Who we are The world around us Business review Governance Financials Sustainability performance Investors Delhaize Annual Report 2017 82

Governance Who we are The world around us Business review Governance Financials Sustainability performance Investors Annual Report 2017 83

Our Management Board and Executive Committee Our Management Board

Executive Committee diversity2 Gender

1 8 Female Male

Dick Boer Frans Muller Jeff Carr Kevin Holt President and Chief Executive Officer Deputy Chief Executive Officer Chief Financial Officer Chief Executive Officer Chairman Management Board and Chief Integration Officer Member Management Board Ahold Delhaize USA Nationality and Executive Committee Member Management Board and Executive Committee Member Management Board has served as Chief Executive Officer Jeff Carr has served as Chief Financial Officer and Executive Committee and Executive Committee of Ahold Delhaize since July 24, 2016. Prior to Frans Muller has served as Deputy Chief of Ahold Delhaize since July 24, 2016. Prior to Effective January 1, 2018, Kevin Holt became the merger between Ahold and Delhaize, he Executive Officer and Chief Integration Officer the merger between Ahold and Delhaize, Jeff Chief Executive Officer Ahold Delhaize 1 4 had served as CEO of Ahold, appointed by the of Ahold Delhaize since July 24, 2016. He was joined Ahold on November 14, 2011, as acting USA. Kevin had been Chief Operating Belgian Dutch Supervisory Board on September 29, 2010, with responsible for Delhaize America, including member of the Management Board and CFO. Officer Ahold USA since October 2016, after an effective date of March 1, 2011. Before that, and Hannaford, on an interim basis Ahold’s shareholders appointed him to the serving as Chief Operating Officer Delhaize Dick had served as Chief Operating Officer from October 2016 until January 2018. Prior to Management Board on April 17, 2012. America since July 24, 2016. Prior to the 2 Ahold Europe since November 6, 2006. the merger between Ahold and Delhaize, Frans merger between Ahold and Delhaize, he was British He began his career at Unilever, and held Dick joined Ahold in 1998 as CEO of Ahold served as President and CEO of senior roles in finance at Associated British Executive Vice President of Delhaize Group Czech Republic and was appointed President from 2013. Before joining Delhaize Group, Frans Foods, Reckitt Benckiser and Grand and Chief Executive Officer of Delhaize 2 had worked for German retailer Metro AG for American and CEO of in 2000. In 2003, he Metropolitan. From 2005 to 2009, he was America, starting in 2014. over 15 years. From 2006 until 2013, he was a became President and CEO of Ahold’s Dutch group finance director and a member of the member of the Metro AG Management Board, Before joining Delhaize Group, Kevin businesses and on May 3, 2007, shareholders board at easyJet. Jeff was then appointed serving as CEO of Metro Cash & Carry from served as president of retail operations 2 Including the members of the appointed him to the Management Board. to the role of group finance director and a 2008 until 2013. for SuperValu. During his tenure there, the Management Board. Prior to joining Ahold, Dick spent more than member of the board at FirstGroup, the leading company owned the Albertsons, Jewel- Earlier, he served in various positions at Metro transport operator in the UK and the United Osco and Save-A-Lot chains and was the 17 years in various retail positions for SHV AG including managing director of Makro, States Jeff has lived and worked in Europe third largest food retailing company in the Holdings N.V. in the Netherlands and abroad member of the board of Metro Cash & Carry and the United States. United States. and for Unigro N.V. International, regional director for Eastern Dick is a board member of the Consumer Europe and Russia, president for Asia Pacific Age: 56 Prior to SuperValu, Kevin worked for three Goods Forum (CGF) and co-sponsor of and Russia / Ukraine and CEO of Metro Group Nationality: British years with Sears Holding Company and the CGF Health and Wellness pillar. He is a Buying. From 1988 to 1997, Frans held various 14 years with Meijer, serving in various member of the advisory board of fashion retailer management and executive positions at leadership positions, including executive G-Star RAW. At the World Economic Forum, KLM Cargo in Amsterdam, Frankfurt, Vienna vice president of retail operations and senior he is governor of the Consumer Industries and Singapore. vice president of information technology / Community and steward of the Future of Frans is president of the European Retail Round services and strategic planning. Health and Healthcare System. Furthermore, Table and serves on the board of directors of Before joining the retail industry, Kevin spent Dick is a member of the supervisory board of the Food Marketing Institute Inc. and Vlerick nine years at NCR delivering technology the Royal Concertgebouw in the Netherlands. Business School. solutions to large and complex organizations. The duties of the Management Board Age: 60 Age: 56 Age: 59 are described under Corporate governance in this Annual Report Nationality: Dutch Nationality: Dutch Nationality: American Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 84

