CORPORATE GOVERNANCE
Additional Governance Matters
Related Party Transactions Policy
46 DELHAIZE GROUP ANNUAL REPORT '11
Management's monitoring of internal
control is performed on a continuous
basis. Operating company perfor
mance is measured and compared
to budgets and long-term plans and
key performance indicators which may
identify anomalies indicative of a con
trol failure. In addition, the Company
has implemented a group-wide perfor
mance management system to monitor
and measure performance consistently
across the organization.
The Company has a professional and
independent internal audit team led
by the Chief Audit Officer who reports
functionally to the Audit Committee. The
Audit Committee reviews Internal Audit's
risk assessment and audit plan, and
regularly receives internal audit reports
for review and discussion.
Internal control deficiencies identified by
internal audit are communicated timely
to management and periodic follow up
is performed to ensure the corrective
action has been taken.
The Company's Board of Directors has
the ultimate responsibility for monitoring
the performance of the company and
its internal control. As such, the sepa
rate committees, described herein, have
been formed to monitor various aspects
of the Company's performance; and the
Terms of Reference for each Committee
are available on the Company website.
The Company determined that, as of
December 31, 2011, effective internal
controls were maintained.
In line with the recommendations of the
Belgian Code on Corporate Governance,
the Company adopted a Related Party
Transactions Policy containing require
ments applicable to the members of the
Board and the Executive Management in
addition to the requirements of the con
flicts of interest policy in the Company's
Guide for Ethical Business Conduct, which
is available at www.delhaizegroup.com.
The Company's Related Party Transac
tions Policy is attached as Exhibit F to the
Company's Corporate Governance Char-
ter. The members of senior management
and the directors of the Company and of
its subsidiaries completed a Related Party
Transaction Questionnaire in 2011 for inter
nal control purposes. Further Information
on Related Party Transactions, as defined
under International Financial Reporting
Standards, can be found in Note 3.2 to
the Financial Statements.
Insider Trading and Market Manipulation
Policy
The Company has a Policy Governing
Securities Trading and Prohibiting Mar
ket Manipulation ("Trading Policy") which
reflects the Belgian and U.S. rules of
market abuse (consisting of insider trad
ing and market manipulation). The Com
pany's Trading Policy contains, among
other things, strict trading restrictions
that apply to persons who regularly
have access to material non-public
information. More details concerning the
Company's Trading Policy can be found
in the Company's Corporate Govern
ance Charter. The Company maintains
a list of persons having regular access
to material non-public information and
periodically informed these persons in
2011 about the rules of the Trading Policy
and about upcoming restriction periods
for trading in Company securities.
Disclosure Policy
As recommended by the Belgian Code
on Corporate Governance, the Company
has adopted a Disclosure Policy that
sets out the framework and the guid
ing principles that the Company applies
when disclosing information. This policy
is available at www.delhaizegroup.com.
Compliance with the Belgian Code
on Corporate Governance
In line with the "comply-or-explain" prin
ciple of the Belgian Code on Corporate
Governance, the Company concluded
that the best interests of the Company
and its shareholders are served by vari
ance from the Code in a limited number
of specific cases. In relation to 2011, the
following variance applied:
Provision 4.5 of the Belgian Code on Cor
porate Governance states, among other
things, that directors should not consider
taking more than five directorships in
listed companies. In the opinion of the
Board of Delhaize Group, the mere fact
that a person is a director of more than
five listed companies should not auto
matically disqualify this person as board
member of Delhaize Group. Rather, this
situation should be reviewed on a case-
by-case basis to determine if it is likely
to affect the performance of this person
as director of Delhaize Group. For this
reason, the Board of Delhaize Group
reserves the right to grant a waiver to
this rule upon request of a non-executive
director. When making its decision, the
Board will consider, among other fac
tors, the amount of time the non-exec
utive director will likely have to devote
to the Company. The Board of Directors
granted such a waiver to Baron Van-
steenkiste and Count Goblet d'Alviella,
who both served on the Boards of more
than five listed companies. This waiver
is no longer relevant since Baron Van-
steenkiste has less than five director
ships in listed companies and Count
Goblet d'Alviella resigned from his func
tion as director of the Company as of
July 1st, 2011.
Undertakings Upon Change
of Control over the Company as of
December 31, 2011
Management associates of non-U.S.
operating companies received stock
options issued by the Board of Direc
tors under the Stock Option Plans 2002
to 2007, granting to the beneficiaries
the right to acquire ordinary shares of
the Company. Management associates
of U.S. operating companies received
options, which qualify as warrants
under Belgian law, issued by the Board
of Directors under the Delhaize Group
2002 Stock Incentive Plan, as amended,
granting to the beneficiaries the right to
subscribe to new American Depositary
Receipts of the Company. The General
Meeting of Shareholders approved a
provision of these plans that provide
that in the event of a change of control
over the Company the beneficiaries will
have the right to exercise their options
and warrants, regardless of their vest
ing period. The number of options and
