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Ahold Annual Report 2003
Financial Statements
163
its directors and officers will actually be charged with or convicted of any violation of law, whether any fines will be
imposed upon Ahold or what the final amount of such fines would be or whether or not Ahold will be subject to other
penalties or remedies.
Euronext Amsterdam has investigated whether the Company was late in disclosing the events leading to the
public announcement on February 24, 2003, and, as a result, acted in breach of the Listing and Issuing Rules of
Euronext Amsterdam. Ahold has fully cooperated with Euronext Amsterdam in this investigation and has submitted
information to Euronext Amsterdam in response to its requests. The investigation was completed in January 2004,
pursuant to which Euronext Amsterdam submitted its findings to the Listing and Issuing Rules Advisory Committee for
its advice on this matter. Hearings were held before the Advisory Committee on March 18, 2004, and the Advisory
Committee is expected to issue its advice shortly. Thereafter Euronext Amsterdam will take and make public its final
decision. Ahold cannot predict, with any degree of certainty, the likely outcome. It is possible that the investigation
could lead to a public reprimand or delisting. However, Ahold believes that it is unlikely that if it were found to have
breached the Euronext Amsterdam Listing and Issuing rules any of its securities would be delisted.
The AFM has launched an investigation in February 2003 into possible insider trading with respect to Ahold's
common shares. Although the Company itself is not the subject of the investigation, it has fully cooperated with the
AFM and submitted information to the AFM in response to its request.
In The Netherlands, Ahold is involved in two legal proceedings initiated by the Vereniging van Effectenbezitters
(the Dutch Shareholders' Association) (the "VEB").
The first VEB proceeding is a so-called "annual accounts procedure" (jaarrekeningprocedure). On January 6,
2004, the VEB served Ahold with a writ of summons to appear before the Enterprise Chamber (Ondernemingskamer)
of the Amsterdam Court of Appeals (the "Enterprise Chamber"). The VEB appears to allege that Ahold's annual
accounts for 1998 through 2002 did not comply with the relevant provisions of the Dutch Civil Code and related rules.
The VEB seeks the nullification of those accounts and a restatement of Ahold's accounts and related annual reports
for such periods. Ahold's written response is due on May 13, 2004, which may be postponed to a later date. Ahold
believes that these claims are unfounded and intends to vigorously defend its position.
The second VEB proceeding is a so-called "inquiry procedure" (enqueteprocedure). On February 12, 2004, the
VEB filed a petition with the Enterprise Chamber seeking an inquiry into the policies and affairs of Ahold between
September 27, 1999 and December 18, 2003. The VEB alleges that there are valid reasons to doubt the proper
management of Ahold's affairs during that period. Ahold must submit its written defense by May 17, 2004. Oral
arguments are scheduled to be held before the Enterprise Chamber on June 17, 2004. Ahold intends to contest the
need to hold such an inquiry.
In connection with its acquisition of USF, the Company purchased from AIG Europe (Netherlands) N.V.
("AIG Europe") a Directors, Officers and Corporate Liability Insurance Policy dated June 8, 2000 (the "USF D&O
Policy"). The USF D&O Policy provides coverage with respect to any wrongful acts of directors and officers of USF
committed on or before April 12, 2000 with respect to claims made on or after April 12, 2000 and on or before April
12, 2006. The USF D&O Policy has a limit of USD 100 per claim and in the aggregate.
On April 8, 2004, the Company was served with a summons by AIG Europe to appear in proceedings before the
District Court of Haarlem, The Netherlands. The proceedings relate to an attempt by AIG Europe to rescind the USF
D&O Policy under Article 251 of the Dutch Code of Commerce based on the claim that certain statements made by
the Company and/or USF in connection with the issuance of the USF D&O Policy were not true. If successful, AIG
Europe's action would void the coverage under the USF D&O Policy from inception, as if such policy never existed.
The summons also names as defendants USF and a number of former and current officers and directors of USF.
The Company intends to vigorously contest AIG Europe's claim and to enforce its rights under the USF D&O Policy.
Proceedings regarding terminations
Ahold's former Chief Executive Officer and Chief Financial Officer have each agreed in the context of their separation
that the determination of their severance package, if any, must be left to an impartial body, in this case an arbitration
tribunal, which will be comprised of persons with experience in this area and not having any relationship with either
Ahold or the former Chief Executive Officer and Chief Financial Officer, to ensure complete objectivity of the
proceedings. In December 2003, the former Chief Executive Officer and Chief Financial Officer initiated an
arbitration proceeding which is presently pending and which covers, among other things, claims for severance
payments, reimbursement for bonus amounts and forfeiture of options.
The employment relationship between USF and its former Chief Executive Officer, James L. Miller, who
resigned from this position in May 2003, terminated as of October 1, 2003. On or around February 26, 2004,
Mr. Miller filed an action in the Circuit Court for Baltimore County against Ahold, Ahold USA, USF and various
executive officers and directors of Ahold. In the case, Mr. Miller asserts causes of action for breach of contract,
declaratory judgment, fraudulent inducement, negligent misrepresentation, promissory estoppel, and injunctive relief
with respect to the defendants' alleged improper refusal to pay post-termination benefits and severance. Mr. Miller
seeks an award of compensatory damages of USD 10, punitive damages, attorneys' fees and litigation expenses,
interest, and costs, as well as a declaratory judgment that he is entitled to post-termination benefits and severance
