Dive Brief:

• Kroger Chairman and CEO Rodney McMullen earned a total compensation package of $15.7 million during the company’s most recent fiscal year — about 18% less than he took home during fiscal year 2022 — the grocer disclosed in a securities filing on Wednesday.
• McMullen’s pay was lower in fiscal year 2023 than during the year before largely because he received a sharply lower bonus.
• Kroger lowered its chief executive’s pay during a year when its operating profit declined and identical sales growth lost steam compared to the prior year.

Dive Insight:

McMullen’s reduced compensation in 2023 reflects the fact that the supermarket company’s annual performance incentive came in below target, the grocer said in a filing detailing how it paid its most senior executives.

That incentive program, which is based on Kroger’s identical sales growth excluding fuel and adjusted operating profit, paid out at about 24% of target in 2023. The company described its performance during the year, during which it posted same-store sales growth of just under 1% and notched an adjusted operating profit of $5 billion, as “strong.”

By comparison, Kroger achieved same-store sales growth without fuel of 5.6% and an adjusted operating profit of $5.1 billion in 2022 — a performance it defined as “exceptional.” Those results helped the incentive program that year pay out at almost 200% of the company’s target, leading to a larger bonus for McMullen than he received in 2023.

McMullen’s overall pay in fiscal year 2023 included a base salary of $1.4 million, $10 million in stock awards and a bonus of about $673,000. The prior year, he earned $19.2 million, including $10.4 million in stock awards and a $4.1 million bonus.

Like McMullen, Kroger’s other top executives earned lower compensation in 2023 than they did the year before as they also took home smaller bonuses. Those executives include former CFO Gary Millerchip, who left Kroger earlier this year to assume the same role at Costco; Stuart Aitken, Kroger’s chief merchant; Chief Information Officer Yael Cosset; and Timothy Massa, the company’s human resources chief.

Kroger noted that it examines executive compensation at a range of other publicly traded companies, including Albertsons, Costco, Target and Walmart when determining how much to pay its top officials.

Investors pushed up Kroger’s stock price more than 6% in fiscal year 2023 even as the company saw its results soften. Shares in the retailer, which is pressing ahead with a controversial plan to merge with Albertsons, are up almost 20% so far during its current fiscal year, which began Feb. 4.