulfillment center and distribution center equipment is depreciated over lives varying from
three to 15 years. Information technology assets are generally depreciated over three to five years. Depreciation and
amortization expense was $3,125 in 2023, $2,965 in 2022 and $2,824 in 2021.

Interest costs on significant projects constructed for the Company’s own use are capitalized as part of the costs of
the newly constructed facilities. Upon retirement or disposal of assets, the cost and related accumulated depreciation and
amortization are removed from the balance sheet and any gain or loss is reflected in net earnings. Refer to Note 3 for
further information regarding the Company’s property, plant and equipment.

Leases

The Company leases certain store real estate, warehouses, distribution centers, fulfillment centers, office space and
equipment. The Company determines if an arrangement is a lease at inception. Finance and operating lease assets and
liabilities are recognized at the lease commencement date. Finance and operating lease liabilities represent the present
value of minimum lease payments not yet paid. Operating lease assets represent the right to use an underlying asset and
are based upon the operating lease liabilities adjusted for prepayments, lease incentives and impairment, if any. To
determine the present value of lease payments, the Company estimates an incremental borrowing rate which represents
the rate used for a secured borrowing of a similar term as the lease.

Lease terms generally range from 10 to 20 years with options to renew for varying terms at the Company’s sole

discretion. The lease term includes the initial contractual term as well as any options to extend the lease when it is
reasonably certain that the Company will exercise that option. Leases with an initial term of 12 months or less are not
recorded on the balance sheet. Certain leases include escalation clauses or payment of executory costs such as property
taxes, utilities or insurance and maintenance. Operating lease payments are charged on a straight-line basis to rent
expense over the lease term and finance lease payments are charged to interest expense and depreciation and
amortization expense over the lease term. Assets under finance leases are amortized in accordance with the Company’s
normal depreciation policy for owned assets or over the lease term, if shorter. The Company’s lease agreements do not
contain any residual value guarantees or material restrictive covenants. For additional information on leases, see Note 9
to the Consolidated Financial Statements.

Goodwill

The Company reviews goodwill for impairment during the fourth quarter of each year, or earlier upon the
occurrence of a triggering event. The Company performs reviews of each of its operating divisions and other
consolidated entities (collectively, “reporting units”) that have goodwill balances. Generally, fair value is determined
using a market multiple model, or discounted projected future cash flows, and is compared to the carrying value of a
reporting unit for purposes of identifying potential impairment. Projected future cash flows are based on management’s
knowledge of the current operating environment and expectations for the future. Goodwill impairment is recognized for
any excess of the reporting unit’s carrying value over its fair value, not to exceed the total amount of goodwill allocated
to the reporting unit. Results of the goodwill impairment reviews performed during 2023, 2022 and 2021 are
summarized in Note 2.

Impairment of Long-Lived Assets

The Company monitors the carrying value of long-lived assets for potential impairment each quarter based on
whether certain triggering events have occurred. These events include current period losses combined with a history of
losses or a projection of continuing losses or a significant decrease in the market value of an asset. When a triggering
event occurs, an impairment calculation is performed, comparing projected undiscounted future cash flows, utilizing
current cash flow information and expected growth rates related to specific stores, to the carrying value for those stores.
If the Company identifies impairment for long-lived assets to be held and used, the Company compares the assets’
current carrying value to the assets’ fair value. Fair value is based on current market values or discounted future cash
flows. The Company records impairment when the carrying value exceeds fair market value. With respect to owned
property and equipment held for disposal, the value of the property and equipment is adjusted to reflect recoverable
values based on previous efforts to dispose of similar assets and current economic conditions. Impairment is recognized
for the excess of the carrying value over the estimated fair market value, reduced by estimated direct costs of disposal.
The Company recorded asset impairments totaling $69, $68 and $64 in 2023, 2022 and 2021, respectively. Costs to
reduce the carrying value of long-lived assets for each of the years presented have been included in the Consolidated
Statements of Operations as Operating, general and administrative (“OG&A”) expense.

Accounts Payable Financing Arrangement

The Company has an agreement with a third party to provide an accounts payable tracking system which facilitates

participating suppliers’ ability to finance payment obligations from the Company with designated third-party financial
institutions. Participating suppliers may, at their sole discretion, make offers to finance one or more payment obligations
of the Company prior to their scheduled due dates at a discounted price to participating financial institutions. The
Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not affected by
suppliers’ decisions to finance amounts under this arrangement. As of February 3, 2024, and January 28, 2023, the
Company had $325 and $314 in “Accounts payable,” respectively, associated with financing arrangements.

Contingent Consideration

The Company’s Home Chef business combination involved potential payment of future consideration that is

contingent upon the achievement of certain performance milestones. The Company recorded contingent consideration at
fair value at the date of acquisition based on the consideration expected to be transferred, estimated as the probability-
weighted future cash flows, discounted back to present value using a discount rate determined in accordance with
accepted valuation methods. The liability for contingent consideration is remeasured to fair value at each reporting
period using Level 3 inputs, and the change in fair value, including accretion for the passage of time, is recognized in
earnings until the contingency is resolved. In 2022, adjustments to increase the contingent consideration liability as of
year-end were recorded for $20 in OG&A expense. The Company made the final contingent consideration payment in
the second quarter of 2023, which was based on the fair value of the outstanding year-end 2022 liability.

Store Closing Costs

The Company regularly evaluates the performance of its stores and periodically closes those stores that are

underperforming. Related liabilities arise, such as severance, contractual obligations and other accruals associated with
store closings. The Company records a liability for costs associated with an exit or disposal activity when the liability is
incurred, usually in the period the store closes. Adjustments to closed store liabilities primarily relate to actual exit costs
differing from original estimates. Adjustments are made for changes in estimates in the period in which the change
becomes known.

Owned stores held for disposal are reduced to their estimated net realizable value. Costs to reduce the carrying
values of property, plant, equipment and operating lease assets are accounted for in accordance with the Company’s
policy on impairment of long-lived assets. Inventory write-downs, if any, in connection with store closings, are
classified in the Consolidated Statements of Operations as “Merchandise costs.” Costs to transfer inventory and
equipment from closed stores are expensed as incurred.

Interest Rate Risk Management

The Company uses derivative instruments primarily to manage its exposure to changes in interest rates. The
Company’s current program relative to interest rate protection and the methods by which the Company accounts for its
derivative instruments are described in Note 6.

Benefit Plans and Multi-Employer Pension Plans

The Company recognizes the funded status of its retirement plans on the Consolidated Balance Sheets. Actuarial
gains or losses, prior service costs or credits and transition obligations that have not yet been recognized as part of net
periodic benefit cost are required to be recorded as a component of Accumulated Other Comprehensive Income
(“AOCI”). The Company has elected to measure defined benefit plan assets and obligations as of January 31, which is
the month-end that is closest to its fiscal year-ends.

The determination of the obligation and expense for company-sponsored pension plans and other post-retirement

benefits is dependent on the selection of assumptions used by actuaries and the Company in calculating those
amounts. Those assumptions are described in Note 14 and include, among others, the discount rate, the expected long-
term rate of return on plan assets, mortality and the rates of increase in compensation and health care costs. Actual
results that differ from the assumptions are accumulated and amortized over future periods and, therefore, generally
affect the recognized expense and recorded obligation in future periods. While the Company believes that the
assumptions are appropriate, significant differences in actual experience or significant changes in assumptions may
materially affect the pension and other post-retirement obligations and future expense.

The Company also participates in various multi-employer plans for substantially all union employees. Pension
expense for these plans is recognized as contributions are funded or when commitments are probable and reasonably
estimable, in accordance with GAAP. Refer to Note 15 for additional information regarding the Company’s
participation in these various multi-employer pension plans.

The Company administers and makes contributions to the employee 401(k) retirement savings accounts.

Contributions to the employee 401(k) retirement savings accounts are expensed when contributed or over the service
period in the case of automatic contributions. Refer to Note 14 for additional information regarding the Company’s
benefit plans.

Share Based Compensation

The Company recognizes compensation expense for all share-based payments granted under fair value recognition

provisions. The Company recognizes share-based compensation expense, net of an estimated forfeiture rate, over the
requisite service period of the award based on the fair value at the date of the grant. The Company grants options for
common shares (“stock options”) to employees under various plans at an option price equal to the fair market value of
the underlying shares on the grant date of the award. Stock options typically expire 10 years from the date of grant.
Stock options vest between one and four years from the date of grant. In addition to stock options, the Company awards
restricted stock to employees and incentive shares to nonemployee directors under various plans. The restrictions on
these restricted stock awards generally lapse between one and four years from the date of the awards. The Company
determines the fair value for restricted stock awards in an amount equal to the fair market value of the underlying shares
on the grant date of the award.

Deferred Income Taxes

Deferred income taxes are recorded to reflect the tax consequences of differences between the tax basis of assets and

liabilities and their financial reporting basis. Refer to Note 4 for the types of differences that give rise to significant
portions of deferred income tax assets and liabilities.

Uncertain Tax Positions

The Company reviews the tax positions taken or expected to be taken on tax returns to determine whether and to

what extent a benefit can be recognized in its consolidated financial statements. Refer to Note 4 for the amount of
unrecognized tax benefits and other related disclosures related to uncertain tax positions.

Various taxing authorities periodically audit the Company’s income tax returns. These audits include questions

regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of
income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions,
including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse
before a particular matter, for which an allowance has been established, is audited and fully resolved. As of February 3,
2024, the years ended February 1, 2020 and forward remain open for review for federal income tax purposes.

The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures

associated with the Company’s various filing positions.

Self-Insurance Costs

The Company is primarily self-insured for costs related to workers’ compensation and general liability
claims. Liabilities are actuarially determined and are recognized based on claims filed and an estimate of claims
incurred but not reported. The liabilities for workers’ compensation claims are accounted for on a present value
basis. The Company has purchased stop-loss coverage to limit its exposure to any significant exposure on a per claim
basis. The Company is insured for covered costs in excess of these per claim limits.

The following table summarizes the changes in the Company’s self-insurance liability through February 3, 2024:

2023

2022

2021

Beginning balance
Expense(1)
Claim payments
Ending balance
Less: Current portion
Long-term portion

$ 712 $ 721 $ 731
226
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227
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330
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(1) The increase in 2023, compared to 2022 and 2021, was the result of higher claim costs.

The current portion of the self-insured liability is included in “Other current liabilities,” and the long-term portion is

included in “Other long-term liabilities” in the Consolidated Balance Sheets.

The Company maintains surety bonds related to self-insured workers’ compensation claims. These bonds are
required by most states in which the Company is self-insured for workers’ compensation and are placed with third-party
insurance providers to insure payment of the Company’s obligations in the event the Company is unable to meet its
claim payment obligations up to its self-insured retention levels. These bonds do not represent liabilities of the
Company, as the Company has recorded reserves for the claim costs.

The Company also maintains insurance coverages for certain risks, including cyber exposure and property-related

losses. The Company’s insurance coverage begins for these exposures ranging from $25 to $30.

