BUSINESS

Former No. 2 Kroger exec paid $2.7M to leave quietly

Alexander Coolidge
acoolidge@enquirer.com
Mike Ellis, chief operating officer for Kroger. He was previously a senior vice president. He started his career at the age of 16 at a Fred Meyer store. Photo by Jim Callaway

Former Kroger chief operating officer Mike Ellis was paid $2.7 million in June to quietly resign, the grocer has disclosed.

The Downtown Cincinnati-based supermarket chain this week disclosed a copy of its separation agreement with Ellis along with its quarterly results in a government filing.

As part of the agreement, Ellis’ departure was characterized as a resignation and outstanding stock options that had not vested would become vested. In exchange, Kroger said Ellis could not discuss his retirement with any one besides his attorneys, financial advisers or tax authorities.

“You agree that this agreement, its terms and conditions, and any and all larger circumstances surrounding the separation of your employment shall remain confidential, and you will not disclose their existence or their substance,” the agreement said.

In the agreement, Ellis agreed not to criticize Kroger or disclose company secrets.

“You further agree that you will not at any time in the future disparage or malign Kroger or any of its officers, directors, employees, agents or assigns, or any of their respective management philosophies, direction, values, activities or practices of any kind, in any way in any communications you may have with any third party,” the agreement said. “You will not at any time in the future divulge or disclose in any way to any third party any Kroger trade secrets, business plans, strategies or policies, financial or marketing information, sales or market share information, vendor or supplier information, contractual information, or other confidential company information of any kind whatsoever.”

Kroger agreed to vest Ellis’ outstanding options as part of the agreement. Ellis had options on more than 91,000 shares of company stock as of Kroger’s May 13 proxy. They were worth $2.7 million as of June 29 when Ellis resigned.

Robert K. Rasmussen, a corporate law professor and the J. Thomas McCarthy Trustee Chair in Law and Political Science at the University of Southern California, said Ellis' separation agreement might be a sign that his parting was not amicable. But such non-disclosure, non-disparagement agreements are fairly standard in the corporate world.

"It's very common – it sounds like somebody might have been upset and the company wanted to protect its reputation," Rasmussen said, adding the size of the payment was in line with Ellis' former position in the executive suite.

On June 30, Kroger said Ellis, 57, retired after 40 years with the company, but only 18 months into his tenure as chief operating officer. Kroger officials said Ellis retired “for personal reasons,” adding the long-time Portland, Oregon resident still has family there.

"This filing reflects the terms of (Ellis') voluntary departure," Kroger spokesman Keith Dailey said. "Mike retired after 40 years with Kroger and we continue to wish him all the best."