Note 9
9 SHARE-BASED COMPENSATION
2005 1
Share option plans
Main characteristics
In 2005 Ahold had two types of share-based compensation plans: (a) share option plans and (b) a performance share grant
plan. In addition, in 2004 a restricted shares program was in place, which ended January 2, 2005. Furthermore, shares are
incidentally granted to employees as part of their remuneration. Total share-based compensation expenses, which are fully
recognized in the Group Support Office segment, were as follows:
2004
Share option plans
17
11
2004-2006 Performance Share Grant
7
7
Granted shares
1
5
Total share-based compensation expenses
25
23
As set out in Note 36, all share option grants from before November 7, 2002 and share option grants that were fully vested at
January 1, 2005 are accounted for using the intrinsic value method. Because the share options in Ahold's option plans do not
have an intrinsic value at the grant date, no expenses have been recognized for these grants.
Ahold does not hold any of its own shares to cover the share-based compensation plans, as it is Ahold's current policy to issue
new shares for these plans.
Effective 2005 Ahold has one global share option plan with a uniform set of rules and conditions (the "2005 Plan") for all
participants, except members of the Corporate Executive Board. The term of the 2005 share options is eight years and the
exercise of these options is conditional upon continued employment during a three-year vesting period. Upon termination of
employment, share options that have vested can be exercised during four weeks after termination and are forfeited thereafter,
while share options that have not vested will be forfeited immediately. Upon termination of employment due to retirement,
disability or death all share options are exercisable during their relevant exercise periods. Also effective 2005, share options
are granted on the first Monday in April of any given year. The exercise price of each share option equals the closing market
price of Ahold's common shares at Euronext Amsterdam on the last stock exchange trading day prior to the grant date.
A separate plan applies to members of the Corporate Executive Board. Beginning with the share option grant made in 2005, all
option grants to members of the Corporate Executive Board are subject to performance criteria (measured with EVA) at vesting.
Other characteristics of the plan are the same as for the 2005 Plan described above. Details of the Corporate Executive Board
plan are described in the "Remuneration" section of this annual report.
Until January 2, 2005 Ahold had three share option plans (the Dutch, U.S. and International Share Option Plans (collectively
the "Plans")). Under these Plans, participants were granted share options with either a five- or ten-year term, generally
exercisable after three years. Share options were granted on the first business day of each year and the exercise price of
each share option equaled the closing market price of Ahold's common shares on the previous business day.
Upon termination of employment, all share options granted under the Dutch Plan can be exercised within four weeks after
termination and are forfeited thereafter. Share options granted under the U.S. and International Plan can, upon termination
of employment, be exercised within four weeks after termination provided they have vested and are forfeited thereafter, while
share options that have not vested will be forfeited immediately. Under the Plans, upon termination of employment due to
retirement, disability or death all share options are exercisable during their relevant exercise periods.
During the years presented Ahold followed the practice in the Netherlands, recommended by VNO-NCW (Dutch employers
association), of not granting options exercisable into a number of shares that exceeds a yearly approximate maximum of 1%
of the issued and outstanding common shares, or 15.5 million as of January 1, 2006. From 1997 until 2003, the number of
share options granted each year was dependent on the growth in basic net income (loss) available for common shareholders
during the most recent year as compared to the immediately preceding year. In 2004 and 2005, the grants made were at the
discretion of the Corporate Executive Board and approved by the Supervisory Board.
AHOLD ANNUAL REPORT 2005 119
