IFRS PRACTICAL IMPLEMENTATION GUIDE AND WORKBOOK

Chapter 34/ Share-Based Payments (IFRS 2)

393

plan ("PSG") . Due to contractual obligations, a very limited number of employees were granted op– tions under the 2005 option plan rules. Furthermore, restricted shares are incidentally granted to em– ployees as part of their remun eration. In principle, plan rules will not be altered during the term of the plans. Total share-based compensation expenses, which are fully recog nized in the Group Supp ort Of– fice segment, were as follows: 2006 2005 2004 GROprogram 9 Share option plans 8 17 I I 2004-2006 Performance Share Grant 3 7 7 Granted shares -l -l --.5. Total share -based compensation expenses ;U 25. U Total compensation cost related to non-vested options and conditional shares not yet recognized at December 31, 2006 is EUR52 , which is expected to be recognized over a weighted-average period of 2.89 years. The company does not hold any of its own shares to cover the share-based compensation pro– grams, as it is the Comp any's current policy to issue new shares for these programs. Co nditiona l sha re grant program (Global Reward Opportunity, GRO) Main Characteristics Under the GRO program, introd uced in 2006, Ahold shares are granted through a midterm (three– year) and long-term (five-year) program. The number of conditional shares to be granted depends on the at-target value, the annual incen tive multiplier of the precedi ng year and the average share price for six month s precedi ng the date of the grant. The conditi ona l shares granted under the midte rm component vest after three years continued employment. The Corporate Executi ve Board members are not allowed to sell these shares within a period of five years from the grant date. However, the Corporate Executive Board members are allowed to sell part of the shares to finan ce tax due at the date of vesting . The conditional shares gra nted through the long-term component will vest after a performance period of five years. During this five-year period, perfo rma nce will be measured using the Total Shareholder Return ("TSR," share price growth and dividends) of the peer group (refer to "Remuneration" sect ion of this Annu al Report for the composition of the peer gro up). The table below indicates the percentage of conditional shares that could vest based on the rankin g of the Company within the peer group: Rank Corporate Executive Board Other participants 1 2. 1 1- 150% 130% 110% 90% 150% 135% 120% 105% .2 Ii 70% 50% 90% 75% Z 25% 60% Ii 0% 45% 2 0% 30% 10 11 0% 0% 15% 7.5% 12 0% 0% For partic ipants in the program other than the Corporate Executiv e Board members, the mid- term component of the program contains a matching feature . For every five shares a participant holds for an additional two years after the vesting date, the participant will receive one additional share. Upon termination of employment due to retirement, disabilit y, or death, participants are allowed to stay in the plan but will not receive any new gra nts. Upon term ination of employment without cause (e.g., reorga nization or divestiture), a pro rata part of the granted shares will vest on the date of termination of employment. The following table summarizes the status of the GRO program during 2006: Non-vested at beeinnin? 0( 2006 Gramed Foifei ted A.C. Moberg Three-year component 32,5 16 Five-year component 32,5 16 J. Rishton Three-year component 34,924 Five-year component 34,924 P.N. Wakkie Three-year component 29,987 Five-year component 29,987 Other participants Three-year component 5,035,393 180,834 Five-year component 5035 393 lliMl Total number of shares 10,265,640 370,677 10,975 1966 12,944 Non-ves ted at the end 0(2006 32,5 16 32,5 16 34,924 34,924 29,987 29,987 4,843,584 4 843584 9,882,022