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ZAANDAM, Netherlands - Ahold yesterday said it had established seven criteria that its new c.e.o. Anders Moberg would have to meet to receive a bonus for 2003.
"If Mr Moberg achieves all of his performance criteria and delivers outstanding performance in 2003, then the maximum bonus will be 250 percent of his base salary," Ahold said in a statement.
The criteria, which will be discussed in Ahold's general shareholders meeting Nov. 26, will be set annually by mutual agreement between Ahold's supervisory board and Moberg.
Criteria for 2004 will be developed as part of Ahold's overall remuneration policy to be presented to shareholders next year.
For the year 2003, the bonus will be calculated pro rata from May 5, 2003, when Moberg began his duties with the international retailer, which is immersed in a massive reorganization stemming from an accounting scandal that was revealed last February.
To obtain a payout, Moberg must fully meet the performance criteria targeted for the seven items that have been grouped into three categories: financial, strategic, and stabilization.
As part of Ahold's "Road to Recovery" program to restore its financial health, the company has redirected its planning process toward maximizing cash flow and reducing debt through more selective capital expenditures and initiatives to improve working capital.
Financial performance criteria is based on projected results that have been set in the three areas that are critical to Ahold's short-term liquidity: improvements in cash flow before financing activities, reduced rolling inventory days,and reduced cash tangible capital expenditures.
On "full achievement of the projected results of these financial performance criteria," Moberg will be entitled to receive a bonus of 40 percent of the maximum bonus for 2003. An outstanding performance would result in Moberg's being entitled to receive 70 percent of the maximum bonus for 2003.
The two criteria relating to Ahold's strategic mission are development of the appropriate corporate strategy for Ahold and its acceptance by the supervisory board, shareholders, and the financial community; and development of a successful financing strategy, and its acceptance by Ahold's supervisory board, banks, and the financial markets. If both strategic objectives are fully achieved, Moberg will be entitled to receive 24 percent of his maximum 2003 bonus amount.
The two criteria regarding the stabilization of aspects of the company's operations are assurance that the internal controls required to put Ahold's house in order are in place through improved financial controls, internal audit procedures, functional reviews, and a return to a normal reporting cycle; and the hiring of new management for U.S. Foodservice.
If the stabilization criteria are fully achieved, Moberg will be entitled to receive 6 percent of the maximum 2003 bonus.
The criteria for bonus compensation for Anders Moberg will be discussed under Item 8 of the agenda of the Annual General Meeting of Ahold Shareholders, to be held in Amsterdam Nov. 26.
All told, Moberg could receive a 2003 bonus of up to 250 percent.