Note 9
Conditional share grant program (Global Reward Opportunity, GRO)
Main characteristics
Under the GRO program, introduced in 2006, Ahold shares are granted through a mid-term (three-year) and a long-term
(five-year) program. The number of conditional shares to be granted depends on the at-target value, the annual incentive
multiplier of the preceding year and the average share price for six months preceding the date of the grant. The conditional
shares granted under the mid-term component vest after three years continued employment. The Corporate Executive Board
members are not allowed to sell these shares within a period of five years from the grant date. However, the Corporate
Executive Board members are allowed to sell part of the shares to finance tax due at the date of vesting. The conditional
shares granted through the long-term component will vest after a performance period of five years. During this five-year
period, performance will be measured using the Total Shareholder Return ("TSR", share price growth and dividends) of the
peer group (refer to "Remuneration" section of this Annual Report for the composition of the peer group). The table below
indicates the percentage of conditional shares that could vest based on the ranking of the Company within the peer group:
Rank
1
2
3
4
5
6
7
8
9
10
11
12
Corporate Executive Board
Other participants
150%
150%
130%
135%
110%
120%
90%
105%
70%
90%
50%
75%
25%
60%
0%
45%
0%
30%
0%
15%
0%
7.5%
0%
0%
For participants in the program other than the Corporate Executive Board members, the mid-term component of the program
contains a matching feature. For every five shares a participant holds for an additional two years after the vesting date, the
participant will receive one additional share.
Upon termination of employment due to retirement, disability or death, participants are allowed to stay in the plan but will not
receive any new grants. Upon termination of employment without cause (e.g., reorganization or divestiture), a pro rata part of
the granted shares will vest on the date of termination of employment.
The following table summarizes the status of the GRO program during 2006:
Non vested at
Non vested at
beginning of
the end of
2006
Granted
Forfeited
Vested
2006
A.C. Moberg
Three-year component
Five-year component
J. Rishton
Three-year component
Five-year component
P.N. Wakkie
Three-year component
Five-year component
Other participants
Three-year component
Five-year component
Total number of shares
Valuation model and input variables
The weighted average fair value of the conditional shares
granted in 2006 amounted to EUR 6.35 per share for the
three-year component (based on the share price on the
measurement date) and EUR 6.39 per share for the
five-year component (determined using a Monte Carlo
simulation model). The most important assumptions used
in the valuation were as follows:
32,516 - - 32,516
32,516 - - 32,516
- 34,924 - - 34,924
- 34,924 - - 34,924
- 29,987 - - 29,987
- 29,987 - - 29,987
- 5,035,393 180,834 10,975 4,843,584
- 5,035,393 189,843 1,966 4,843,584
- 10,265,640 370,677 12,941 9,882,022
Weighted average assumptions 2006
Risk-free interest rate 3.8%
Volatility 37.0%
Assumed annual forfeitures 6.0%
Assumed dividend yield 0.6%
Expected volatility has been determined as the average of
the implied volatility and the historical volatility, whereby the
extraordinarily volatile month after February 24, 2003 has
been excluded.
Ahold Annual Report 2006 77