Revenue Recognition

Sales

The Company recognizes revenues from the retail sale of products, net of sales taxes, at the point of sale. Pharmacy

sales are recorded when the product is provided to the customer. Digital channel originated sales are recognized either
upon pickup in store or upon delivery to the customer. Amounts billed to a customer related to shipping and delivery
represent revenues earned for the goods provided and are classified as sales. When shipping is discounted, it is recorded
as an adjustment to sales. Discounts provided to customers by the Company at the time of sale, including those provided
in connection with loyalty cards, are recognized as a reduction in sales as the products are sold. Discounts provided by
vendors, usually in the form of coupons, are not recognized as a reduction in sales provided the coupons are redeemable at
any retailer that accepts coupons. The Company records a receivable from the vendor for the difference in sales price and
cash received. For merchandise sold in one of the Company’s stores or online, tender is accepted at the point of sale.
The Company acts as principal in certain vendor arrangements where the purchase and sale of inventory are virtually
simultaneous. The Company records revenue and related costs on a gross basis for these arrangements. For pharmacy
sales, collection of third-party receivables is typically expected within three months or less from the time of purchase.
The third-party receivables from pharmacy sales are recorded in “Receivables” in the Company’s Consolidated Balance
Sheets and were $616 as of February 3, 2024 and $867 as of January 28, 2023.

Gift Cards and Gift Certificates

The Company does not recognize revenue when it sells its own gift cards and gift certificates (collectively “gift
cards”). Rather, it records a deferred revenue liability equal to the amount received. A sale is then recognized when the
gift cards are redeemed to purchase the Company’s products. The Company’s gift cards do not expire. While gift cards
are generally redeemed within 12 months, some are never fully redeemed. The Company recognizes gift card breakage
under the proportional method, where recognition of breakage income is based upon the historical run-off rate of
unredeemed gift cards. The Company’s gift card deferred revenue liability was $228 as of February 3, 2024 and $200
as of January 28, 2023.

Disaggregated Revenues

The following table presents sales revenue by type of product for the year-ended February 3, 2024, January 28, 2023,

and January 29, 2022:

Non Perishable(1)
Fresh(2)
Supermarket Fuel
Pharmacy
Other(3)

Total Sales

Amount
$ 76,903
35,686
16,621
14,259
6,570

2023

2022

2021

% of total Amount

% of total

51.3 % $ 74,121
23.8 % 35,433
11.1 % 18,632
9.5 % 13,377
6,695
4.3 %

50.0 % $ 69,648
23.9 % 33,972
12.6 % 14,678
9.0 % 12,401
7,189
4.5 %

50.6 %
24.6 %
10.6 %
9.0 %
5.2 %

$ 150,039

100 % $ 148,258

100 % $ 137,888

100 %

(1) Consists primarily of grocery, general merchandise, health and beauty care and natural foods.
(2) Consists primarily of produce, floral, meat, seafood, deli, bakery and fresh prepared.
(3) Consists primarily of sales related to food production plants to outside parties, data analytic services, third-party
media revenue, other consolidated entities, specialty pharmacy, in-store health clinics, Kroger Personal Finance,
digital coupon services and other online sales not included in the categories above. The decrease in 2022, compared
to 2021, is primarily due to discontinued patient therapies at Kroger Specialty Pharmacy.

Merchandise Costs

The “Merchandise costs” line item of the Consolidated Statements of Operations includes product costs, net of
discounts and allowances; advertising costs (see separate discussion below); inbound freight charges; warehousing costs,
including receiving and inspection costs; transportation costs; and food production and operational costs. Warehousing,
transportation and manufacturing management salaries are also included in the “Merchandise costs” line item; however,
purchasing management salaries and administration costs are included in the “OG&A” line item along with most of the
Company’s other managerial and administrative costs. Shipping and delivery costs associated with the Company’s
digital offerings originating from non-retail store locations are included in the “Merchandise costs” line item. Rent
expense and depreciation and amortization expense are shown separately in the Consolidated Statements of Operations.

Warehousing and transportation costs include distribution center direct wages, transportation direct wages, repairs
and maintenance, utilities, inbound freight and, where applicable, third-party warehouse management fees. These costs
are recognized in the periods the related expenses are incurred.

The Company believes the classification of costs included in merchandise costs could vary widely throughout the
industry. The Company’s approach is to include in the “Merchandise costs” line item the direct, net costs of acquiring
products and making them available to customers. The Company believes this approach most accurately presents the
actual costs of products sold.

The Company recognizes all vendor allowances as a reduction in merchandise costs when the related product is

sold. When possible, vendor allowances are applied to the related product cost by item and, therefore, reduce the
carrying value of inventory by item. When the items are sold, the vendor allowance is recognized. When it is not
possible, due to systems constraints, to allocate vendor allowances to the product by item, vendor allowances are
recognized as a reduction in merchandise costs based on inventory turns and, therefore, recognized as the product is sold.

Advertising Costs

The Company’s advertising costs are recognized in the periods the related expenses are incurred and are included in

the “Merchandise costs” line item of the Consolidated Statements of Operations. The Company’s advertising costs
totaled $1,089 in 2023, $1,030 in 2022 and $984 in 2021. The Company does not record vendor allowances for co-
operative advertising as a reduction of advertising expense.

Operating, General and Administrative Expenses

OG&A expenses consist primarily of employee-related costs such as wages, healthcare benefit costs, retirement plan

costs, utilities, and credit card fees. Shipping and delivery costs associated with the Company's digital offerings
originating from retail store locations, including third-party delivery fees, are included in the “OG&A” line item of the
Consolidated Statements of Operations. Rent expense, depreciation and amortization expense and interest expense are
shown separately in the Consolidated Statement of Operations.

Consolidated Statements of Cash Flows

For purposes of the Consolidated Statements of Cash Flows, the Company considers all highly liquid debt

instruments purchased with an original maturity of three months or less to be temporary cash investments.

Segments

The Company operates supermarkets, multi-department stores and fulfillment centers throughout the United States.

The Company’s retail operations, which represent 97% of the Company’s consolidated sales, are its only reportable
segment. The Company aggregates its operating divisions into one reportable segment due to the operating divisions
having similar economic characteristics with similar long-term financial performance. In addition, the Company’s
operating divisions offer customers similar products, have similar distribution methods, operate in similar regulatory
environments, purchase the majority of the merchandise for retail sale from similar (and in many cases identical)
vendors on a coordinated basis from a centralized location, serve similar types of customers, and are allocated capital
from a centralized location. Operating divisions are organized primarily on a geographical basis so that the operating
division management team can be responsive to local needs of the operating division and can execute company strategic
plans and initiatives throughout the locations in their operating division. This geographical separation is the primary
differentiation between these retail operating divisions. The geographical basis of organization reflects how the business
is managed and how the Company’s Chief Executive Officer, who acts as the Company’s chief operating decision
maker, assesses performance internally. All of the Company’s operations are domestic.

2. GOODWILL AND INTANGIBLE ASSETS

The following table summarizes the changes in the Company’s net goodwill balance through February 3, 2024:

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

2023

2022

$ 5,737 $ 5,737
(2,661)
3,076

(2,821)
2,916

—

(160)

5,737
(2,821)

5,737
(2,821)
$ 2,916 $ 2,916

Testing for impairment is performed annually, or on an interim basis upon the occurrence of a triggering event or a

change in circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying
amount. The annual evaluation of goodwill and indefinite-lived intangible assets was performed during the fourth
quarter of 2023, 2022 and 2021. The evaluation did not result in impairment in 2023 or 2021. The evaluation resulted in
an impairment in 2022.

Based on the results of the Company’s impairment assessment in the fourth quarter of 2022, Vitacost.com recorded

a $160 goodwill impairment. In the fourth quarter of 2022, as the Company’s digital strategy evolved, the Company’s
primary focus was to effectively utilize its Pickup and Delivery capabilities. This reprioritization resulted in reduced
long-term profitability expectations and a decline in the market value for one underlying channel of business and led to
the pre-tax and after-tax impairment charge of $160. The pre-impairment goodwill balance for Vitacost.com was $160
as of the fourth quarter 2022. There is no goodwill remaining for Vitacost.com as of January 28, 2023.

The following table summarizes the Company’s intangible assets balance through February 3, 2024:

2023

2022

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)
(230)
(173)
(96)
—
—

(259) $
(179)
(103)
—
—

360 $
186
118
685
91

325 $
186
112
685
90

Total

1,440 $

(541) $

1,398 $

(499)

(1) Pharmacy prescription files are amortized to merchandise costs, customer relationships are amortized to

depreciation and amortization expense and other intangibles are amortized to OG&A expense and depreciation and
amortization expense.

Amortization expense associated with intangible assets totaled approximately $42, $52 and $59, during fiscal years

2023, 2022 and 2021, respectively. Future amortization expense associated with the net carrying amount of definite-
lived intangible assets for the years subsequent to 2023 is estimated to be approximately:

2024
2025
2026
2027
2028
Thereafter

42
38
17
8
8
10

Total future estimated amortization associated with definite-lived intangible assets

123

3. PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consists of:

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

2023

2022

$ 3,512 $ 3,442
14,539
17,328
11,435
4,044
2,580

15,137
19,375
12,394
3,574
2,701

56,693
(31,463)

53,368
(28,642)

Property, plant and equipment, net

$ 25,230 $ 24,726

Accumulated depreciation and amortization for leased property under finance leases was $730 at February 3, 2024

and $562 at January 28, 2023.

Approximately $104 and $124, net book value, of property, plant and equipment collateralized certain mortgages at

February 3, 2024 and January 28, 2023, respectively.

Capitalized implementation costs associated with cloud computing arrangements of $257, net of accumulated
amortization of $65, and $193, net of accumulated amortization of $36, are included in “Other assets” in the Company’s
Consolidated Balance Sheets as of February 3, 2024 and January 28, 2023, respectively. The corresponding cash flows
related to these arrangements are included in “Net cash provided by operating activities” in the Company’s Consolidated
Statements of Cash Flows.

4. TAXES BASED ON INCOME

The provision for taxes based on income consists of:

2023

2022 2021

Federal

Current
Deferred

Subtotal federal

State and local
Current
Deferred

Subtotal state and local

Total

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 legal settlements
Non-deductible executive compensation
Other changes, net

$ 707 $ 401 $ 349
(46)

(130)

162

577

563

303

114
(24)

91
(1)

67
15

$ 667 $ 653 $ 385

2023 2022 2021
21.0 % 21.0 % 21.0 %
2.5
(0.8)
(0.2)
(1.9)
1.2
—
0.5
0.2

3.2
(1.3)
(3.1)
(1.3)
—
—
0.6
(0.3)

2.5
(1.1)
—
(0.7)
—
1.4
0.3
0.1

Effective income tax rate

23.5 % 22.5 % 18.8 %

The 2023 tax rate differed from the federal statutory rate due to the effect of state income taxes and the

nondeductible portion of opioid settlement charges, partially offset by the benefit from share-based payments and the
utilization of tax credits.

The 2022 tax rate differed from the federal statutory rate due to the effect of state income taxes and non-deductible
goodwill impairment charges related to Vitacost.com, partially offset by the benefits from share-based payments and the
utilization of tax credits.

The 2021 tax rate differed from the federal statutory rate primarily due to a discrete benefit of $47 which was
primarily from the favorable outcome of income tax audit examinations covering multiple years, the benefit from share-
based payments and the utilization of tax credits, partially offset by the effect of state income taxes.

