Kroger $1 Billion Stock Repurchase Program Leaves Workers Behind

Company Program Eliminates Key Stakeholders from

Sharing Company Success

Revenue growth and profit levels are at an all time high for the Kroger Company.

Company revenues and profits skyrocketed last year, with the company posting $3.5 billion in operating profits for 2006.

Kroger recently announced that it would divert resources into a program to repurchase $1 billion of Kroger common stock. This repurchase program will lift the value of the company shares and improve shareholder returns.  Clearly, the shareholders will benefit from Kroger’s good performance.  In addition, Kroger also announced that it will pay additional dividends to shareholders on top of increasing its quarterly shareholder dividend by 15.4 percent on March 15, 2007. A $10,000 investment in Kroger two years ago would be worth about $18,000 today – a return of 80 percent.

Kroger executives also have benefited from the company’s good performance.  The Kroger board of directors awarded company CEO David Dillon $7.5 million in salary, bonuses and stock options in 2006, an increase of $1.4 million - more than a 17 percent raise over the previous year.

CEO Dillon attributes much of the company’s success to employees, stating, “We challenged our associates to help us improve our connection with customers.  They accepted the challenge and raised the bar, as [our] market share gains clearly show.” And in fact, since last year Kroger grew its market share in 26 major metropolitan areas where non-union competitor Wal-Mart has a strong presence.

But Kroger Refuses to Share Success with Workers

Yet employees—represented by the United Food and Commercial Workers Union—are encountering Kroger proposals at the collective bargaining table that call for restricting wage increases and would provide less than living wages and undermine current health care benefits which already are inadequate to provide a decent level of health security to its employees.

Kroger has rewarded executives and shareholders, but refuses to treat its employees fairly.

Three years ago, UFCW members were forced to accept wage freezes and benefits reductions on behalf of greater profitability for Kroger.  In Southern California, the adoption of a two-tier wage and benefit system resulted in new hires earning less   Health care coverage for employees dropped dramatically, nearly 50 percent, leaving a number of workers and their families, including children, vulnerable.