Notes to the
consolidated
financial statements
continued
20 Equity attributable to common shareholders continued
Overview
Business review
Governance
Financials
Investors
Ahold Delhaize Annual Report 2016
On March 14, 2016, the merger between Ahold and Delhaize, including a capital repayment and reverse stock split, was approved at an
Extraordinary General Meeting of Shareholders. The merger between Ahold and Delhaize became effective on July 24, 2016.
As consideration, Delhaize shareholders received 4.75 Ahold common shares for each issued and outstanding Delhaize common share, which
increased the number of common shares outstanding by 496,000,577 shares.
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. The Option Agreement entitles
SAC, under certain circumstances, to acquire cumulative preferred shares from the Company up to a total par value that is equal to the total par
value of all issued and outstanding shares of Ahold Delhaize’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 one vote 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.
Share-based payments
Share-based payments recognized in equity in the amount of €74 million (2015: €66 million) relate to the 2016 GRO share-based compensation
expenses (see Note 32) and the associated current and deferred income taxes, as well as an amount attributable to the purchase consideration for
replacement awards issued (see Note 4).
On July 18, 2016, every 17 issued common shares were consolidated into 16 common shares, which reduced the total number of common shares
outstanding by 48,507,004 shares. The capital repayment of €1.29 per remaining share, €1,001 million in the aggregate (excluding transaction
costs) was paid on July 21, 2016.
On January 9, 2017, the Company commenced the €1 billion share buyback program that was announced on December 7, 2016. The program is
expected to be completed before the end of 2017.
Cumulative preferred shares
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. However, according to
Dutch law, a response device is limited in time and therefore cannot permanently block a take-over of the company concerned. Instead, it aims
to facilitate an orderly process in which the interests of the continuity of the company, its shareholders and other stakeholders are safeguarded
in the best way possible. Moreover, outside the scope of a public offer, but also under other circumstances, the ability to issue this class of shares
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 January 1, 2017, or during
2016 and 2015.