The tax effects of significant temporary differences that comprise tax balances were as follows:

2023

2022

Deferred tax assets:

Compensation related costs
Lease liabilities
Closed store reserves
Unrealized losses on hedging instruments
Net operating loss and credit carryforwards
Deferred income
Legal settlements
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
Other

Total deferred tax liabilities

Deferred income taxes

361 $

2,100
51
—
76
102
313
30
—

409
1,892
51
74
101
104
—
26
13

3,033
(55)

2,670
(83)

2,978

2,587

(2,038)
(1,985)
(241)
(259)
—
(16)

(1,954)
(1,759)
(257)
(281)
(8)
—

(4,539)

(4,259)

$ (1,561) $ (1,672)

As of February 3, 2024, deferred tax assets of $18 are included in “Other assets” in the Company’s Consolidated

Balance Sheets. At February 3, 2024, the Company had net operating loss carryforwards for state income tax purposes
of $1,499. These net operating loss carryforwards expire from 2024 through 2043. The utilization of certain of the
Company’s state net operating loss carryforwards may be limited in a given year. Further, based on the analysis
described below, the Company has recorded a valuation allowance against some of the deferred tax assets resulting from
its state net operating losses.

At February 3, 2024, the Company had state credit carryforwards of $7 which expire from 2024 through 2037. The

utilization of certain of the Company’s credits may be limited in a given year. Further, based on the analysis described
below, the Company has recorded a valuation allowance against some of the deferred tax assets resulting from its state
credits.

The Company regularly reviews all deferred tax assets on a tax filer and jurisdictional basis to estimate whether
these assets are more likely than not to be realized based on all available evidence. This evidence includes historical
taxable income, projected future taxable income, the expected timing of the reversal of existing temporary differences
and the implementation of tax planning strategies. Projected future taxable income is based on expected results and
assumptions as to the jurisdiction in which the income will be earned. The expected timing of the reversals of existing
temporary differences is based on current tax law and the Company’s tax methods of accounting. Unless deferred tax
assets are more likely than not to be realized, a valuation allowance is established to reduce the carrying value of the
deferred tax asset until such time that realization becomes more likely than not. Increases and decreases in these
valuation allowances are included in "Income tax expense" in the Consolidated Statements of Operations. As of
February 3, 2024, January 28, 2023, and January 29, 2022, the total valuation allowance was $55, $83, and $72,
respectively.

A reconciliation of the beginning and ending amount of unrecognized tax benefits, including positions effecting

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

2023
$

2022

2021

93 $ 100 $ 193
10
8
10
9
6
3
(108)
(4)
(9)
—
(9)
(1)
(8)
(6)
(4)
93 $ 100
90 $

As of February 3, 2024, January 28, 2023, and January 29, 2022 the amount of unrecognized tax benefits that, if

recognized, would affect the effective tax rate was $62, $66, and $73 respectively.

To the extent interest and penalties would be assessed by taxing authorities on any underpayment of income tax,
such amounts have been accrued and classified as a component of income tax expense. During the years ended February
3, 2024, January 28, 2023, and January 29, 2022, the Company recognized approximately $1, $(6), and $(15),
respectively, in interest and penalties (recoveries). The Company had accrued approximately $15, $14, and $22 for the
payment of interest and penalties as of February 3, 2024, January 28, 2023, and January 29, 2022, respectively.

As of February 3, 2024, the years ended February 1, 2020 and forward remain open for review for federal income

tax purposes.

5. DEBT OBLIGATIONS

Long-term debt consists of:

1.70% to 8.00% Senior Notes due through 2049
Other

Total debt, excluding obligations under finance leases

Less current portion

February 3, January 28,

2023

2024
9,123 $ 10,215
1,077
1,064

10,187
(25)

11,292
(1,153)

Total long-term debt, excluding obligations under finance leases

$ 10,162 $ 10,139

In 2023, the Company repaid $600 of senior notes bearing an interest rate of 3.85% and $500 of senior notes bearing

an interest rate of 4.00%, all using cash on hand.

In 2022, the Company repaid $400 of senior notes bearing an interest rate of 2.80% using cash on hand.

Additionally in 2021, the Company acquired 28, previously leased, properties for a purchase price of $455.
Separately, the Company also entered into a transaction to sell those properties to a third party for total proceeds of
$621. Total cash proceeds received as a result of the transactions was $166. The sale transaction did not qualify for sale-
leaseback accounting treatment. As a result, the Company recorded property, plant and equipment for the $455 price
paid and recorded a $621 financing obligation. The leases have a base term of 25 years and twelve option periods of five
years each. The Company has the option to purchase the individual properties for fair market value at the end of the base
term or at the end of any option period. The Company is obligated to repurchase the properties at the end of the base
term for $300 if the lessor exercises its put option.

On July 6, 2021, the Company entered into an amended and restated credit agreement, which credit agreement was

further amended on November 9, 2022 (as so amended, the “Credit Agreement”) providing for a $2,750 unsecured
revolving credit facility (the “Revolving Credit Facility”), with a termination date of July 6, 2026, unless extended as
permitted under the Credit Agreement. The Company has the ability to increase the size of the Revolving Credit Facility
by up to an additional $1,250, subject to certain conditions.

Borrowings under the Credit Agreement bear interest, at the Company’s option, at either (i) adjusted Term SOFR
plus a market spread, based on the Company’s Public Debt Rating or (ii) the base rate, defined as the highest of (a) the
Federal Funds Rate plus 0.5%, (b) Bank of America’s prime rate, and (c) one-month Term SOFR plus 1.0%, plus a
market rate spread based on the Company’s Public Debt Rating. The Company will also pay a Commitment Fee based
on its Public Debt Rating and Letter of Credit fees equal to a market rate spread based on the Company’s Public Debt
Rating. “Public Debt Rating” means, as of any date, the rating that has been most recently announced by either S&P or
Moody’s, as the case may be, for any class of non-credit enhanced long-term senior unsecured debt issued by the
Company.

The Credit Agreement contains a covenant, which, among other things, requires the maintenance of a Leverage

Ratio of not greater than (i) 3.50:1.00 or (ii) upon the consummation of the proposed merger with Albertsons, 4.50 to
1.00, with step downs to 4.25:1.00, 4.00:1.00, 3.75:1.00 and 3.50:1.00 effective at the end of the third, fifth, seventh and
ninth, full fiscal quarters after the consummation of the proposed merger, respectively. The Company may repay the
Credit Agreement in whole or in part at any time without premium or penalty. The Credit Agreement is not guaranteed
by the Company’s subsidiaries.

On October 13, 2022, the Company entered into a merger agreement with Albertsons Companies, Inc.

(“Albertsons”). For additional information about the Company’s unsecured bridge term loan facility and term loan credit
agreement associated with the merger agreement, see Note 16 to the Consolidated Financial Statements.

As of February 3, 2024, and January 28, 2023, the Company had no commercial paper borrowings and no

borrowings under the Credit Agreement.

As of February 3, 2024, the Company had outstanding letters of credit in the amount of $314, of which $2 reduces
funds available under the Credit Agreement. As of January 28, 2023, the Company had outstanding letters of credit in
the amount of $310, of which $2 reduces funds available under the Credit Agreement. The letters of credit are
maintained primarily to support performance, payment, deposit or surety obligations of the Company.

Most of the Company’s outstanding public debt is subject to early redemption at varying times and premiums, at the
option of the Company. In addition, subject to certain conditions, some of the Company’s publicly issued debt is subject
to redemption, in whole or in part, at the option of the holder upon the occurrence of a redemption event, upon not less
than five days’ notice prior to the date of redemption, at a redemption price equal to the default amount, plus a specified
premium. “Redemption Event” is defined in the indentures as the occurrence of (i) any person or group, together with
any affiliate thereof, beneficially owning 50% or more of the voting power of the Company, (ii) any one person or
group, or affiliate thereof, succeeding in having a majority of its nominees elected to the Company’s Board of Directors,
in each case, without the consent of a majority of the continuing directors of the Company or (iii) both a change of
control and a below investment grade rating.

The aggregate annual maturities and scheduled payments of long-term debt, as of year-end 2023, and for the years

subsequent to 2023 are:

2024
2025
2026
2027
2028
Thereafter

Total debt

25
92
1,305
611
642
7,512

$ 10,187

6. DERIVATIVE FINANCIAL INSTRUMENTS

GAAP requires that derivatives be carried at fair value on the balance sheet and provides for hedge accounting when

certain conditions are met. The Company’s derivative financial instruments are recognized on the balance sheet at fair
value. Changes in the fair value of derivative instruments designated as “cash flow” hedges, to the extent the hedges are
highly effective, are recorded in other comprehensive income, net of tax effects. Ineffective cash flow hedges, if any,
are recognized in current period earnings. Other comprehensive income or loss is reclassified into current period
earnings when the hedged transaction affects earnings. Changes in the fair value of derivative instruments designated as
“fair value” hedges, along with corresponding changes in the fair values of the hedged assets or liabilities, are recorded
in current period earnings. Ineffective fair value hedges, if any, are recognized in current period earnings. Changes in
fair value of derivative instruments not designated as hedges are recognized in current period earnings and included in
“Gain (loss) on investments” in the Company’s Consolidated Statements of Operations.

The Company assesses, both at the inception of the hedge and on an ongoing basis, whether derivatives used as
hedging instruments are highly effective in offsetting the changes in the fair value or cash flow of the hedged items. If it
is determined that a derivative is not highly effective as a hedge or ceases to be highly effective, the Company
discontinues hedge accounting prospectively.

Interest Rate Risk Management

The Company is exposed to market risk from fluctuations in interest rates. The Company manages its exposure to

interest rate fluctuations through the use of a commercial paper program, interest rate swaps (fair value hedges) and
forward-starting interest rate swaps (cash flow hedges). The Company’s current program relative to interest rate
protection contemplates hedging the exposure to changes in the fair value of fixed-rate debt attributable to changes in
interest rates. To do this, the Company uses the following guidelines: (i) use average daily outstanding borrowings to
determine annual debt amounts subject to interest rate exposure, (ii) limit the average annual amount subject to interest
rate reset and the amount of floating rate debt to a combined total amount that represents 25% of the carrying value of
the Company’s debt portfolio or less, (iii) include no leveraged products, and (iv) hedge without regard to profit motive
or sensitivity to current mark-to-market status.

The Company reviews compliance with these guidelines annually with the Finance Committee of the Board of

Directors. These guidelines may change as the Company’s needs dictate.

Fair Value Interest Rate Swaps

The Company did not have any outstanding interest rate derivatives classified as fair value hedges as of February 3,

2024 and January 28, 2023.

Cash Flow Forward-Starting Interest Rate Swaps

As of February 3, 2024 and January 28, 2023, the Company had five forward-starting interest rate swap agreements

with a maturity date of August 1, 2027 with an aggregate notional amount totaling $5,350. A forward-starting interest
rate swap is an agreement that effectively hedges the variability in future benchmark interest payments attributable to
changes in interest rates on the forecasted issuance of fixed-rate debt. The Company entered into these forward-starting
interest rate swaps in order to lock in fixed interest rates on its forecasted issuances of debt.

