Share-based compensation

In 2007, Ahold’s share-based compensation program consisted of a conditional share grant program (Global Reward Opportunity “GRO”).

In addition, restricted shares are incidentally granted to employees as part of their remuneration. In principle, plan rules will not be altered during the term of the plans. The GRO program, introduced in 2006, replaced the Company’s share option plans. Total share-based compensation expenses were as follows:

2007 2006

GRO program 17 9

Restricted shares 6 1

Share option plans 7 8

2004–2006 Performance Share Grant – 3

Total share-based compensation expenses 30 21

At December 30, 2007 the Company held 19,965,205 of its own shares for delivery under share-based compensation programs (December 31, 2006: nil).

For the share-based compensation expenses allocable to the individual Corporate Executive Board members, see Note 31.

Conditional share grant program (GRO) Main characteristics

Under the GRO program, introduced in 2006, Ahold shares are granted through a mid-term (three-year) and a long-term (five-year) program.

The number of conditional shares to be granted depends on the at-target value, the annual incentive multiplier of the preceding year and the average share price for six months preceding the date of the grant. The conditional shares granted under the mid-term component vest after three years of continued employment. The Corporate Executive Board members are not allowed to sell these shares within a period of five years from the grant date, except to finance tax due at the date of vesting. The conditional shares granted through the long-term component vest after a performance period of five years. During this five-year period, performance will be measured using the Total Shareholder Return (“TSR”, share price growth and dividends) of the peer group (refer to “Remuneration” section of this annual report for the composition of the peer group). The table below indicates the percentage of conditional shares that could vest based on the ranking of the Company within the peer group:

Rank 1 2 3 4 5 6 7 8 9 10 11 12

Corporate Executive Board 150% 130% 110% 90% 70% 50% 25% 0% 0% 0% 0% 0%

Other participants 150% 135% 120% 105% 90% 75% 60% 45% 30% 15% 7.5% 0%

For participants in the program other than the Corporate Executive 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, disability or death the same vesting conditions as described above apply. Upon termination of employment without cause (e.g., restructuring or divestiture), a pro rata part of the granted shares will vest on the date of termination of employment.

Note 32

Valuation model and input variables

The weighted average fair value of the conditional shares granted in 2007 amounted to EUR 9.28 and EUR 9.05 per share for the three-year and five-year component, respectively (2006: EUR 6.35 and EUR 6.39, respectively). These fair values are based on the share price on the measurement date (three-year component) and a Monte Carlo simulation model (five-year component). The most important assumptions used in the valuation were as follows:

Weighted average assumptions 2007 2006

Risk-free interest rate 4.2% 3.8%

Volatility 32.4% 37.0%

Assumed annual forfeitures 6.0% 6.0%

Assumed dividend yield 1.3% 0.6%

Expected volatility has been determined as the average of the implied volatility and the historical volatility, whereby the extraordinarily volatile month after February 24, 2003 has been excluded.

Restricted shares

In addition to the shares granted under the GRO program, Ahold granted an at-target number of 950,000 restricted shares with a two-year vesting period in 2007. Half of these shares are conditional shares that vest after two years continued employment and half of these shares are performance shares. The number of performance shares that will vest at the end of the two-year period is based on the average annual incentive multiplier for 2007 and 2008. The fair value of the restricted shares, determined in the same manner as the three-year GRO shares, was EUR 9.44 per share.

Conditional share option plans

In 2005 Ahold had one global share option plan with a uniform set of rules and conditions (the “2005 Plan”) for all participants, except members of the Corporate Executive Board. The term of the 2005 share options is eight years and the exercise of these options is conditional upon continued employment during a three-year vesting period. Upon termination of employment, share options that have vested can be exercised during four weeks after termination and are forfeited thereafter, while share options that have not vested will be forfeited immediately. In 2005, share options were granted on the first Monday in April and the exercise price of each share option equaled the closing market price of Ahold’s common shares on the last trading day prior to the grant date. A separate plan applies to members of the Corporate Executive Board. The share option grant made in 2005 to members of the Corporate Executive Board is subject to a performance criterion at vesting, being the average economic value added improvement versus targeted improvement over the three financial years prior to vesting. The vested number of options will range from 80% to 120% of the targeted number of options depending on performance against the vesting criteria. When performance against the vesting criteria is below 80% of target, zero options will vest. Other characteristics of the plan are the same as for the 2005 Plan described above.

Until January 2, 2005 Ahold had three share option plans (the Dutch, U.S. and International Share Option Plans (collectively the “Plans”)).

Under these Plans, participants were granted share options with either a five- or ten-year term, generally exercisable after three years.

