Note 9
2005 1
-
2004 - 2006 Performance Share Grant
Main characteristics
The following table summarizes the status of the share option plans during 2004:
Outstanding
at beginning
of year
Granted
Exercised
Weighted
average
exercise
price
Weighted
average
share price
Forfeited or
expired
Outstanding
at end of
year
5 yr
21,786,134
4,686,294
9,000
5.83
6.17
8,338,410
18,125,018
10 yr
10,610,747
3,692,780
7,750
5.83
5.97
1,738,259
12,557,518
1 Total
32,396,881
8,379,074
16,750
5.83
6.08
10,076,669
30,682,536
Weighted average
exercise price
25.19
5.83
5.83
26.33
19.53
The following table summarizes information about the outstanding share options for all employees at January 1, 2006:
Weighted
Weighted
Number
Weighted
average
Number
Weighted
average
outstanding
average
remaining
exercisable
average
remaining
at January 1,
exercise
contractual
at January 1,
exercise
contractual
Range of Exercise Prices EUR
2006
price
years
2006
price
years
5.20-11.65
22,658,352
7.54
5.77
5,907,361
11.65
4.18
15.18-22.17
723,185
18.77
1.47
723,185
18.77
1.47
25.38-29.39
497,639
29.13
4.03
497,639
29.13
4.03
30.26-34.36
6,822,572
32.82
2.74
5,535,098
32.86
1.98
Total
30,701,748
12,663,283
Valuation model and input variables
The weighted average fair value of the share options granted in 2005 and 2004 amounts to EUR 2.30 and EUR 2.12
respectively. These fair values were calculated using the Black-Scholes-Merton formula and the following assumptions:
WEIGHTED AVERAGE ASSUMPTIONS
2004
Expected life of the option (years):
Five-year options
4.0
4.0
Eight-year options
5.5
Ten-year options
6.0
6.0
Interest rate
3.0%
3.5%
Volatility
43.0%
45.0%
Assumed annual forfeitures
5.0%
5.0%
Assumed dividend yield
2.0%
2.0%
The effects of expected early exercise have been incorporated in the calculation by using an expected life of the share option
that is shorter than the contractual life. Expected volatility has been determined based on historical volatilities, whereby the
extraordinarily volatile month after February 24, 2003 has been excluded.
Effective January 2004 Ahold launched a share bonus program for certain employees, known within Ahold as the 2004-2006
Ahold Performance Share Grant Plan (the "PSG" plan). This is a performance-related share grant plan based on the
development of Ahold's Total Shareholder Return ("TSR") benchmarked against the TSR development of a selected group of
ten companies (including Ahold) with the same core activities as Ahold (the peer group - see the "Remuneration" section of
this Annual Report). TSR development is measured over the 2004-2006 period. The starting value of each of the share prices
AHOLD ANNUAL REPORT 2005 121