A notional amount of $2,350 of these forward-starting interest rate swaps was designated as a cash-flow hedge as
defined by GAAP. Accordingly, the changes in fair value of these forward-starting interest rate swaps are recorded to
accumulated other comprehensive income and reclassified into net earnings when the hedged transaction affects net
earnings. As of February 3, 2024, the fair value of the interest rate swaps designated as cash flow hedges was recorded in
“Other Assets” for $125 and accumulated other comprehensive income for $95, net of tax. As of January 28, 2023, the
fair value of the interest rate swaps designated as cash flow hedges was recorded in “Other long-term liabilities” for
$116 and accumulated other comprehensive loss for $89, net of tax.

The remainder of the notional amount of $3,000 of the forward-starting interest rate swaps was not designated as a
cash-flow hedge. Accordingly, the changes in the fair value of these forward-starting interest rate swaps not designated
as cash-flow hedges are recognized through net earnings. As of February 3, 2024, the fair value of these swaps was
recorded in “Other Assets” for $35 and “Other long-term liabilities” for $3. In 2023, the Company recognized an
unrealized gain of $174 related to these swaps that is included in “Gain (loss) on investments” in the Company’s
Consolidated Statements of Operations. As of January 28, 2023, the fair value of these swaps was recorded in “Other
long-term liabilities” for $142. In 2022, the Company recognized an unrealized loss of $142 related to these swaps that is
included in “Gain (loss) on investments” in the Company’s Consolidated Statements of Operations.

The following table summarizes the effect of the Company’s derivative instruments designated as cash flow hedges

for 2023, 2022 and 2021:

Amount of Gain/(Loss) in

Amount of Gain/(Loss)

Year-To-Date

Derivatives in Cash Flow Hedging Relationships

AOCI on Derivative
2023 2022 2021

Reclassified from AOCI into Income Location of Gain/(Loss)
Reclassified into Income
2021

2023

2022

Forward-Starting Interest Rate Swaps, net of tax(1)

60 $ (129) $

(47) $

(6) $

(7) $

(7)

Interest expense

(1) The amounts of Gain/(Loss) reclassified from AOCI into income on derivatives include unamortized proceeds and
payments from forward-starting interest rate swaps once classified as cash flow hedges that were terminated prior
to the end of 2020.

For the above cash flow interest rate swaps, the Company has entered into International Swaps and Derivatives
Association master netting agreements that permit the net settlement of amounts owed under their respective derivative
contracts. Under these master netting agreements, net settlement generally permits the Company or the counterparty to
determine the net amount payable for contracts due on the same date and in the same currency for similar types of
derivative transactions. These master netting agreements generally also provide for net settlement of all outstanding
contracts with a counterparty in the case of an event of default or a termination event.

Collateral is generally not required of the counterparties or of the Company under these master netting agreements.

As of February 3, 2024, no cash collateral was received or pledged under the master netting agreements.

The effect of the net settlement provisions of these master netting agreements on the Company’s derivative balances

upon an event of default or termination event is as follows as of February 3, 2024 and January 28, 2023:

Net Amount

Gross Amounts Not Offset in the
Balance Sheet

February 3, 2024
Assets
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

160 $

— $

160 $

—

— $

160

Liabilities
Cash Flow Forward-Starting

Interest Rate Swaps

3 $

— $

3 $

—

— $

Net Amount

Gross Amounts Not Offset in the
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 February 3, 2024 and January 28, 2023:

February 3, 2024 Fair Value Measurements Using

Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)

Significant Other
Observable Inputs
(Level 2)

Marketable Securities
Forward-Starting Interest Rate Swaps and

Commodity Contracts

Total

646

—
646

—

155
155

January 28, 2023 Fair Value Measurements Using

Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)

Significant Other
Observable Inputs
(Level 2)

Marketable Securities
Forward-Starting Interest Rate Swaps
Total

463
—
463

—
(258)
(258)

Total

646

155
801

Total

463
(258)
205

The Company values interest rate hedges using observable forward yield curves. These forward yield curves are

classified as Level 2 inputs.

Fair value measurements of non-financial assets and non-financial liabilities are primarily used in the impairment

analysis of goodwill, other intangible assets, long-lived assets and in the valuation of store lease exit costs. The
Company reviews goodwill and indefinite-lived intangible assets for impairment annually, during the fourth quarter of
each fiscal year, and as circumstances indicate the possibility of impairment. See Note 2 for further discussion related to
the Company’s carrying value of goodwill. Long-lived assets and store lease exit costs were measured at fair value on a
nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy. See Note 1 for further discussion of the
Company’s policies for impairments of long-lived assets and valuation of store lease exit costs. In 2023, long-lived
assets with a carrying amount of $72 were written down to their fair value of $3, resulting in an impairment charge of
$69. In 2022, long-lived assets with a carrying amount of $69 were written down to their fair value of $1, resulting in an
impairment charge of $68.

Fair Value of Other Financial Instruments

Current and Long-term Debt

The fair value of the Company’s long-term debt, including current maturities, was estimated based on the quoted
market prices for the same or similar issues adjusted for illiquidity based on available market evidence. If quoted market
prices were not available, the fair value was based upon the net present value of the future cash flow using the forward
interest rate yield curve in effect at respective year-ends. At February 3, 2024, the fair value of total debt excluding
obligations under finance leases was $9,401 compared to a carrying value of $10,187. At January 28, 2023, the fair
value of total debt excluding obligations under finance leases was $10,593 compared to a carrying value of $11,292.

Contingent Consideration

As a result of the Home Chef merger in 2018, the Company recognized a contingent liability of $91 on the

acquisition date. The contingent consideration was measured using unobservable (Level 3) inputs and was included in
“Other long-term liabilities” within the Consolidated Balance Sheet. The Company estimated the fair value of the
earnout liability by applying a Monte-Carlo simulation method using the Company’s projection of future operating
results for both the online and offline businesses related to the Home Chef merger and the estimated probability of
achievement of the earnout target metrics. The Monte-Carlo simulation is a generally accepted statistical technique used
to generate a defined number of valuation paths in order to develop a reasonable estimate of the fair value of the earnout
liability. The liability is remeasured to fair value using the Monte-Carlo simulation method at each reporting period, and
the change in fair value, including accretion for the passage of time, is recognized in net earnings until the contingency is
resolved. In 2020, the Company amended the contingent consideration agreement including the performance milestones
to align with the Company’s current business strategies. In 2022, the Company recorded adjustments to increase the
contingent consideration liability for $20 in OG&A. During 2023, the Company made the final contingent consideration
payment of $83 which was based on the fair value of the outstanding year-end 2022 liability.

Cash and Temporary Cash Investments, Store Deposits In-Transit, Receivables, Prepaid and Other Current Assets,

Accounts Payable, Accrued Salaries and Wages and Other Current Liabilities

The carrying amounts of these items approximated fair value due to their short-term nature.

Other Assets

The fair value of certain financial instruments, measured using Level 1 inputs, was $578 and $401 as of February 3,

2024 and January 28, 2023, respectively, and is included in “Other assets” in the Company’s Consolidated Balance
Sheets. The unrealized loss for these Level 1 investments was approximately $66 and $586 for 2023 and 2022,
respectively, and is included in “Gain (loss) on investments” in the Company’s Consolidated Statements of Operations.

The Company held other equity investments without a readily determinable fair value. These investments are
measured initially at cost and remeasured for observable price changes to fair value through net earnings. The value of
these investments was $92 and $320 as of February 3, 2024 and January 28, 2023, respectively, and is included in
“Other assets” in the Company’s Consolidated Balance Sheets. The decrease in the value of these other equity
investments without a readily determinable fair value was the result of one of the Company’s investments now being
measured using Level 1 inputs. There were no other observable price changes or impairments for these investments
without a readily determinable fair value during 2023 or 2022, and as such, they are excluded from the fair value
measurements table above for February 3, 2024 and January 28, 2023.

The following table presents the Company’s remaining other assets as of February 3, 2024 and January 28, 2023:

Other Assets

Equity method and other long-term investments
Notes receivable
Prepaid deposits under certain contractual arrangements
Implementation costs related to cloud computing arrangements
Forward-starting interest rate swaps
Funded asset status of pension plans
Other

Total

February 3, 2024

January 28, 2023

290
78
193
257
160
44
128
1,150

274
169
199
193
—
69
125
1,029

8. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table represents the changes in AOCI by component for the years ended February 3, 2024 and

January 28, 2023:

Balance at January 29, 2022
OCI before reclassifications(2)
Amounts reclassified out of AOCI(3)
Net current-period OCI
Balance at January 28, 2023

Balance at January 28, 2023
OCI before reclassifications(2)
Amounts reclassified out of AOCI(3)
Net current-period OCI
Balance at February 3, 2024

Cash Flow
Hedging
Activities(1)

Pension and
Postretirement
Defined Benefit
Plans(1)

Total(1)

(47)
(89)
7
(82)
(129)

(129)
183
6
189
60

(420)
(88)
5
(83)
(503)

(503)
(35)
(11)
(46)
(549)

(467)
(177)
12
(165)
(632)

(632)
148
(5)
143
(489)

(1) All amounts are net of tax.
(2) Net of tax of $(28) and $(27) for pension and postretirement defined benefit plans and cash flow hedging activities,
respectively, as of January 28, 2023. Net of tax of $(11) and $56 for pension and postretirement defined benefit
plans and cash flow hedging activities, respectively, as of February 3, 2024.

(3) Net of tax of $2 and $2 for pension and postretirement defined benefit plans and cash flow hedging activities,

respectively, as of January 28, 2023. Net of tax of $(3) and $2 for pension and postretirement defined benefit plans
and cash flow hedging activities, respectively, as of February 3, 2024.

The following table represents the items reclassified out of AOCI and the related tax effects for the years ended

February 3, 2024, January 28, 2023 and January 29, 2022:

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
February 3, 2024 January 28, 2023 January 29, 2022

8 $
(2)
6

(14)
3
(11)
(5) $

9 $
(2)
7

7
(2)
5
12 $

10
(3)
7

97
(23)
74
81

(1) Reclassified from AOCI into interest expense.
(2) Reclassified from AOCI into non-service component of company-sponsored pension plan costs. These components

are included in the computation of net periodic pension expense.

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:

Assets
Operating
Finance

Total leased assets

Liabilities
Current

Operating
Finance

Noncurrent
Operating
Finance

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

February 3,
2024

January 28,
2023

6,692 $
1,971

6,662
2,018

8,663 $

8,680

670 $

173

662

157

Noncurrent operating lease liabilities
Long-term debt including obligations under finance leases

6,351
1,866

6,372
1,929

Total lease liabilities

9,060 $

9,120

(1) Finance lease assets are recorded net of accumulated amortization of $730 and $562 as of February 3, 2024 and

January 28, 2023.

The following table provides the components of lease cost:

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
February 3, 2024

Year-To-Date
January 28, 2023

1,006
(115)

195
78

950
(111)

161
66

1,164

1,066

(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.

2024
2025
2026
2027
2028
Thereafter

Operating
Leases

Finance
Leases

Total

961
898
838
784
722
5,738

243
240
240
242
238
1,359

1,204
1,138
1,078
1,026
960
7,097

Total lease payments

9,941

2,562

12,503

Less amount representing interest

2,920

523

Present value of lease liabilities(1)

7,021

2,039

(1) Includes the current portion of $670 for operating leases and $173 for finance leases.

