o www.ahold.com/reports2009
Remuneration - continued
Governance
Wal-Mart Stores, Inc.
Carrefour S.A.
Metro A.G.
Tesco PLC
Costco Wholesale Corporation
The Kroger Co.
Target Corporation
Safeway Inc.
SuperValu Inc.
Delhaize Brothers and Co.
(Delhaize Group)
Staples, Inc.
To anticipate changes to the peer group, a short list of substitutes has been defined.
In selecting the most appropriate replacement, the Supervisory Board uses the same
criteria as was used to select the companies in the current peer group.
Base salary
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 around the 50th percentile.
Annual cash incentive plan
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 claw back provision is embedded in
the rules of the Annual Incentive Plan.
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.
The Supervisory Board has determined the target value to be granted under GRO at
125 percent of base pay. The number of conditional shares to be granted is determined
by 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 €100,000 and an annual
incentive multiplier for the preceding year of 0.8, the value to be granted will be
0.8 x €100,000 €80,000. Assuming, furthermore, a six-month average share price
preceding the date of grant of €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.
Scenario analyses are prepared regularly to estimate possible future outcomes. These
outcomes are included in the annual evaluation of the remuneration policy, each of the
components and the mix of these components (Risk profile of the package).
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.
