Note 9
in 2005 and 2004 amounts to EUR 2.30 and EUR 2.12
-
The following table summarizes information about the outstanding share options for all employees at December 31, 2006:
Range of
Number
Weighted
Weighted average
Number
Weighted
Weighted
exercise prices
outstanding at
average
remaining
exercisable at
average
average remaining
EUR
December 31, 2006
exercise price
contractual years
December 31, 2006
exercise price
contractual years
5.20-11.65 21,979,543 7.56
15.18-22.17 396,272 22.17
25.38-29.39 539,975 29.15
30.26-34.36 2,959,102 32.98
Total 25,874,892
4.76 12,859,968 8.41 3.72
0.99 396,272 22.17 0.99
3.03 539,975 29.15 3.03
4.13 2,959,102 32.98 4.13
16,755,317
The aggregate intrinsic value of options exercisable at
December 31, 2006 amounts to EUR 16.
Valuation model and input variables
The weighted average fair value of the share options granted
respectively. These fair values were calculated using the
Black-Scholes-Merton formula and the following
assumptions:
Weighted average assumptions
2005
2004
Expected life of the option (years):
Five-year options
4.0
4.0
Eight-year options
5.5
10-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 into 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.
2004-2006 Performance Share Grant
Main characteristics
Effective January 2004 Ahold launched a one-off share
bonus plan for a limited number of employees, 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 10 companies (including Ahold) with
the same core activities as Ahold. The peer group consists of
the following companies: Sysco Corporation, Wal-Mart
Stores, Inc., Safeway Inc., Delhaize Group, The Kroger Co.,
Casino S.A., Metro A.G., Carrefour S.A. and Tesco PLC. TSR
development is measured over the 2004-2006 period. The
starting value of each of the share prices of the peer group is
defined as the average share price for the last six months of
2003. The ending value is defined as the average share
price for the last six months of 2006, with dividends added.
The PSG plan ended on December 31, 2006 and based on
the relative TSR performance, Ahold ranked 7th in the peer
group. As a consequence no shares have vested under this
plan.
Valuation model and input variables
The fair value of the 2004-2006 Performance Share Grant
has been calculated using a Monte Carlo simulation model.
The most important inputs are the historical volatilities in the
share price of each of the shares of the peer group
companies between January 1, 2001 and December 31,
2003. The fair value resulting from the Monte Carlo
simulation, adjusted for forfeitures, has been recognized
ratably over the three-year period of the plan.
Restricted shares retention agreements for key management
In 2003 Ahold granted restricted shares to certain key
officers under individual key management retention
agreements. The size of the grant was adjusted in 2004 due
to the dilutive effect of the rights issue in December 2003.
Vesting of 868,750 shares and 765,000 shares occurred
in July 2004 and December 2004, respectively. Total
compensation expense has been recognized ratably over
the vesting period of these grants.
Ahold Annual Report 2006 79