Total future minimum rentals under non-cancellable subleases at February 3, 2024 were $212.

The following table provides the weighted-average lease term and discount rate for operating and finance leases:

Weighted-average remaining lease term (years)

Operating leases
Finance leases

Weighted-average discount rate

Operating leases
Finance leases

February 3, 2024

January 28, 2023

13.9
11.8

4.4 %
3.8 %

14.3
12.7

4.2 %
3.5 %

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
February 3, 2024

Year-To-Date
January 28, 2023

984
78
173
700
168
37
15
—

$
$
$
$
$
$
$
$

903
66
132
602
656
30
1
2

(1) In 2023, the Company entered into sale leaseback transactions related to nine properties, which resulted in total
proceeds of $52. In 2022, the Company entered into sale leaseback transactions related to five properties,
which resulted in total proceeds of $44.

On May 17, 2018, the Company entered into a Partnership Framework Agreement with Ocado International
Holdings Limited and Ocado Group plc (“Ocado”), which has since been amended. Under this agreement, Ocado will
partner exclusively with the Company in the U.S., enhancing the Company’s digital and robotics capabilities in its
distribution networks. In 2023, the Company opened one additional Kroger Delivery customer fulfillment center in
Frederick, Maryland. The Company determined the arrangement with Ocado contains a lease of the robotic equipment
used to fulfill customer orders. As a result, the Company establishes a finance lease when each facility begins fulfilling
orders to customers. The base term of each lease is 10 years with options to renew at the Company’s sole discretion. The
Company elected to combine the lease and non-lease elements in the contract. As a result, the Company will account for
all payments to Ocado as lease payments. In 2023, the Company recorded finance lease assets of $147 and finance lease
liabilities of $135 related to the Company’s agreement with Ocado. In 2022, the Company recorded finance lease assets
of $629 and finance lease liabilities of $583 related to the Company’s agreement with Ocado. As of February 3, 2024
and January 28, 2023, the Company had $960 and $928, respectively, of net finance lease assets included within
“Property, plant and equipment, net” in the Company’s Consolidated Balance Sheets related to the Company's agreement
with Ocado. As of February 3, 2024 and January 28, 2023, the Company had $100 and $88, respectively, of current
finance lease liabilities recorded within “Current portion of long-term debt including obligations under finance leases"
and $814 and $785, respectively, of non-current finance lease liabilities recorded within “Long-term debt including
obligations under finance leases” in the Company’s Consolidated Balance Sheets.

10. EARNINGS PER COMMON SHARE

Net earnings attributable to The Kroger Co. per basic common share equals net earnings attributable to The Kroger

Co. less income allocated to participating securities divided by the weighted average number of common shares
outstanding. Net earnings attributable to The Kroger Co. per diluted common share equals net earnings attributable to
The Kroger Co. less income allocated to participating securities divided by the weighted average number of common
shares outstanding, after giving effect to dilutive stock options. The following table provides a reconciliation of net
earnings attributable to The Kroger Co. and shares used in calculating net earnings attributable to The Kroger Co. per
basic common share to those used in calculating net earnings attributable to The Kroger Co. per diluted common share:

(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
February 3, 2024

For the year ended
January 28, 2023

For the year ended
January 29, 2022

Earnings
(Numerator)

Shares
(Denominator)

Per
Share
Amount

Earnings
(Numerator)

Shares
(Denominator)

Per
Share
Amount

Earnings
(Numerator)

Share
(Denominator) Amount

Per

2,146

718 $
7

2.99 $

2,224

718
9

3.10 $

1,639

$ 2.20

744
10

diluted common share

2,146

725 $

2.96 $

2,224

727

3.06 $

1,639

754

$ 2.17

The Company had combined undistributed and distributed earnings to participating securities totaling $18, $20 and

$16 in 2023, 2022 and 2021, respectively.

The Company had stock options outstanding for approximately 2.8 million, 1.7 million and 2.4 million shares,
respectively, for the years ended February 3, 2024, January 28, 2023 and January 29, 2022, which were excluded from
the computations of net earnings per diluted common share because their inclusion would have had an anti-dilutive
effect on net earnings per diluted share.

11. STOCK-BASED COMPENSATION

The Company recognizes compensation expense for all share-based payments granted. The Company recognizes

share-based compensation expense, net of an estimated forfeiture rate, over the requisite service period of the award
based on the fair value at the date of the grant.

The Company grants options for common shares (“stock options”) to employees under various plans at an option
price equal to the fair market value of the underlying shares on the grant date of the award. The Company accounts for
stock options under the fair value recognition provisions. Stock options typically expire 10 years from the date of grant.
Stock options vest between one and four years from the date of grant.

In addition to the stock options described above, the Company awards restricted stock to employees and incentive

shares to nonemployee directors under various plans. The restrictions on the restricted share awards generally lapse
between one and four years from the date of the awards. The Company determines the fair value for restricted stock
awards in an amount equal to the fair market value of the underlying shares on the grant date of the award.

At February 3, 2024, approximately 40 million common shares were available for future options or restricted stock

grants under the 2019 Amended and Restated Long-Term Incentive Plan. Options granted reduce the shares available
under the Plans at a ratio of one to one. Restricted stock grants reduce the shares available under the Plans at a ratio of
2.83 to one.

Equity awards granted are based on the aggregate value of the award on the grant date. This can affect the number

of shares granted in a given year as equity awards. Excess tax benefits related to equity awards are recognized in the
provision for income taxes. Equity awards may be approved at one of four meetings of its Board of Directors occurring
shortly after the Company’s release of quarterly earnings. The 2023 primary grants were made in conjunction with the
March and June meetings of the Company’s Board of Directors.

All awards become immediately exercisable upon certain changes of control of the Company.

Stock Options

Changes in options outstanding under the stock option plans are summarized below:

Outstanding, year-end 2020

Granted
Exercised
Canceled or Forfeited

Outstanding, year-end 2021

Granted
Exercised
Canceled or Forfeited

Outstanding, year-end 2022

Granted
Exercised
Canceled or Forfeited

Outstanding, year-end 2023

Weighted-

Shares
subject
to option
(in millions)

average
exercise
price

26.65
35.45
24.70
28.88

28.15
56.13
26.02
31.54

30.81
47.23
24.04
39.45

26.8 $
2.1 $
(7.1) $
(0.7) $

21.1 $
1.2 $
(5.4) $
(0.3) $

16.6 $
1.3 $
(2.4) $
(0.1) $

15.4 $

33.11

A summary of options outstanding, exercisable and expected to vest at February 3, 2024 follows:

Options Outstanding
Options Exercisable
Options Expected to Vest

Weighted-average

Number of shares

(in millions)

remaining
contractual life
(in years)

Weighted-average

exercise price

Aggregate
intrinsic
value
(in millions)

15.4
11.8
3.5

4.78
3.84
7.87

$
$
$

33.11
30.01
43.24

$
$
$

214
194
20

Restricted stock

Changes in restricted stock outstanding under the restricted stock plans are summarized below:

Outstanding, year-end 2020

Granted
Lapsed
Canceled or Forfeited

Outstanding, year-end 2021

Granted
Lapsed
Canceled or Forfeited

Outstanding, year-end 2022

Granted
Lapsed
Canceled or Forfeited

Outstanding, year-end 2023

Restricted
shares
outstanding
(in millions)

Weighted-average

grant-date
fair value

28.46
37.29
29.58
31.31

32.52
50.50
32.16
38.32

41.76
47.06
40.37
45.32

7.8 $
3.9 $
(4.0) $
(0.5) $

7.2 $
3.0 $
(4.0) $
(0.4) $

5.8 $
3.5 $
(3.1) $
(0.3) $

5.9 $

45.49

The weighted-average grant date fair value of stock options granted during 2023, 2022 and 2021 was $15.17, $15.91

and $8.54, respectively. The fair value of each stock option grant was estimated on the date of grant using the Black-
Scholes option-pricing model, based on the assumptions shown in the table below. The Black-Scholes model utilizes
accounting judgment and financial estimates, including the term option holders are expected to retain their stock options
before exercising them, the volatility of the Company’s share price over that expected term, the dividend yield over the
term and the number of awards expected to be forfeited before they vest. Using alternative assumptions in the
calculation of fair value would produce fair values for stock option grants that could be different than those used to
record stock-based compensation expense in the Consolidated Statements of Operations. The decrease in the fair value
of the stock options granted during 2023, compared to 2022, resulted primarily from decreases in the Company’s share
price, partially offset by an increase in the weighted-average risk-free interest rate. The increase in the fair value of the
stock options granted during 2022, compared to 2021, resulted primarily from increases in the Company’s share price,
the weighted-average expected volatility, and an increase in the weighted-average risk-free interest rate.

The following table reflects the weighted-average assumptions used for grants awarded to option holders:

Weighted average expected volatility
Weighted average risk-free interest rate
Expected dividend yield
Expected term (based on historical results)

2023
31.14 %
4.09 %
2.11 %

2022

2021

30.47 %
2.09 %
1.82 %

28.52 %
1.21 %
2.00 %

7.1 years

7.2 years

The weighted-average risk-free interest rate was based on the yield of a treasury note as of the grant date,

continuously compounded, which matures at a date that approximates the expected term of the options. The dividend
yield was based on our history and expectation of dividend payouts. Expected volatility was determined based upon
historical stock volatilities; however, implied volatility was also considered. Expected term was determined based upon
historical exercise and cancellation experience.

Total stock compensation recognized in 2023, 2022 and 2021 was $172, $190 and $203, respectively. Stock option

compensation recognized in 2023, 2022 and 2021 was $17, $19 and $20, respectively. Restricted shares compensation
recognized in 2023, 2022 and 2021 was $155, $171 and $183, respectively.

The total intrinsic value of stock options exercised was $55, $159 and $121 in 2023, 2022 and 2021, respectively.

The total amount of cash received in 2023 by the Company from the exercise of stock options granted under share-based
payment arrangements was $50. As of February 3, 2024, there was $212 of total unrecognized compensation expense
remaining related to non-vested share-based compensation arrangements granted under the Plans. This cost is expected
to be recognized over a weighted-average period of approximately two years. The total fair value of options that vested
was $16, $19 and $20 in 2023, 2022 and 2021, respectively.

Shares issued as a result of stock option exercises may be newly issued shares or reissued treasury shares. Proceeds
received from the exercise of options, and the related tax benefit, may be utilized to repurchase the Company’s common
shares under a stock repurchase program adopted by the Company’s Board of Directors. During 2023, the Company
repurchased approximately one million common shares in such a manner.

12. COMMITMENTS AND CONTINGENCIES

The Company continuously evaluates contingencies based upon the best available evidence.

The Company believes that allowances for loss have been provided to the extent necessary and that its assessment of

contingencies is reasonable. To the extent that resolution of contingencies results in amounts that vary from the
Company’s estimates, future earnings will be charged or credited.

The principal contingencies are described below:

Insurance — The Company’s workers’ compensation risks are self-insured in most states. In addition, other
workers’ compensation risks and certain levels of insured general liability risks are based on retrospective premium
plans, deductible plans and self-insured retention plans. The liability for workers’ compensation risks is accounted for
on a present value basis. Actual claim settlements and expenses incident thereto may differ from the provisions for
loss. Property risks have been underwritten by a subsidiary and are all reinsured with unrelated insurance
companies. Operating divisions and subsidiaries have paid premiums, and the insurance subsidiary has provided loss
allowances, based upon actuarially determined estimates.

