Notes to the
consolidated
financial statements
continued
32 Share-based compensation
Overview
Business review
Governance
Financials
Investors
Ahold Delhaize Annual Report 2016
150%
110%
80%
0%
0%
In 2016, Ahold Delhaize’s share-based compensation program consisted of a share grant program called Global Reward Opportunity (GRO).
Total 2016 GRO share-based compensation expenses were €61 million (2015: €47 million). Ahold Delhaize’s share-based compensation programs
are equity-settled.
GRO program
Main characteristics
A revised GRO program was introduced in 2016. The performance shares granted under this program vest on the day after the annual General
Meeting of Shareholders in the third year after the grant, subject to certain performance conditions. The revised GRO program employs two
financial measures: Return on Capital (RoC) and Total Shareholder Return (TSR), as well as non-financial performance measures related to
sustainable retailing targets. The total GRO award is comprised of three portions of shares. The first 40% is linked to a three-year RoC target.
Depending on performance, the number of shares that eventually vest may range between zero and a maximum of 150% of the number of
shares granted. Another 40% is linked to TSR (share price growth and dividends paid over the performance period), with performance at vesting
benchmarked against the TSR performance of a peer group comprised of 14 companies (refer to the Remuneration section for the composition of
the peer group). The number of shares that vest depends on the Company’s relative ranking in the peer group and may range between zero and
a maximum of 175% of the number of shares granted (refer to table below for the vesting percentages based on Ahold Delhaize’s ranking within
the peer group). For the remaining 20% of the total GRO share award, the performance at vesting is measured using sustainable retailing targets.
This measure relates to the Company’s sustainable retailing strategic ambitions. The targets set under this non-financial performance measure are
both qualitative and quantitative. Depending on performance, the number of shares that eventually vest can range between zero and a maximum
of 150% of the number of shares granted.
The fair value of the shares granted under the GRO program in 2016 at grant date was €97 million, of which €7 million related to Management
Board members. The fair value is expensed over the vesting period of the grants adjusted for expected annual forfeitures of 5% (2015: 5%), excluding
Management Board members. For the share-based compensation expenses allocable to the individual Management Board members, see Note 31.
The fair value of the shares granted under a one-time retention incentive award (refer to Other awards in the paragraph below) was €29 million and
is expensed over the vesting period.
Treatment outstanding performance shares
Shares awarded in previous years under the Ahold GRO program (to former Ahold Management Board members and associates) and the Delhaize
European long-term incentive plan (to former Delhaize Management Board members) have been rolled over in the (new) Ahold Delhaize’s long
term equity-based program (2016 GRO).
Outstanding (non-vested) performance share awards remaining from the Ahold GRO plan have been split into two parts. One part, which is
related to the full performance years prior to the year of the merger (2012, 2013, 2014 and 2015, where applicable), has been assessed against
the performance of Ahold as a standalone company, on the basis of the existing performance measures. Based on the performance realized in
those years, this part of the award has been assessed on the basis of the applicable share programs and converted into restricted Ahold Delhaize
shares. These restricted shares are not subject to additional performance criteria, but will be subject to the remaining vesting period and continued
employment. The other part, which is related to the performance during the year of the merger (2016) and beyond, will be assessed against
the financial measures of Ahold Delhaize’s long-term equity-based plan. The outstanding conditional shares will continue to be subject to the
remaining vesting period and continued employment.
13
0%
14
0%
The table below indicates the percentage of shares that could vest based on Ahold Delhaize’s TSR ranking within the peer group:
2016 GRO program rank 1 2 3 4 5 6 7 8 9 10 11 12
All participants 175% 15o% 125% 110% 100% 80% 5o% 0% 0% 0% 0% 0%
