Remuneration (continued)
Pension and other contract terms
Remuneration 2012
Ahold Annual Report 2012 70
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Financials
Investors
Three-year component
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
Rank
1 150%
4 90%
7 25%
O
O
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2 130%
5 70%
•vO
cN
O
CO
11 0%
3 110%
6 50%
9 0%
12 0%
An independent external advisor determines the ranking against the
peer group based on TSR performance.
Pension
The pension plan for Corporate Executive Board members is identical
to that of all other Ahold employees in the Netherlands and is referred
to as a career average pension plan. The normal retirement age is 65.
Under this plan, each Corporate Executive Board member pays a
pension premium contribution of approximately 1% of his or her
pension-bearing salary.
During 2012, the Ahold Pension Fund plan was amended. The plan
amendments will become effective in two phases: the first on January
1, 2013, and the second on January 1, 2014. The pension accrual will
be based on an increased age (accrual of future benefits lowered from
2.25% to 2% from January 1, 2014), contributions from participants
will be gradually increased and the income offset component will be
gradually lowered. The employer contribution as well as the
conditional additional funding rules will remain the same.
Other contract terms
Loans
Ahold does not provide loans or advances to members of the
Corporate Executive Board or the Supervisory Board. There are no
loans or advances outstanding. Ahold does not issue guarantees to
the benefit of members of the Corporate Executive Board or the
Supervisory Board. There have been no such guarantees issued.
Additional arrangements
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.
Employment agreements
The term of appointment for all Corporate Executive Board members
is set at four years, while 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 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.
The Remuneration Committee monitors the effectiveness of the
remuneration policy and its implementation. The Committee advises
the Supervisory Board on target-setting and monitors the (individual)
achievement of the targets by members of the Corporate Executive
Board. As a principle, targets are aspirational, though realistic, and
should be based on historical performance and operational and
strategic objectives. They should also contribute to the realization of
long-term objectives, taking into account the Company's risk profile.
The details of (individual) remuneration to members of the Corporate
Executive Board are outlined in Notes 31 and 32 to the consolidated
financial statements and are in accordance with accounting standards.
During 2012 the members of the Corporate Executive Board did not
receive any severance pay or other special remuneration. Overall, in
2012, the remuneration to the members of the Corporate Executive
Board was in line with the policy.