Litigation — Various claims and lawsuits arising in the 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.

On September 8, 2023, the Company announced that it reached an agreement in principle with plaintiffs to settle the

majority of opioid claims that have been or could be brought against Kroger by states in which they operate,
subdivisions, and Native American tribes. Along with the execution of certain non-monetary conditions that remain
under discussion, the Company has agreed to pay up to $1,200 to states and subdivisions and $36 to Native American
tribes in funding for abatement efforts, and approximately $177 to cover attorneys’ fees and costs. States, subdivisions,
and the Native American tribes will have an opportunity to opt-in to participate in the settlement, and the Company will
have full discretion to determine whether there is sufficient participation for the settlement to become effective. If all
conditions are satisfied, the settlement would allow for the full resolution of all claims on behalf of participating states,
subdivisions and Native American tribes and is not an admission of any wrongdoing or liability.

As a result, the Company concluded that the agreement in principle for the settlement of opioid claims was
probable, and for which the related loss was reasonably estimable. Accordingly, in 2023, the Company recognized
opioid settlement charges of $1,413, $1,113 net of tax, relating to the nationwide opioid settlement framework. This
charge is included in “Operating, general and administrative” in the Company’s Consolidated Statement of Operations.

The agreement in principle described above includes payments of approximately $1,236 and $177, in equal

installments over 11 years and 6 years, respectively. As of February 3, 2024, the Company recorded $284 and $1,129 of
the estimated settlement liability in “Other current liabilities” and “Other long-term liabilities,” respectively, in the
Company’s Consolidated Balance Sheets. The current portion of the estimated settlement liability is recorded in
“Accrued expenses” and the long-term portion of the estimated settlement liability is recorded in “Other” within
“Changes in operating assets and liabilities” in the Company’s Consolidated Statement of Cash Flows for fiscal year
2023.

Because of the conditions remaining to satisfy, the Company cannot predict if the agreement will become effective,
and whether unfavorable developments may occur. The amount of the actual loss may differ materially from the accrual
estimate recorded as of February 3, 2024.

Additionally, in 2023, the Company recorded a charge of $62 relating to a settlement of opioid litigation claims with

the State of West Virginia. The agreed upon settlement framework resolves all opioid lawsuits and claims by the West
Virginia Attorney General.

In 2022, the Company recorded a charge of $85 relating to a settlement of opioid litigation claims with the State of

New Mexico. The agreed upon settlement framework allocates $85 among various constituents related to the state of
New Mexico. This settlement agreement resolved all opioid lawsuits and claims by the state of New Mexico against the
Company.

The foregoing settlements are not admissions of wrongdoing or liability by the Company and the Company will

continue to vigorously defend against any other claims and lawsuits relating to opioids that the settlements do not
resolve.

Assignments — The Company is contingently liable for leases that have been assigned to various third parties in
connection with facility closings and dispositions. The Company could be required to satisfy the obligations under the
leases if any of the assignees is unable to fulfill its lease obligations. Due to the wide distribution of the Company’s
assignments among third parties, and various other remedies available, the Company believes the likelihood that it will
be required to assume a material amount of these obligations is remote.

13. STOCK

Preferred Shares

The Company has authorized five million shares of voting cumulative preferred shares; two million shares were
available for issuance at February 3, 2024. The shares have a par value of $100 per share and are issuable in series.

Common Shares

The Company has authorized two billion common shares, $1 par value per share.

Common Stock Repurchase Program

The Company maintains stock repurchase programs that comply with Rule 10b5-1 of the Securities Exchange Act
of 1934 to allow for the orderly repurchase of The Kroger Co. common shares, from time to time. The Company made
no open market purchases in 2023. The Company made open market purchases totaling $821 and $1,422 under these
repurchase programs in 2022 and 2021, respectively.

In addition to these repurchase programs, in December 1999, the Company began a program to repurchase common

shares to reduce dilution resulting from its employee stock option plans. This program is solely funded by proceeds
from stock option exercises and the related tax benefit. The Company repurchased approximately $62, $172 and $225
under the stock option program during 2023, 2022 and 2021, respectively.

14. COMPANY- SPONSORED BENEFIT PLANS

The Company administers non-contributory defined benefit retirement plans for some non-union employees and
union-represented employees as determined by the terms and conditions of collective bargaining agreements. These
include several qualified pension plans (the “Qualified Plans”) and non-qualified pension plans (the “Non-Qualified
Plans”). The Non-Qualified Plans pay benefits to any employee that earns in excess of the maximum allowed for the
Qualified Plans by Section 415 of the Internal Revenue Code. The Company only funds obligations under the Qualified
Plans. Funding for the company-sponsored pension plans is based on a review of the specific requirements and on
evaluation of the assets and liabilities of each plan.

In addition to providing pension benefits, the Company provides certain health care benefits for retired employees.
Based on an employee’s age, years of service and position with the Company, the employee may be eligible for retiree
health care benefits. Funding of retiree health care benefits occurs as claims or premiums are paid.

The Company recognizes the funded status of its retirement plans on the Consolidated Balance Sheets. Actuarial
gains or losses and prior service credits that have not yet been recognized as part of net periodic benefit cost are required
to be recorded as a component of AOCI. The Company has elected to measure defined benefit plan assets and
obligations as of January 31, which is the month-end that is closest to its fiscal year-ends.

Amounts recognized in AOCI as of February 3, 2024 and January 28, 2023 consist of the following (pre-tax):

Net actuarial loss (gain)
Prior service credit

Pension Benefits

2023

2022

Other Benefits

Total

2023

2022

2023

2022

817 $

785 $

—

(92) $ (108) $
(11)

(23)

725 $
(11)

677
(23)

Total

817 $

785 $ (103) $ (131) $

714 $

654

Other changes recognized in other comprehensive income (loss) in 2023, 2022 and 2021 were as follows (pre-tax):

Pension Benefits

Other Benefits

Total

Incurred net actuarial loss (gain)
Amortization of prior service credit
Amortization of net actuarial gain (loss)
Total recognized in other comprehensive

2023 2022 2021 2023 2022 2021

2023 2022 2021
$ 42 $ 101 $ (109) $ 4 $ 15 $ 2 $ 46 $ 116 $ (107)
12
(109)

—
(126)

—
(10)

13
(20)

—
(31)

12
17

13
11

11
13

11
3

income (loss)

$ 32 $ 70 $ (235) $ 28 $ 39 $ 31 $ 60 $ 109 $ (204)

Total recognized in net periodic benefit cost
and other comprehensive income (loss)

$ 36 $ 58 $ (164) $ 15 $ 25 $ 10 $ 51 $ 83 $ (154)

Information with respect to change in benefit obligation, change in plan assets, the funded status of the plans
recorded in the Consolidated Balance Sheets, net amounts recognized at the end of fiscal years, weighted-average
assumptions and components of net periodic benefit cost follow:

Pension Benefits

Qualified Plans
2022
2023

Non-Qualified Plans
2023

2022

Other Benefits
2022

2023

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

$ 2,463 $ 2,977 $ 271 $ 325 $ 165 $ 150
5
—
5
13
12
—
8
(3)
—
(1)
(22)
(24)
7
—

8
92
4
(421)
(33)
(159)
(5)

17
116
4
(42)
(11)
(165)
(14)

—
10
—
(40)
(2)
(22)
—

4
8
9
—
—
(21)
3

Benefit obligation at end of fiscal year

$ 2,368 $ 2,463 $ 256 $ 271 $ 168 $ 165

Change in plan assets:
Fair value of plan assets at beginning of fiscal year

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 (unfunded) status and net asset and liability

$ 2,496 $ 3,096 $

65
27
4
(11)
(165)
(17)

(409)
2
4
(33)
(159)
(5)

— $
—
26
—
(2)
(24)
—

— $
—
24
—
(2)
(22)
—

— $
—
12
9
—
(21)
—

—
—
10
12
—
(22)
—

$ 2,399 $ 2,496 $

— $

—

recognized at end of fiscal year

31 $

33 $ (256) $ (271) $ (168) $ (165)

As of February 3, 2024, other assets and other current liabilities include $44 and $36, respectively, of the net asset

and liability recognized for the above benefit plans. As of January 28, 2023, other assets and other current liabilities
include $69 and $36, respectively, of the net asset and liability recognized for the above benefit plans. Pension plan
assets do not include common shares of The Kroger Co.

The following table outlines the weighted average assumptions associated with pension and other benefit costs for

2023, 2022 and 2021:

Weighted average assumptions
Discount rate — Benefit obligation
Discount rate — Net periodic benefit

Pension Benefits

Other Benefits

2023 2022 2021 2023 2022 2021
5.27 % 4.90 % 3.17 % 5.21 % 4.86 % 3.01 %

cost

4.90 % 3.17 % 2.72 % 4.86 % 3.01 % 2.43 %

Expected long-term rate of return on

plan assets

5.50 % 5.50 % 5.50 %

Rate of compensation increase — Net

periodic benefit cost

2.57 % 3.05 % 3.03 %

Rate of compensation increase —

Benefit obligation

2.52 % 2.57 % 3.05 %
Cash Balance plan interest crediting rate 3.30 % 3.30 % 3.30 %

The Company’s discount rate assumptions were intended to reflect the rates at which the pension benefits could be
effectively settled. They take into account the timing and amount of benefits that would be available under the plans.
The Company’s policy is to match the plan’s cash flows to that of a hypothetical bond portfolio whose cash flow from
coupons and maturities match the plan’s projected benefit cash flows. The discount rates are the single rates that
produce the same present value of cash flows. The selection of the 5.27% and 5.21% discount rates as of year-end 2023
for pension and other benefits, respectively, represents the hypothetical bond portfolio using bonds with an AA or better
rating constructed with the assistance of an outside consultant. A 100-basis point increase in the discount rate would
decrease the projected pension benefit obligation as of February 3, 2024, by approximately $210.

The Company’s assumed pension plan investment return rate was 5.50% in 2023, 2022, and 2021. The value of all

investments in the company-sponsored defined benefit pension plans during the calendar year ended December 31, 2023,
net of investment management fees and expenses, increased 8.2% and for fiscal year 2023 investments increased 2.8%.
Historically, the Company’s pension plans’ average rate of return was 4.8% for the 10 calendar years ended December
31, 2023, net of all investment management fees and expenses. For the past 20 years, the Company’s pension plans’
average annual rate of return has been 7.1%. To determine the expected rate of return on pension plan assets held by the
Company, the Company considers current and forecasted plan asset allocations as well as historical and forecasted rates
of return on various asset categories.

The Company calculates its expected return on plan assets by using the market-related value of plan assets. The

market-related value of plan assets is determined by adjusting the actual fair value of plan assets for gains or losses on
plan assets. Gains or losses represent the difference between actual and expected returns on plan investments for each
plan year. Gains or losses on plan assets are recognized evenly over a five-year period. Using a different method to
calculate the market-related value of plan assets would provide a different expected return on plan assets.

