Pay for Kroger Co.'s CEO fell again as the grocery chain's sales and profit growth fell below tough targets in a choppy economy.
An Associated Press analysis of a regulatory filing Friday shows that David Dillon, chairman and CEO of the nation's largest traditional grocer, received compensation for 2010 valued at $5.4 million. That's down 19 percent from 2009, and the third straight year in which Dillon's largely performance-based pay fell.
The 60-year-old CEO's compensation has dropped about 40 percent in that time, from $9.09 million in 2007.
Kroger outperformed most competitors last year, with revenue up 7.1 percent to a Kroger-record $82.2 billion. Earnings per share were $1.74, up from only 11 cents for 2009 when Kroger took a charge for the decline in value of its Ralphs division in California. Revenue at stores open at least 15 months, a key retail indicator, increased 2.8 percent excluding fuel.
However, the company target was 3 percent to 4 percent growth, and earnings and other undisclosed strategic measures were also below goals. The company's leaders did reach a fuel growth target, the Security and Exchange Commission filing states.
"In sum, the committee believes our management produced outstanding results in 2010, but we did not achieve our aggressive business plan objectives for sales, earnings and our strategic plan," the compensation committee stated in the report.
The filings shows Dillon's annual salary got a 1 percent bump to $1.25 million. But his bonus fell 35 percent to about $808,000 and the value of his stock and option awards fell 19 percent to $3.27 million. He received perks worth $58,027, mainly for life insurance premiums.
Kroger has focused on building customer loyalty in a weak economy as consumers have seen their household budgets squeezed by the recession, unemployment and jumping gas prices. The company sends out special coupons for regular shoppers, holds sales such as offering rebates for buying featured items, and has increased gas rewards while expanding its number of store gas stations and a tie-in with Shell Oil.
The company operates more than 2,400 groceries in 31 states. Its annual shareholders meeting will be June 23 in Cincinnati.
Dillon, a native of Hutchinson, Kansas, joined Kroger when his family's Dillon Cos. grocery chain was acquired by the Cincinnati-based company. He became CEO in 2003 and was elected chairman in 2004.
The Associated Press formula calculates an executive's total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and options awarded to the executive during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the SEC.