O
Remuneration
Equity-based program: Global Reward Opportunity
Under the Global Reward Opportunity (GRO) program,
conditional shares are granted through three- (with a
performance hurdle at grant) and five-year (with a performance
hurdle at grant and vesting) programs. In principle, plan rules
will not be altered during the term of the plan.
Pension
Other contract terms
Loans
Additional arrangements
Employment agreements
Outlook remuneration policy
Governance
AHOLD ANNUAL REPORT 2008 I 41
The Supervisory Board has determined the target value to be
granted under GRO to be 125 percent of base pay. The number
of conditional shares to be granted depends on the at-target
value of the grant, the annual cash incentive plan multiplier of
the preceding year and the average share price during the six
months preceding the date of grant. For example, assuming an
at-target grant value of EUR 100,000 and an annual incentive
multiplier for the preceding year of 0.8, the value to be granted
will be 0.8 x EUR 100,000 EUR 80,000. Assuming
furthermore a six-month average share price preceding the date
of grant of EUR 8.00, the number of shares to be conditionally
granted will be 10,000. Of these 10,000 shares, 5,000 will
be granted through the three-year component and 5,000 will
be granted through the five-year Total Shareholder Return
(TSR)-related component. If the annual incentive multiplier
is zero, 50 percent of the grant value at target will be granted
through the five-year program only.
The relation between the annual cash incentive and the GRO
program, plus the fact that the maximum annual cash incentive
multiplier is capped at 1.25, results in a maximum grant value
of 156.25 percent of base salary.
Three-year component
For Corporate Executive Board members, the shares
conditionally granted (with a performance hurdle at grant) under
this component vest after three years of continued employment.
The performance hurdle at grant is the multiplier of the Annual
Incentive Plan of the preceding year, which is used to determine
the number of shares to be conditionally granted. Corporate
Executive Board members must retain these shares for a period
of five years from the grant date. They are allowed to sell part of
the shares to finance tax due at the date of vesting.
Five-year component
The shares conditionally granted (with a performance hurdle at
both grant and vesting) under this component vest at the end of
the performance period of five years. Performance at vesting is
measured using TSR (share price growth and dividends paid
over the performance period) as benchmarked against the TSR
performance of the peer group. The number of shares that vest
depends on Ahold's ranking within the peer group. No shares
will vest if Ahold ranks below the seventh position of the peer
group, which consists of 12 companies (including Ahold).
The table below indicates the percentage of conditional shares
that could vest based on Ahold's ranking within the peer group:
Corporate Executive Board Members
Rank
Rank
Rank
1
150%
5
70%
9
0%
2
130%
6
50%
10
0%
3
110%
7
25%
11
0%
4
90%
8
0%
12
0%
The pension plan for Corporate Executive Board members is
identical to the pension provision for all other employees of
Ahold in the Netherlands and is referred to as a career average
pension plan. For every service year at Ahold a pension
amounting to 2.25 percent of the pension-bearing base salary
will be granted. The normal retirement age is 65. Under this
plan, each Corporate Executive Board member pays a pension
premium contribution of approximately 1 percent of his or her
pension-bearing salary. Upon appointment to the Corporate
Executive Board, CFO Kimberly Ross continued her participation
in the U.S. pension plan.
Ahold does not provide loans to members of the Corporate
Executive Board. There are no loans outstanding.
In addition to the remuneration allocated to Corporate Executive
Board members, a number of additional arrangements apply.
These include expense allowances, medical insurance and
accident insurance, and are in line with standard practice
in the Netherlands.
The term of appointment for all Corporate Executive Board
members is set at four years. The term of employment is equal
to the term of appointment, unless the Corporate Executive
Board member is reappointed for another term or was already
employed by Ahold immediately prior to the appointment. In
both cases the term of employment is indefinite. If the Company
terminates the employment agreement of any member of the
Corporate Executive Board, the severance payment is, in
principle, limited to one year's base salary. The same applies if
an initial employment agreement for four years is not continued
because the Corporate Executive Board member is not
reappointed. The employment agreements may be terminated by
Ahold with a notice period of 12 months, and by the Corporate
Executive Board member with a notice period of six months.
No major changes to either the policy or the design of the
incentive programs are anticipated for 2009.
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