Remuneration
Ahold's remuneration policy is prepared
in accordance with the Dutch Corporate
Governance Code. It was adopted at the
General Meeting of Shareholders on
May 18, 2006 as required by the Dutch
Corporate Governance Code.
Remuneration Committee
Remuneration policy 2008
Total Direct Compensation
Peer group
Base salary
Annual cash incentive plan
31 www.ahold.com/reports2008
Governance
AHOLD ANNUAL REPORT 2008 40
Further details on employment agreements, individual
remuneration, pension, shares and other interests in the
Company for the Corporate Executive Board members
are outlined in Notes 30 and 31 to the consolidated
financial statements.
The main responsibilities of the Remuneration Committee
include:
Preparing proposals for the Supervisory Board on the
remuneration policy for the Corporate Executive Board
to be adopted by the General Meeting of Shareholders;
Preparing proposals on the remuneration of individual
members of the Corporate Executive Board;
Advising on the level and structure of compensation for
senior personnel other than members of the Corporate
Executive Board.
The Remuneration Committee uses internal and external
advisors for market data and recent developments. In 2008,
external advisors were hired to provide advice regarding market
practices and developments relating to the remuneration policy
and short- and long-term incentive plans. Ultimately, the
Supervisory Board determines the level and composition of the
remuneration components for the individual members of the
Corporate Executive Board.
The current members of the Remuneration Committee are
Supervisory Board members Derk Doijer, Chairman, Mark
McGrath, Stephanie Shern and Judith Sprieser. In 2008, the
Remuneration Committee met five times.
Ahold's remuneration policy is focused on Total Direct
Compensation, which is benchmarked against a pre-defined
peer group.
The basic elements of the Total Direct Compensation provided
to Ahold's Corporate Executive Board members are (1) a base
salary, (2) an annual cash incentive and (3) a long-term,
equity-based program. An important component of the overall
remuneration package is the pension benefit, which is not
regarded as a component of the Total Direct Compensation.
The peer group used to assess the competitiveness of the
overall remuneration provided to the Corporate Executive Board
is the same as that used to benchmark the performance of the
Company. This peer group reflects Ahold's geographic operating
areas and the markets most relevant in relation to the
recruitment and retention of top management. In addition,
peer group companies are selected based on relevant size,
public listing and liquidity of shares.
The peer group:
Carrefour S.A.
Costco Wholesale Corporation
Delhaize Brothers and Co. (Delhaize Group)
The Kroger Co.
Metro AG
Safeway, Inc.
Staples, Inc.
SuperValu, Inc.
Target Corporation
Tesco PLC
Wal-Mart Stores, Inc
To anticipate changes to the peer group, a short list with
substitutes has been defined. In selecting the most appropriate
replacement, the Supervisory Board uses the same criteria as
used to select the companies in the current peer group.
The composition (risk profile) of the existing Total Direct
Compensation levels is taken into account when benchmarking
base salary levels. The target Total Direct Compensation level is
typically targeted at the 50th percentile.
The Corporate Executive Board's annual cash incentive plan
uses three equally weighted measures: net sales growth,
operating margin and return on net assets (RoNA). The at-target
payout as a percentage of base salary is 100 percent,
contingent on full achievement of the individual's objectives,
with a cap at 125 percent of the base salary. Ahold does not
disclose the required performance levels of the measures, as
this is considered commercially sensitive information. A
clawback provision is embedded in the rules of the Annual
Incentive Plan.
