A bonus by any other name…

Kroger ((KR) has been humming along lately with its share price up dramatically over the past year on healthy earnings and even buyout talks. And the grocery store chain disclosed in this proxy filed yesterday that it has rewarded its executives handsomely, handing out some hefty cash bonuses including $2 million to CEO David Dillon.

Everything would be peachy if only those bonuses were tax deductible.

But wait, next year they might be. The company is asking shareholders to approve a measure at its meeting on June 28 that would declare executive bonuses performance based and therefore tax deductible. To convince shareholders of the objective nature of bonuses, the company decided to stop using the term bonus, instead calling it non-equity incentive plan compensation in the current proxy. It’s a trend that we’ve seen at lots of companies this proxy season where the column labled bonus in the summary compensation chart is mysteriously blank, giving the impression, at least to the casual reader, that there was no bonus. So much for the new rules of executive compensation making these things easier to read!

As if that’s not confusing enough, Kroger is vague in defining the criteria for measuring executive performance, saying only that they will have to do well in key categories and show achievement of strategic initiatives.

Its also unclear how much in cash incentives Kroger is willing to dole out. The shareholder proposal says that no single bonus may exceed $5 million. But, they add, executives can earn more than one bonus per year. No one can know if shareholders will endorse big bonuses for Kroger executives, but with the share price hovering around a 52-week-high now seems like as good a time as any to ask.