Our Management Board and Executive Committee Our Executive Committee

Wouter Kolk Abbe Luersman Jan Ernst de Groot Marc Croonen Ben Wishart Chief Operating Officer Chief Human Resources Officer Chief Legal Officer Chief Sustainability, Transformation Global Chief Information Officer the Netherlands and Belgium Member Executive Committee Member Executive Committee and Communications Officer Member Executive Committee 1 Abbe Luersman was appointed as Chief Jan Ernst de Groot has served as Chief Legal Ben Wishart became a member of the Member Executive Committee Member Executive Committee Wouter Kolk was appointed Chief Operating Human Resources Officer and member Officer since July 24, 2016. Prior to the merger Marc Croonen has been Ahold Delhaize’s Executive Committee, effective January 1, Officer the Netherlands and Belgium and of Ahold Delhaize’s Executive Committee, of Ahold and Delhaize, he was appointed Chief Sustainability, Transformation and 2018. Ben joined Ahold in 2013 in the role member of the Executive Committee of effective July 24, 2016. She is responsible for Chief Legal Officer and member of Ahold’s Communications Officer since July 24, 2016. of Global Chief Information Officer and has Ahold Delhaize on September 8, 2017. Global Human Resources, including Talent Executive Committee effective February 1, Prior to the merger between Ahold and continued in this role for Ahold Delhaize since and Diversity; Leadership and Development; 2015. He is responsible for Ahold Delhaize’s the merger in 2016. He previously served as Wouter re-joined Ahold in 2013 as EVP Delhaize, he was Executive Vice President and Organizational Effectiveness and Design; and legal affairs, governance and compliance CIO of Morrisons plc and Whitbread plc and Specialty Stores and New Markets at Chief Human Resources Officer at Delhaize Total Rewards. Prior to the merger between functions and product integrity. held various senior Information Technology Albert Heijn following a six-year period as Group starting in 2014. Ahold and Delhaize, Abbe had served as roles at Tesco plc. CEO of international retailer WE Fashion. Before joining Ahold, Jan Ernst was general Before joining Delhaize Group, Marc Ahold’s Chief Human Resources Officer and He became Chief Executive Officer Albert counsel and managing director at TNT was human resources director for Europe, Age: 55 member of the Executive Committee from Heijn in January 2015 and will continue to Express. Prior to that, he worked for KLM the Middle East and Africa at International November 1, 2013. Nationality: British lead Albert Heijn. He first started at Ahold Royal Dutch Airlines in a wide range of Paper from 2012. Between 2010 and 2012, in 1991, and over the next 16 years served Before that, Abbe worked for Unilever, business and corporate roles, most recently he was chief human resources officer at Dexia. where she held various HR leadership roles, as managing director and a member in several international commercial and Marc began his career with the former Artois most recently as head of human resources of the board of management. Jan Ernst general management roles, including brewery. After serving as human resources for Unilever Europe. Prior to Unilever, Abbe started his career at law firm De Brauw Commercial Director Asia-Pacific based in manager there for nine years, he became worked at Whirlpool Corporation, holding Blackstone Westbroek. Singapore, Regional Director Albert Heijn, head of human resources and communication a number of senior roles in human resources, General Manager Gall & Gall and General Jan Ernst is chairman of the supervisory at Volkswagen Belgium in 1995. In 1999, both in the United States and internationally. Manager of . Wouter is a member of the council of Hivos, a supervisory board member he joined Danone as human resources director supervisory boards of the Hortus Botanicus Abbe is a member of the Network of of ADG Dienstengroep and a board member for Northern Europe. From 2001 until 2010, Amsterdam and concert hall Paradiso. Executive Women board of directors, the of the Hermitage Museum Amsterdam. Marc was employed by AB Inbev, including as Age: 51 Catalyst advisory board and the Netherlands Age: 54 head of human resources for Western Europe American Chamber of Commerce board Nationality: Dutch from 2005 onwards. of directors. Nationality: Dutch Age: 57 Age: 50 Nationality: Belgian Nationality: American

1 Wouter Kolk will be nominated for appointment to the Management Board at the 2018 annual General Meeting of Shareholders. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 85