Share options were granted on the first business day of each year and the exercise price of each share option equaled the closing market price of Ahold’s common shares on the last trading day prior to the grant date. Upon termination of employment, all share options granted under the Dutch Plan can be exercised within four weeks The following table summarizes the status of the GRO program during 2007 for the individual Corporate Executive Board members and for all other employees in the aggregate:

Non vested at the Non vested at

beginning of 2007 Granted Vested Forfeited the end of 2007

J.F. Rishton

Three-year 2006 grant 34,924 – – – 34,924

Five-year 2006 grant 34,924 – – – 34,924

Three-year 2007 grant – 35,268 – – 35,268

Five-year 2007 grant – 35,268 – – 35,268

P.N. Wakkie

Three-year 2006 grant 29,987 – – – 29,987

Five-year 2006 grant 29,987 – – – 29,987

Three-year 2007 grant – 24,226 – – 24,226

Five-year 2007 grant – 24,226 – – 24,226

A.D. Boer

Three-year 2006 grant 28,963 – – – 28,963

Five-year 2006 grant 28,963 – – – 28,963

Three-year 2007 grant – 39,779 – – 39,779

Five-year 2007 grant – 39,779 – – 39,779

A.C. Moberg

Three-year 2006 grant 32,516 – 13,469 19,047 –

Five-year 2006 grant 32,516 – 2,021 30,495 –

Three-year 2007 grant – – – – –

Five-year 2007 grant – – – – –

Other employees

Three-year 4,814,621 2,011,505 755,163 1,652,313 4,418,650

Five-year 4,814,621 2,011,505 277,781 2,129,695 4,418,650

Total number of shares 9,882,022 4,221,556 1,048,434 3,831,550 9,223,594

Financial statements – Notes to the consolidated financial statements

Note 32

after termination and are forfeited thereafter. Share options granted under the U.S. and International Plans can, upon termination of employment, be exercised within four weeks after termination provided they have vested and are forfeited thereafter, while share options that have not vested will be forfeited immediately.

Under all option plans, upon termination of employment due to retirement, disability or death all share options are exercisable during their relevant exercise periods.

The following table summarizes the status of the share option plans during 2007 for the individual Corporate Executive Board members and for all other employees in the aggregate. After the introduction of GRO, options were discontinued as a remuneration component.

Description of grant Outstanding Outstanding

at the beginning at the end of Exercise Expiration

of 2007 Granted Exercised Forfeited Expired 2007 price date

J.F. Rishton – – – – – – – –

P.N. Wakkie

Five-year 2005 grant¹ 45,000 – – – – 45,000 6.36 04/03/2010

Ten-year 2005 grant¹ 45,000 – – – – 45,000 6.36 04/03/2015

A.D. Boer

Five-year 2003 grant 21,000 – – – 21,000 – 11.65 12/29/2007

Five-year 2004 grant 21,000 – – – – 21,000 5.83 12/28/2008

Eight-year 2005 grant 70,200 – – – – 70,200 6.36 04/03/2013

Ten-year 2001 grant 12,000 – – – – 12,000 34.36 12/31/2010

Ten-year 2002 grant 12,000 – – – – 12,000 32.68 12/30/2011

Ten-year 2003 grant 21,000 – – – – 21,000 11.65 12/29/2012

Ten-year 2004 grant 21,000 – – – – 21,000 5.83 12/28/2013

A.C. Moberg ²

Five-year 2003 grant 500,000 – – – – 500,000 5.20 05/04/2008

Five-year 2004 grant 50,625 – – – – 50,625 5.83 12/28/2008

Five-year 2005 grant¹ 60,750 – – – – 60,750 6.36 04/03/2010

Ten-year 2003 grant 500,000 – – – – 500,000 5.20 05/04/2013

Ten-year 2004 grant 50,625 – – – – 50,625 5.83 12/28/2013

Ten-year 2005 grant¹ 60,750 – – – – 60,750 6.36 04/03/2015

Subtotal Corporate Executive Board members 1,490,950 – – – 21,000 1,469,950

Weighted average exercise price 6.12 – – – 11.65 6.04

Other employees

Five-year 6,692,966 – 1,833,785 666,808 2,592,034 1,600,339 5.89

Eight-year 8,522,875 – 2,828,612 544,225 – 5,150,038 6.36

Ten-year 9,168,101 – 1,338,452 1,196,268 392,216 6,241,165 19.95

Subtotal other employees 24,383,942 – 6,000,849 2,407,301 2,984,250 12,991,542 12.83

Total options 25,874,892 – 6,000,849 2,407,301 3,005,250 14,461,492 12.14

Weighted average exercise price 11.14 – 6.08 15.39 13.02 12.14

Weighted average share price at date of exercise 9.24

1 This represents the maximum number of options (120%-level).

2 In accordance with Anders Moberg’s employment agreement, all outstanding options are exercisable during their relevant exercise periods, but not later than 24 months after termination of employment.

The following table summarizes information about the total number of outstanding share options at December 30, 2007:

Weighted Weighted Weighted Weighted

Number average average Number average average

Exercise price outstanding at exercise remaining exercisable at exercise remaining

(range) December 30, 2007 price contractual years December 30, 2007 price contractual

5.20–6.57 9,563,483 6.08 4.41 3,816,745 5.66 3.18

11.65 1,981,117 11.65 5.00 1,981,117 11.65 5.00

25.38–34.36 2,916,892 32.32 2.90 2,916,892 32.32 2.90

Total 14,461,492 12.14 4.19 8,714,754 15.95 3.50

Note 33

33 Commitments and contingencies