- Global Equity Organization

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Geo Chapter meeting
Amsterdam
May 2013
Introducing Ahold; The Corporate Structure…
Supervisory Board
Remuneration
Committee
Selection & Appointment
Committee
Audit
Committee
Corporate Executive Board
D. Boer(CEO)
J. Carr (CFO),
& L. Hijmans van den Bergh (CCGC)
J. McCann
(COO)
Corporate Center
Ahold USA
Operations
Ahold Europe
Operations
200 Employees
Tax
Fin.
Comm
Audit
HR
C&B
Legal
MD
2
Sander
vd Laan
(COO)
In Perspective
Corporate Center &
Management Layers
5,000 employees
Ahold USA approx.
115,000 employees
Giant
Carlisle
Stop & Shop
NE
Giant
Landover
Stop & Shop
Metro NY
Ahold Europe approx.
95,000 employees
Albert Heijn
Etos
Gall & Gall
Albert
Bol.com
3
Ahold Central
Europe
(Retention) Risk Paradox
(financial driven approach vs development driven approach)
Reducing the overall risk as a results
of talent leaving thru probability axis:
Reducing the overall risk as a result of
talents leaving thru impact axis:





Inspiring leadership
Successful succession planning
Training
Clear career opportunities
Mentor programs
Probability = C&B
 Increase effectiveness of
pay/benefits
Reduces Risk
High
Impact = MD & Succession Planning
High
Low
Reduces Risk
4
The Deal
Total Rewards Strategy
Pay:
Benefits
Base Salary
 Short-Term Incentive
 Mid-Term Incentive
 Long-Term Incentive
 Pension
 Car allowance
 Health Insurance etc.

Work
Environment
Learning
and Development




Attracts





Education
Training (on the job)
Career perspective
Mentor programs etc.
5
Building
Supporting Systems
Culture
Supervisor
etc.
Retains
The pay component
Compensation for:
Variable
Long
Short
 Multiyear Incentive
Fixed
Three components:
 Base Salary

 Value creation
Equity
0
 Annual Incentive

 (Out)Performance
Cash
 Doing your job
6
Long-term Incentive Equity Component
Design Objectives







Motivate / retain participants
Reinforce alignment with shareholder interests and identification with Ahold
Simple / easy to understand / administer
Defendable publicly / Tabaksblat
No particularly negative tax consequences (company or participant)
More in line with market practice
Overall, the Long-Term Incentive Program should:




Be regarded as a meaningful component of Total Direct Compensation
Restore credibility of Long-term Incentive component as a pay component
Make it possible for Ahold to attract and retain the best available talent
Create corporate glue
Historical Share Price Development
8
Global Reward Opportunity 2006 - 2012
Package
Base salary € 600,000
GRO grant : 150%
1. Target grant value: € 900,000
2. Prior year bonus multiplier:
example multiple = 1.20
3. Actual grant value:
1.20 x € 900,000 = € 1,080,000
4. Assumed share price: € 10.00
3-year component: # of shares granted: 54,000
Conditional: Waiting period of 3 years
Vesting condition: employment only
5. # of shares to be granted:
€ 1,080,000 / € 10.00 = 108,000
6. 50% of the shares granted thru:
the 3-years conditional
component
and 50% through the TSR
component
Grant Date
T=3
5-year, TSR component: # of Shares: 54,000
The number of performance shares that will vest is determined by a TSR
performance-ranking and the pay out curve.
Holding period for all shares is five years after date of grant
9
T=5
Historical overview
2005
Redesign Pay
Component:
1. benchmarking
top structure
2. New STI (AIP)
3. New LTI (GRO)
Credibility
2006
1. Approval In
AGM for new
Pay Policy CEB
2. Roll out AIP
3. Roll out Gro
2009
1. First vesting of
GRO shares
2. GRO wins ‘best
plan effectiveness’ award
(GEO Paris)
2011
1. Completion first
full GRO cycle
2. Ahold ranks first
in the RTSR
Peer group
resulting in a
150% vesting
3. Transfer to
MSSB as
administrator
GRO
Effectiveness
2012
1. Assessment of
appropriateness
design of variable
pay components
2. Increase
effectiveness by
better
communication
3. Education
4. Simplicity &
transparency.
2013
1. Approval in AGM
for ‘simplified’ GRO
design
2. Roll out of the new
design.
3. New website, new
logo, explanatory
video
1. Assessment of appropriateness design of variable pay components (in light of development in market and new strategy)
 Evaluation remuneration policy of CEB and rest of population
 Delinking AIP from Gro and grant at target (multiplier at 1x)
 Reduce performance period TSR component from five to three years
 Rescind matching share feature
2. Communication
 Development of AIP Performance tracker report in close cooperation with finance (please be referred to documents attached)
 Gro revitalization project
3. Education
 ELM modules on GRO and The Deal
 Periodic education sessions with European/CC Reward teams
4. Simplicity
 Evaluate pay policies (effectiveness current policies, gap analyses, close the gap strategy)
 Align pay policies where possible
 Tailor expat policy to new strategy (local plus, short-term exchange etc.)
Global Reward Opportunity 2013 Package
Base salary € 600,000
Conditional share grant: 50%
Performance share grant: 100%
2. Prior year bonus multiplier:
example multiple = 1.20
3. Actual grant value:
1.20 x € 300,000 = € 360,000
4. Assumed share price: € 10.00
No change
1. Target grant value: € 300,000
3-year component: # of shares granted: 36,000
Conditional: Waiting period of 3 years
Vesting condition: employment only
5. # of shares to be granted:
€ 360,000 / € 10.00 = 36,000
Grant Date
1. Target grant value: € 600,000
T=3
T=5
3-year, RoC: # of Shares: 30,000
2. Assumed share price: € 10.00
3. # of shares to be granted:
€ 600,000 / € 10.00 = 60,000
3-year, TSR component: # of Shares: 30,000
Biggest change
No performance hurdle at grant, 50%
TSR and 50% RoC hurdle at
vesting.
11
Historical Share Price Development
12
Value delivered through the GRO Program
Recent trends on equity programs
Design


Employee share purchase programs
Performance share plans
Financial education


Responsibility Employer vs employee
Financial Planning
Communication


Less technical, more emphasis on intention, objectives
Simplicity

http://www.gro-ahold.com

https://www.youtube.com/watch?feature=player_embedded&v=zUuXBiDrAzY
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