The pension benefit unfunded status decreased in 2023, compared to 2022, due primarily to an increase in discount
rates, which lowered the benefit obligation more than the plan’s lower actual rate of return versus expected rate of return
on assets. The Company’s Qualified Plans were fully funded as of February 3, 2024 and January 28, 2023.

The following table provides the components of the Company’s net periodic benefit costs for 2023, 2022 and 2021:

Pension Benefits

2023

Qualified Plans
2022

2021

Non-Qualified Plans

Other Benefits

2023 2022 2021 2023 2022 2021

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

17 $

116
(150)

8 $
92
(153)

12 $ — $ — $ — $
92
(168)

13
—

10
—

9
—

4 $
8
—

5 $
5
—

4
4
—

—
5
1
—

—
22
4
—

—
4
—
(2)

(12)
—
—
(17)
6
33
—
—
87
—
1
(1)
55 $ 15 $ 15 $ 16 $ (13) $ (14) $ (21)

(13)
(11)
—
—

(11)
(13)
—
(1)

—
5
—
—

Net periodic benefit cost

$ (11) $ (27) $

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
2023 2022 2023
$ 159 $ 176 $ 256 $ 271
—
$ 150 $ 141 $

— $

2022

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
2023 2022 2023
2022
$ 159 $ 176 $ 256 $ 271
—
$ 150 $ 141 $

— $

The following table provides information about the Company’s estimated future benefit payments:

2024
2025
2026
2027
2028
2029 —2033

Pension Other
Benefits Benefits
$ 210 $ 13
$ 210 $ 14
$ 211 $ 15
$ 210 $ 16
$ 208 $ 16
$ 982 $ 80

The following table provides information about the target and actual pension plan asset allocations as of February 3,

2024:

Pension plan asset allocation
Global equity securities
Investment grade debt securities
High yield debt securities
Private equity
Hedge funds
Real estate
Other

Total

Target allocations

Actual
Allocations

2023

2022

5.0 %
78.0
3.0
10.0
2.0
2.0
—

5.4 %

4.9 %

78.9
3.1
8.5
2.4
1.7
—

75.8
2.9
9.8
2.3
1.8
2.5

100.0 % 100.0 % 100.0 %

Investment objectives, policies and strategies are set by the Retirement Benefit Plan Management Committee (the
“Committee”). The primary objectives include holding and investing the assets and distributing benefits to participants
and beneficiaries of the pension plans. Investment objectives have been established based on a comprehensive review of
the capital markets and each underlying plan’s current and projected financial requirements. The time horizon of the
investment objectives is long-term in nature and plan assets are managed on a going-concern basis.

Investment objectives and guidelines specifically applicable to each manager of assets are established and reviewed

annually. Derivative instruments may be used for specified purposes, including rebalancing exposures to certain asset
classes. Any use of derivative instruments for a purpose or in a manner not specifically authorized is prohibited, unless
approved in advance by the Committee.

The target allocations shown for 2023 were established at the beginning of 2023 based on the Company’s liability-

driven investment (“LDI”) strategy. An LDI strategy focuses on maintaining a close to fully-funded status over the long-
term with minimal funded status risk. This is achieved by investing more of the plan assets in fixed income instruments
to more closely match the duration of the plan liability.

The Company did not make any significant contributions to its company-sponsored pension plans in 2023, and the

Company is not required to make any contributions to these plans in 2024. If the Company does make any contributions
in 2024, the Company expects these contributions will decrease its required contributions in future years. Among other
things, investment performance of plan assets, the interest rates required to be used to calculate the pension obligations
and future changes in legislation, will determine the amounts of any contributions. The Company expects 2024 net
periodic benefit costs for company-sponsored pension plans to be approximately $(2).

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. The

Company used a 6.90% initial health care cost trend rate, which is assumed to decrease on a linear basis to a 4.00%
ultimate health care cost trend rate in 2046, to determine its expense.

The following tables, set forth by level within the fair value hierarchy, present the Qualified Plans’ assets at fair

value as of February 3, 2024 and January 28, 2023:

Assets at Fair Value as of February 3, 2024

Quoted Prices in
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

151 $
2
—
—
108
—
—
—
—
—
261 $

— $
—
1,092
140
—
—
—
—
—
93
1,325 $

—
—
—
—
—
—
29
—
24
—
53

—
—
—
—
—
513
29
203
15
—
760

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
—
—
—
—
—
97
1,325 $

—
—
—
—
—
—
31
—
28
—
59

—
—
—
—
—
514
28
248
16
—
806

Total

151
2
1,092
140
108
513
58
203
39
93
2,399

Total

178
4
1,113
115
124
514
59
248
44
97
2,496

Certain investments that are measured at fair value using the NAV per share (or its equivalent) have not been
classified in the fair value hierarchy. The fair value amounts presented for these investments in the preceding tables are
intended to permit reconciliation of the fair value hierarchies to the total fair value of plan assets.

For measurements using significant unobservable inputs (Level 3) during 2023 and 2022, a reconciliation of the

beginning and ending balances is as follows:

Ending balance, January 29, 2022
Contributions into Fund
Realized gains
Unrealized gains
Distributions

Ending balance, January 28, 2023
Contributions into Fund
Realized gains
Unrealized gains
Distributions

Ending balance, February 3, 2024

Hedge Funds Real Estate
37
39 $
$
1
—
12
—
(6)
(3)
(16)
(5)

31
—
1
1
(4)

29 $

28
1
—
(3)
(2)

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 $322, $315 and $289 to employee 401(k) retirement savings accounts in

2023, 2022 and 2021, respectively. The 401(k) retirement savings account plans provide to eligible employees both
matching contributions and automatic contributions from the Company based on participant contributions, compensation
as defined by the plan and length of service.

15. MULTI-EMPLOYER PENSION PLANS

The Company contributes to various multi-employer pension plans based on obligations arising from collective
bargaining agreements. These multi-employer pension plans provide retirement benefits to participants based on their
service to contributing employers. The benefits are paid from assets held in trust for that purpose. Trustees are
appointed in equal number by employers and unions. The trustees typically are responsible for determining the level of
benefits to be provided to participants as well as for such matters as the investment of the assets and the administration
of the plans.

The Company recognizes expense in connection with these plans as contributions are funded or when commitments
are probable and reasonably estimable, in accordance with GAAP. The Company made cash contributions to these plans
of $635 in 2023, $620 in 2022 and $1,109 in 2021. The decrease in 2023 and 2022, compared to 2021, is due to the
contractual payments the Company made in 2021 related to its commitments established for the restructuring of certain
multi-employer pension plan agreements.

The Company continues to evaluate and address potential exposure to under-funded multi-employer pension plans

as it relates to the Company’s associates who are beneficiaries of these plans. These under-fundings are not a liability of
the Company. When an opportunity arises that is economically feasible and beneficial to the Company and its
associates, the Company may negotiate the restructuring of under-funded multi-employer pension plan obligations to
help stabilize associates’ future benefits and become the fiduciary of the restructured multi-employer pension plan. The
commitments from these restructurings do not change the Company’s debt profile as it relates to its credit rating since
these off-balance sheet commitments are typically considered in the Company’s investment grade debt rating.

The Company is currently designated as the named fiduciary of the United Food and Commercial Workers
(“UFCW”) Consolidated Pension Plan and the International Brotherhood of Teamsters (“IBT”) Consolidated Pension
Fund and has sole investment authority over these assets. Due to opportunities arising, the Company has restructured
certain multi-employer pension plans. The significant effects of these restructuring agreements recorded in our
Consolidated Financial Statements are:

•

In 2022, the Company incurred a $25 charge, $19 net of tax, for obligations related to withdrawal liabilities for
certain multi-employer pension funds.

In 2021, associates within the Fred Meyer and QFC divisions ratified an agreement for the transfer of liabilities
from the Sound Retirement Trust to the UFCW Consolidated Pension Plan. The Company transferred $449,
$344 net of tax, in net accrued pension liabilities and prepaid escrow funds to fulfill obligations for past service
for associates and retirees. The agreement will be satisfied by cash installment payments to the UFCW
Consolidated Pension Plan and will be paid evenly over seven years.

The risks of participating in multi-employer pension plans are different from the risks of participating in single-

employer pension plans in the following respects:

• Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees

of other participating employers.

•

If a participating employer stops contributing to the plan, the unfunded obligations of the plan allocable to such
withdrawing employer may be borne by the remaining participating employers.

If the Company stops participating in some of its multi-employer pension plans, the Company may be required
to pay those plans an amount based on its allocable share of the unfunded vested benefits of the plan, referred to
as a withdrawal liability.

The Company’s participation in multi-employer plans is outlined in the following tables. The EIN / Pension Plan
Number column provides the Employer Identification Number (“EIN”) and the three-digit pension plan number. The
most recent Pension Protection Act Zone Status available in 2023 and 2022 is for the plan’s year-end at December 31,
2022 and December 31, 2021, respectively. Among other factors, generally, plans in the red zone are less than 65
percent funded, plans in the yellow zone are less than 80 percent funded and plans in the green zone are at least 80
percent funded. The FIP/RP Status Pending / Implemented Column indicates plans for which a funding improvement
plan (“FIP”) or a rehabilitation plan (“RP”) is either pending or has been implemented. Unless otherwise noted, the
information for these tables was obtained from the Forms 5500 filed for each plan’s year-end at December 31, 2022 and
December 31, 2021. The multi-employer contributions listed in the table below are the Company’s multi-employer
contributions made in fiscal years 2023, 2022 and 2021.

The following table contains information about the Company’s multi-employer pension plans:

Pension Fund
SO CA UFCW Unions & Food

Plan Number

2023

Pension Protection
EIN / Pension Act Zone Status

FIP/RP
Status
Pending/

2022 Implemented

Multi-Employer Contributions Surcharge
Imposed(5)

2021

2023

2022

Employers Joint Pension Trust Fund(1)(2) 95-1939092 - 001 Red

Red

Implemented $

83 $

84 $

84-6277982 - 001 Green Green

86-3278029 - 001 Green Green

Oregon Retail Employees Pension Plan(1) 93-6074377 - 001 Green
Bakery and Confectionary Union &

Red

84-6045986 - 001 Green Green

No
Implemented

52-6118572 - 001 Red

Red

Implemented

Desert States Employers & UFCW

Unions Pension Plan(1)

Sound Variable Annuity Pension

Trust(1)(3)

Rocky Mountain UFCW Unions and

Employers Pension Plan(1)

Industry International Pension Fund(1)
Retail Food Employers & UFCW Local

711 Pension(1)

UFCW International Union — Industry
Variable Annuity Pension Plan(4)
Western Conference of Teamsters

51-6031512 - 001 Red

Red

Implemented

51-6055922 - 001 Green Green

263

282

550

Pension 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 Green
82-2153627 - 001 N/A

N/A

Red

Implemented
No
No

40
98
7
16
635 $

37
34
243
56
29
7
26
29
620 $ 1,109

27
10

27
9

29
10

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, 2023 and

March 31, 2022.

(3) The 2022 information for this fund was obtained from the Form 5500 filed for the plan’s year-end at September 30,

2021.

(4) The information for this fund was obtained from the Form 5500 filed for the plan's year-end at June 30, 2022 and

June 30, 2021.

(5) Under the Pension Protection Act, a surcharge may be imposed when employers make contributions under a

collective bargaining agreement that is not in compliance with a rehabilitation plan. As of February 3, 2024, the
collective bargaining agreements under which the Company was making contributions were in compliance with
rehabilitation plans adopted by the applicable pension fund.

