Long-Term Incentive Awards
Performance Stock Units
Stock Options Warrants
European Plan
Performance Cash Grant
Restricted Stock Units
Other Benefits, Retirement and
Post-employment Benefits
Other Benefits
Retirement and Post-Employment
Benefits
GOVERNANCE
The long-term incentive plan is designed to
retain the Executive Management team and
reward shareholder value creation. Any grant
of LTI is entirely at the discretion of the Board of
Directors upon recommendation of the RC.
In 2014, the long-term incentive plan has been
changed in order to:
Simplify the compensation structure to create
more clarity and improve the link between
pay and performance, and to ensure that
the plans are aligned with the Company's
strategy; and
Establish a more direct link between exec
utive compensation incentives and share
holder value creation.
Due to the impact of the Belgian Transforma
tion Plan that was announced in June 2014,
the Board of Directors decided that the 2014
long term incentive grants for Executive Man
agement would consist solely of Performance
Stock Units. No options were granted.
In 2014 the Company awarded performance
stock units under its Delhaize America 2012
Restricted Stock Unit plan and under the new
Delhaize Group 2014 EU Performance Stock
Unit Plan. The performance stock units are
subject to cliff vesting after 3 years and
Delhaize Group performance conditions.
In 2014, 89 850 performance stock units,
expressed in DG shares, were granted to the
Executive Committee.
The vesting of the awards will occur three
years after the grant date, subject to perfor
mance by the Company against financial tar
gets fixed by the Board of Directors upon grant
and measured over a three-year performance
period. For the 2014 grant, the performance
period will be 2014 until 2016.
As approved by shareholders at the ordinary
shareholder's meeting in 2014, the metric for
assessing performance and determining the
number of performance stock units that will
vest at the end of three years will be based
on a formula to measure Shareholder Value
Creation. This Shareholder Value Creation
formula, measured over a cumulative 3 year
period, is defined as 6 times underlying
EBITDA minus net debt.
The number of ADRs and/or ordinary shares
to be received upon vesting will vary from
0% to 150% of the awarded number of
performance stock units and is a function
of the achieved Shareholder Value Creation
compared to the target.
Following European market practice, stock
options under the non-U.S. 2007 Stock Option
Plan for members of Executive Management
participating in the European-based plan vest
at the end of an approximately three-and-a-
half-year period following the grant date ("cliff
vesting"). No options were granted under this
plan in 2014.
US Stock Incentive Plan
Following U.S. market practice, the Delhaize
Group 2012 U.S. Stock Incentive Plan for exec
utives participating in the Group's U.S. plan
vest in equal annual installments of one third
over a three-year period following the grant
date. No options were granted under this plan
in 2014.
In 2014, 33 418 options were exercised by the
members of the Executive Committee and no
stock options expired.
Beginning in 2014, there have been no further
grants made under the Performance Cash
Plan.
Awards made to Executive Management
related to the 2011 - 2013 performance period
were paid in 2014, and awards made to Exec
utive Management related to the 2012-2014
performance period will be paid in 2015.
The value of the performance cash award
granted for each three year performance
period, referred to as the "target award," is
based on the face value of the award at the
time of the grant, i.e., at the beginning of each
three-year period. For example, the payments
made in 2014 related to the 2011 - 2013 perfor
mance period were based on achievements
against targets set in 2011. The amount of the
cash payment at the end of the three-year
performance period depends on performance
by the Company against Board-approved
financial targets for ROIC and compounded
annual revenue growth. The relative weight
for these metrics is 50% for ROIC and 50% for
revenue growth.
The Board sets these targets each year based
upon its growth expectations for the ensu
ing three-year performance period. These
performance target goals included minimum
threshold performance goals below which no
cash payment will be made, and the maxi
mum award levels if the performance targets
are exceeded.
At the end of each three-year period, actual
ROIC and revenue growth are measured
against the performance targets for both
metrics and the actual pay-out is calculated.
Participants receive between 0% and 150% of
the target cash award in function of achieved
performance. 150% of the target award is paid
when actual performance reaches or exceeds
120% of the performance targets for both ROIC
and revenue growth.
Prior to 2013, U.S. members of Executive
Management received restricted stock units
("RSUs") as part of variable compensation.
The RSUs vested 25% on each of the second,
third, fourth and fifth anniversaries of the date
of grant. There have been no RSU grants after
2012.
For members of Executive Management other
benefits include the use of company-provided
transportation, employee and dependent life
insurance, welfare benefits, cash payments
in connection with stock option grants (for
members of Executive Management residing
in Belgium) and an allowance for financial
planning (for U.S. members of Executive
Management). The Company does not extend
or maintain credit, arrange for the extension of
credit, or renew an extension of credit, in the
form of a personal loan to or for any member
of Executive Management.
Delhaize Group believes these benefits are
appropriate for Executive Management's
responsibilities and believes they are consist
ent with the Group's philosophy and culture
and with current market practices.
The members of Executive Management ben
efit from pension plans, which vary regionally.
In 2014, U.S. members of Executive Manage
ment who were employed by the Company
in 2012 participated in a defined benefit plan
(that has been frozen) and a defined con
tribution plan in their respective operating
companies.
The Belgian members of Executive Man
agement participate in the Belgian plan, a
non-contributory defined contribution plan (the
new plan), which in 2010 replaced a contrib
utory defined benefit plan (the old plan), that
was in part based on the executive's years of
service with the Company.
