Remuneration continued
Long-term equity-based
program: Global Reward
Opportunity
Linked to RoC
Annual cash incentive plan:
Executive Committee
Incentive Plan
Linked to TSR
Claw-back
Linked to sustainable retailing
Shareholding requirements and
ownership guidelines
Overview
Business review
Governance
Financials
Investors
Ahold Delhaize Annual Report 2016
The Management Board members participate
in the Company’s long-term incentive program:
Global Reward Opportunity (GRO). Under the
GRO program, shares are granted through
a three-year program. The vesting of these
performance shares is subject to performance
over a period of three years. The GRO program
employs two financial measures: RoC (40%)
and TSR (40%). In addition, a non-financial
performance measure (20%) related to
sustainable retailing targets is included.
In line with market practice, the target value
of the long-term incentives granted under the
program differentiates per role. For the CEO,
the target value is 235% of base salary; for the
Deputy CEO and U.S. COOs, the target value
is 200% of base salary; for the CFO, the target
value is 175% of base salary; and for the COO
Europe the target value is 150% of base salary.
The total GRO award is comprised of three
portions of shares, linked to RoC, TSR and
sustainability targets, respectively.
Of the total GRO award, the first 40% is linked
to a three-year RoC target. Dependent on
performance, the number of shares that
eventually vest may range between zero
and a maximum of 150% of the number of
shares granted.
In anticipation of potential changes to the
performance peer group due to delisting,
mergers or other extraordinary circumstances,
the Supervisory Board has the discretion to
include substitute comparable companies.
The Management Board members participate
in the Executive Committee Incentive Plan
(EIP). The EIP is an annual cash incentive plan
that uses three equally weighted financial
measures: sales growth (30%), underlying
operating margin (30%) and operating cash
flow (30%), as well as personal objectives
(10%). The at-target payout as a percentage
of base salary is 100%, contingent on full
achievement of the objectives, with a cap at
150% of the base salary in the event of above
target performance.
Another 40% of the total GRO award 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 TSR peer group.
The number of shares that vest depends on the
Company’s relative ranking in the peer group.
An independent external adviser determines
the ranking based on TSR performance.
No shares will vest to Management Board
members if the Company ranks below
the seventh position in the performance
peer group. The table below indicates the
percentage of performance shares that vests
based on the Company’s ranking.
A claw-back provision is applicable to the
Management Board members’ annual cash
incentive plan (EIP) as well as the long-term
equity incentive program (GRO).
For the remaining 20% of the total GRO 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. Dependent on
performance, the number of shares that
eventually vest can range between zero
and a maximum of 150% of the number of
shares granted.
Management Board members must retain
the shares awarded under the GRO program
for a period of at least five years from the
grant date. The sale of a portion of the shares
is permissible to finance tax due at the date
of vesting. All members of the Management
Board are required to hold shares in the
Company with a value equal to 150% of their
base salary. The holding may be built up by
retaining all after-tax shares from the GRO
program and does not require personal
share purchases.
Kroger
Costco
Target
Walgreen Boots
Alliance
Best Buy
Staples
Walmart
TSR performance peer group
Tesco
Carrefour
Metro
Casino Guichard
Perrachon
J Sainsbury
W M Morisson
Company ranking
Ranking 1
Ranking 2
Ranking 3
Ranking 4
Ranking 5
Ranking 6
Ranking 7
Ranking 8 - 14
Shares that will vest
as of originally
granted amount
'175%
150%
125%
110%
100%
80%
50%
0%