(6) The plan was formed after 2006, and therefore is not subject to zone status certifications.

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 2024 to August 2027
June 2025 to March 2026
January 2024(2) to April 2026
January 2025
August 2024 to March 2026

April 2024 to September 2025
January 2024(2) to April 2026

June 2025
April 2024 to May 2027

September 2024 to September 2027

1
3
1
4
1
2

4
1

1
4
2

March 2025
February 2024 to March 2026
March 2026
May 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.

(2) Certain collective bargaining agreements are operating under an extension.

Based on the most recent information available to it, the Company believes the present value of actuarial accrued

liabilities in most of these multi-employer plans exceeds the value of the assets held in trust to pay benefits. Moreover,
if the Company were to exit certain markets or otherwise cease making contributions to these funds, the Company could
trigger a withdrawal liability. Any adjustment for withdrawal liability will be recorded when it is probable that a
liability exists and it can be reasonably estimated.

The Company also contributes to various other multi-employer benefit plans that provide health and welfare benefits
to active and retired participants. Total contributions made by the Company to these other multi-employer health and
welfare plans were approximately $1,182 in 2023, $1,129 in 2022 and $1,197 in 2021.

16. PROPOSED MERGER WITH ALBERTSONS COMPANIES, INC.

As previously disclosed, on October 13, 2022, the Company entered into a merger agreement with Albertsons
Companies, Inc. (“Albertsons”) pursuant to which all of the outstanding shares of Albertsons common and preferred
stock (on an as converted basis) automatically will be converted into the right to receive $34.10 per share, subject to
certain reductions described below.

The per share cash purchase price of $34.10 payable to Albertsons shareholders in the merger would be reduced by
an amount equal to $6.85, which is the per share amount of a special pre-closing cash dividend that was paid on January
20, 2023 to Albertsons shareholders of record as of October 24, 2022. The adjusted per share cash purchase price is
expected to be $27.25.

In connection with obtaining the requisite regulatory clearance necessary to consummate the transaction, the
Company and Albertsons expect to make store divestitures. Subject to the outcome of the divestiture process and as
described in the merger agreement, Albertsons was prepared to establish an Albertsons subsidiary (“SpinCo”). SpinCo
would be spun-off to Albertsons shareholders immediately prior to the closing of the merger and operate as a standalone
public company. As described in more detail below, on September 8, 2023, the Company and Albertsons announced that
they entered into a comprehensive divestiture plan with C&S Wholesale Grocers, LLC (“C&S”). As a result of the
comprehensive divestiture plan announced with C&S, the Company has exercised its right under the merger agreement
to sell what would have been the SpinCo business to C&S. Consequently, the spin-off previously contemplated by the
Company and Albertsons is no longer a requirement under the merger agreement and will no longer be pursued by the
Company and Albertsons.

On September 8, 2023, the Company and Albertsons announced they entered into a definitive agreement with C&S

for the sale of 413 stores, as well as the QFC, Mariano’s and Carrs brand names, the exclusive licensing rights to the
Albertsons banner in Arizona, California, Colorado and Wyoming, eight distribution centers, two offices and certain
other assets in connection with the proposed merger. In addition, Kroger will divest the Debi Lilly Design, Primo
Taglio, Open Nature, ReadyMeals and Waterfront Bistro private label brands. All fuel centers and pharmacies
associated with the divested stores will remain with the stores and continue to operate. The stores will be divested by the
Company following the closing of the proposed merger with Albertsons. The definitive purchase agreement has
customary representations and warranties and covenants of a transaction of its type. The transaction is subject to
fulfillment of customary closing conditions, including clearance by the Federal Trade Commission (“FTC”) and the
completion of the proposed merger. C&S will pay the Company all-cash consideration of approximately $1,900,
including customary adjustments. Prior to the closing, the Company may, in connection with securing FTC and other
governmental clearance, require C&S to purchase up to an additional 237 stores in certain geographies.

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.

In accordance with the terms of the agreement, the parties have extended, and may continue to extend the original
outside date of January 13, 2024 from time to time in 30-day increments for up to 270 days in the aggregate ending on
October 9, 2024. 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.

On February 26, 2024, the Federal Trade Commission (“FTC”) instituted an administrative proceeding to prohibit
the merger. Simultaneously, the FTC (joined by nine States) filed suit in the United States District Court for the District
of Oregon, requesting a preliminary injunction to block the merger. On January 15, 2024 and February 14, 2024, the
attorneys general of Washington and Colorado, respectively, filed suit in their respective state courts, also seeking to
enjoin the merger. In the federal litigation, the Company and Albertsons have stipulated to a temporary restraining order
that prevents the merger from closing until 11:59 PM Eastern Time on the fifth business day after the court rules on the
FTC’s motion for a preliminary injunction or until after the date set by the court, whichever is later. The FTC
administrative proceeding is currently scheduled to begin on July 31, 2024, while a preliminary injunction hearing in the
federal case is set to begin on August 26, 2024. A trial on the State of Washington’s request for a permanent injunction
is scheduled to begin on September 16, 2024. In conjunction with that lawsuit, the Defendants have committed that they
will not close the merger until five days after that court rules (so long as that ruling occurs by a date certain). In the
Colorado case, the court has scheduled a preliminary injunction hearing to begin on August 12, 2024 and a permanent
injunction hearing to begin on September 30, 2024. In addition to these regulatory actions, private plaintiffs have filed
suit in the United States District Court for the Northern District of California also seeking to enjoin the transaction. That
case is stayed pending resolution of the FTC’s motion for a preliminary injunction. The Company, Albertsons and C&S
continue to discuss enhancements to the divestiture plan to address issues raised by federal and state regulators.

17. RECENTLY ISSUED ACCOUNTING STANDARDS

In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax

Disclosures.” This guidance amends existing income tax disclosure guidance, primarily requiring more detailed
disclosure for income taxes paid and the effective tax rate reconciliation. The ASU is effective for annual reporting
periods beginning after December 15, 2024, with early adoption permitted and can be applied on either a prospective or
retroactive basis. The Company is currently assessing the effect that adoption of this guidance will have on its
Consolidated Financial Statements.

In November 2023, the FASB issued ASU No. 2023-07, "Segment Reporting (Topic 280): Improvements to
Reportable Segment Disclosures". The amendments improve reportable segment disclosure requirements, primarily
through enhanced disclosures about significant segment expenses. The ASU is effective for annual reporting periods
beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024 with early
adoption permitted and can be applied on either a prospective or retroactive basis. The Company is currently assessing
the effect that adoption of this guidance will have on its Consolidated Financial Statements and segment disclosures.

18. SUBSEQUENT EVENTS

In the first quarter of 2024, the Company fully exited its position in a Level 1 equity investment, receiving proceeds

totaling approximately $303 and resulting in a gain.

On March 18, 2024, the Company announced a definitive agreement for the sale of its Kroger Specialty Pharmacy

business, subject to customary closing conditions and any regulatory reviews, to CarelonRx, a subsidiary of Elevance
Health, for approximately $485. The transaction is expected to result in a gain, and it is expected to close in the second
half of 2024.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

ITEM 9A. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.

As of February 3, 2024, our Chief Executive Officer and Interim 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 Interim Chief Financial Officer concluded that
the Company’s disclosure controls and procedures were effective as of February 3, 2024.

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. There have been no material
additional implementations of modules during the quarter ended February 3, 2024. 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
February 3, 2024.

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 Interim 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 February 3, 2024.

The effectiveness of the Company’s internal control over financial reporting as of February 3, 2024, 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.

In the fourth quarter of 2023, no director or officer (as defined in Exchange Act Rule 16a-1(f)) of the Company
adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement for the purchase or
sale of securities of the Company, within the meaning of Item 408 of Regulation S-K.

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 2023 (the
“2024 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 2024 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)

Number of securities to Weighted-average
exercise price of
be issued upon exercise
of outstanding options,
outstanding options,
warrants and rights(1) warrants and rights(1)

remaining available for future
issuance under equity
compensation plans
(excluding securities
reflected in column (a))

18,264,812 $

33.11

39,807,196

— $
18,264,812 $

—
33.11

—
39,807,196

(1) The total number of securities reported includes the maximum number of common shares, 2,847,266, 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 2024 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.

The remainder of the information required by this Item is set forth in the section entitled Beneficial Ownership of

Common Stock in the 2024 proxy statement and is hereby incorporated by reference into this Form 10-K.

100

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 2024 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 2024 proxy statement and is hereby incorporated by reference into this Form 10-K.

101

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

PART IV

(a)1.†

Financial Statements:
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
Consolidated Balance Sheets as of February 3, 2024 and January 28, 2023
Consolidated Statements of Operations for the years ended February 3, 2024, January 28, 2023 and January

29, 2022

Consolidated Statements of Comprehensive Income for the years ended February 3, 2024, January 28, 2023

and January 29, 2022
Consolidated Statements of Cash Flows for the years ended February 3, 2024, January 28, 2023 and January
29, 2022

Consolidated Statement of Changes in Shareholders’ Equity for the years ended February 3, 2024, January

28, 2023 and January 29, 2022

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

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.

3.1

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.

3.2

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.

4.1

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.

4.2

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.

10.1*

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.

10.2*

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.

10.3*

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.

10.4*

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.

10.5*

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.

10.6

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.

102

10.7

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.

10.8

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.

10.9

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.

10.10

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.

10.11*

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.

10.12*

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.

10.13*

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.

10.14*

10.15*

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.

10.16*

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.

10.17*

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.

21.1

Subsidiaries of the Registrant.

23.1

Consent of Independent Registered Public Accounting Firm.

24.1

Powers of Attorney.

31.1

Rule 13a-14(a)/15d-14(a) Certification.

31.2

Rule 13a-14(a)/15d-14(a) Certification.

32.1

Section 1350 Certifications.

The Kroger Co. Policy on Incentive Based Compensation Recovery

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* Management contract or compensatory plan or arrangement.
† Filed herewith.

ITEM 16. FORM 10-K SUMMARY.

Not Applicable.

104

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: April 2, 2024

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 2nd of April 2024.

/s/ Todd A. Foley
Todd A. Foley

/s/ Brian W. Nichols
Brian W. Nichols

*
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 Interim Chief Financial Officer

(principal financial officer)

Vice President, Corporate Controller and Assistant Treasurer

(principal accounting officer)

Director

Chairman of the Board and Chief Executive Officer

Director

105

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

Timothy A. Massa
Senior Vice President and
Chief People Officer

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

Todd A. Foley
Senior Vice President and
Interim Chief Financial Officer

W. Rodney McMullen
Chairman of the Board and
Chief Executive Officer

Gabriel Arreaga
Senior Vice President

Valerie L. Jabbar
Senior Vice President

Brian W. Nichols
Vice President,
Corporate Controller

Yael Cosset
Senior Vice President and
Chief Information Officer

Kenneth C. Kimball
Senior Vice President

Christine S. Wheatley
Senior Vice President, Secretary
and General Counsel

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

Brent Stewart
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

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www.thekrogerco.com

The Kroger Co.

1014 Vine Street · Cincinnati, Ohio 45202 · 513-762-4000