Notes to the consolidated financial statements Annua l Report 2014 100
20 Equity attributable to common shareholders (continued)
Cumulative preferred shares
Legal reserves
Ahold at a glance I Business review I Governance I Financials
Dividends on common shares
On April 16, 2014, the General Meeting of Shareholders approved the dividend over 2013 of €0.47 per common share (€414 million in the aggregate). This dividend was paid on May 2, 2014. The Management Board,
with the approval of the Supervisory Board, proposes that a dividend of €0.48 per common share be paid in 2015 with respect to 2014. This dividend is subject to approval by the General Meeting of Shareholders and has
not been included as a liability on the consolidated balance sheet as of December 28, 2014. The payment of this dividend will not have income tax consequences for the Company,
Share buyback
On December 12, 2014, Ahold completed its share buyback program initially announced as €500 million on February 28, 2013, and subsequently increased to €2 billion on June 4, 2013. Under this program,
153,494,149 of the Company's own shares were repurchased and delivered in 2013 and 2014 (2013: 61,008,851 and 2014: 92,485,298) for a total consideration of €2 billion (2013: €768 million and
2014: €1,232 million), at an average price of €13.03 (2013: €12.58 and 2014: €13.32).
Of the total shares repurchased, 85,000,000 were canceled on June 20, 2014.
Capital repayment and reverse stock split
On January 21, 2014, a capital repayment and reverse stock split was approved at an Extraordinary General Meeting of Shareholders. On March 28, 2014, the reverse stock split became effective. Every 13 existing shares
with a nominal value of €0.30 each were consolidated into 12 new shares with a nominal value of €0.01 each. The capital repayment of €1.14 per remaining share, €1,007 million in the aggregate (excluding transaction
costs), took place on April 3, 2014. The capital reduction attributable to treasury shares, which was €109 million in the aggregate, is reported in Other reserves.
Share-based payments
Share-based payments recognized in equity in the amount of €50 million (2013: €61 million) relate to the 2014 GRO share-based compensation expenses of €43 million (2013: €43 million), see Note 32; the stock options
exercised of €1 million (2013: €6 million); and the current and deferred income taxes recognized in and transferred from equity relating to share-based compensation of €6 million (2013: €12 million), see Note 10.
The Company's Articles of Association provide for the possible issuance of cumulative preferred shares. The Company believes that its ability to issue this class of shares could prevent, or at least delay, an attempt by a
potential bidder to make a hostile takeover bid. Moreover, outside the scope of a public offer, but also in other circumstances, this ability may safeguard the interests of the Company and all stakeholders in the Company and
resist influences that might conflict with those interests by affecting the Company's continuity, independence or identity. No cumulative preferred shares were outstanding as of December 28, 2014, or during 2014 and 2013.
In March 1989, the Company entered into an agreement with Stichting Ahold Continuïteit (SAC) as amended and restated in April 1994, March 1997, December 2001, and December 2003 (the Option Agreement).
Pursuant to the Option Agreement, SAC was granted an option for no consideration to acquire cumulative preferred shares from the Company, from time to time until December 2018, up to a total par value that is equal to the
total par value of all issued and outstanding shares of Ahold's share capital, excluding cumulative preferred shares, at the time of exercising the option. In case the authorized share capital of the Company is amended during
the term of the option, the Option Agreement provides for a corresponding change of the total par value of cumulative preferred shares under option. The holders of the cumulative preferred shares are entitled to 50,000 votes
per share and a cumulative dividend expressed as a percentage of the amount called-up and paid-in to purchase the cumulative preferred shares. The percentage to be applied is the sum of (1) the average basic refinancing
transaction interest rate as set by the European Central Bank - measured by the number of days during which that rate was in force in the fiscal year over which the dividend is paid - plus 2.1%, and (2) the average interest
surcharge rate - measured by the number of days during which that rate was in force in the fiscal year over which the dividend is paid - that would be charged by the largest credit institution in the Netherlands (based on the
balance sheet total as of the close of the fiscal year immediately preceding the fiscal year over which the dividend is paid). The minimum percentage to be applied is 5.75%. Subject to limited exceptions, any potential transfer
of cumulative preferred shares requires the approval of the Management Board. Cumulative preferred shares can only be issued in a registered form. The Company may stipulate that only 25% of the par value will be paid
upon subscription to cumulative preferred shares until payment in full is later required by the Company. SAC would then only be entitled to a market-based interest return on its investment,
SAC is a foundation organized under the laws of the Netherlands. Its statutory purpose is to safeguard the interests of the Company and all stakeholders in the Company and to resist, to the best of its ability, influences that
might conflict with those interests by affecting the Company's continuity, independence or identity. In the case of liquidation, the SAC board of directors will decide on the use of any remaining residual assets. The SAC board
of directors has four members, who are appointed by the board of SAC itself.
In accordance with the Dutch Civil Code and statutory requirements in other countries, legal reserves have to be established in certain circumstances. Legal reserves are not available for distribution to the Company's
shareholders. The currency translation reserve, cash flow hedging reserve and other reserves include non-distributable amounts. Of the total equity as per December 28, 2014, of €4,844 million, an amount of €219 million is
non-distributable (December 29, 2013: €513 million out of total equity of €6,520 million). See Note 8 to the parent company financial statements for more detail on the legal reserves.