Our Supervisory Board

Supervisory Board diversity Gender

2 10 Female Male

Mats Jansson Jan Hommen Jacques de Vaucleroy René Hooft Graafland Chairman Vice Chairman Vice Chairman Chairman of the Audit, Mats Jansson has served as Chairman Jan Hommen has served on Ahold Delhaize’s Jacques de Vaucleroy has served on Ahold Finance and Risk Committee of Ahold Delhaize’s Supervisory Board Supervisory Board since July 24, 2016, and is Delhaize’s Supervisory Board since July 24, René Hooft Graafland has served on Ahold Nationality since July 24, 2016, and is a member of its a member of the Governance and Nomination 2016, and is a member of the Audit, Finance Delhaize’s Supervisory Board since July 24, Governance and Nomination Committee. Committee and the Audit, Finance and Risk and Risk Committee and the Governance and 2016, and is Chairman of the Audit, Finance Prior to the merger between Ahold and Committee. Prior to the merger between Ahold Nomination Committee. Prior to the merger and Risk Committee. Prior to the merger Delhaize, he served as Chairman of and Delhaize, he served as Chairman of Ahold’s between Ahold and Delhaize, he served on 1 between Ahold and Delhaize, he was Canadian 2 Delhaize’s Board of Directors starting in 2012. Supervisory Board since 2013. Delhaize’s Board of Directors starting in 2005 appointed to the Ahold Supervisory Board 1 American Mats was CEO of the Scandinavian airline Jan was previously Vice Chairman of Ahold’s and was Chairman of its Governance and on April 16, 2014, with effect from January Swedish SAS from 2006 to 2010. Prior to that, he Supervisory Board and served as Chairman Nomination Committee. 1, 2015. served as president and CEO of Axel Johnson of the Audit Committee from 2003 to 2007. Jacques has spent most of his career within René previously held the position of CFO AB, CEO of Axfood, CEO of Karl Fazer Oy and He is the former CEO of KPMG the Netherlands the ING group, where he was a member and member of the executive board of CEO of Catena / Bilia. Mats began his career and was CEO of ING Group N.V., CFO and of the executive board and CEO of ING Heineken N.V. until April 2015. Before being with ICA, holding positions of increasing vice chairman of the board of management Insurance and Investment Management appointed as a member of Heineken’s responsibility over a period of more than of Royal Philips Electronics N.V. and CFO of Europe. Jacques was a member of AXA 4 4 executive board in 2002, he held various Belgian Dutch 20 years and serving as president of ICA Aluminum Company of America Inc. Group’s management committee and CEO of international management positions with the Detaljhandel and deputy CEO and chairman Currently Jan is chairman of the supervisory the company’s Northern, Central and Eastern company in Europe, Asia and Africa. of the group from 1990 to 1994. Europe business unit from 2010 until 2016. board of Koninklijke VolkerWessels N.V., René is vice chairman of the supervisory He also assumed global responsibility for Currently Mats is a member of the JPMorgan chairman of the board of United World College board and chairman of the audit committee the AXA Group’s life and savings and health European Advisory Council, advisor to Prime Nederland, and a member of the supervisory of Wolters Kluwer N.V. Furthermore, he businesses from 2011 until 2016. Public Communications i Sverige AB and board of ProteoNic B.V. He also serves as is a member of the supervisory board advisor to Advent Capital Management LLC. an advisor to Advent International PLC and Currently Jacques is a member of the board and of the audit committee of Koninklijke Age: 66 BlackRock Netherlands. of directors of Swiss Re Ltd, Swiss Re Europe, FrieslandCampina N.V. He is also chairman Fidelity International Ltd and Zabka Polska. of the supervisory board of Royal Theatre Nationality: Swedish Age: 74 He is also a member of the advisory boards Carré and chairman of the board of Nationality: Dutch of Artexis Easyfairs and CVC Belgium. Stichting African Parks Foundation. Age: 57 Age: 62 Nationality: Belgian Nationality: Dutch Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 86

Our Supervisory Board continued

Ben Noteboom Bill McEwan Rob van den Bergh Mark McGrath McGrath has served on Ahold Mary Anne Anne Citrino Citrinohas served on Ahold Chairman of the Governance Chairman of the Chairman of the Sustainability Delhaize’s Supervisory Board since July 24, Delhaize’s Supervisory Board since July 24, and Nomination Committee Remuneration Committee and Innovation Committee 2016, and is a member of the Governance 2016, and is a member of the Audit, Finance Ben Noteboom has served on Ahold Bill McEwan has served on Ahold Delhaize’s Rob van den Bergh has served on Ahold and Nomination Committee and the and Risk Committee. Prior to the merger Delhaize’s Supervisory Board since July 24, Supervisory Board since July 24, 2016, and is Delhaize’s Supervisory Board since July 24, Remuneration Committee. between Ahold and Delhaize, she was 2016, and is Chairman of the Governance and Chairman of the Remuneration Committee and 2016, and is Chairman of the Sustainability He was first appointed to the Ahold appointed to the Ahold Supervisory Board on Nomination Committee and a member of the a member of the Sustainability and Innovation and Innovation Committee and member of the March 14, 2016. Remuneration Committee. Prior to the merger Committee. Prior to the merger between Ahold Remuneration Committee. Prior to the merger Supervisory Board on April 23, 2008. Mark is between Ahold and Delhaize, he was first and Delhaize, he served on Delhaize’s Board of between Ahold and Delhaize, he was first a director emeritus of McKinsey & Company. Mary Anne is a senior advisor to Blackstone. appointed to the Supervisory Board on April Directors as of 2011 and was Chairman of the appointed to the Ahold Supervisory Board on He led the firm’s Americas Consumer Goods She joined the Blackstone Advisory Partners 28, 2009. Remuneration Committee. April 20, 2011. Practice from 1998 until 2004, when he retired Group as senior managing director in 2004. from the company. Mark is a former director Mary Anne was employed at Morgan Stanley Ben is former CEO and chairman of the Bill is the former president and CEO of Rob is former CEO of VNU N.V. Prior to that, he of GATX and Aware Inc. executive board of Randstad Holding N.V., Sobeys Inc., and was a member of the board held various other executive positions within for over 20 years, during which she served to which he was appointed in 2001. He had of directors of its parent company, Empire VNU; he was a member of the executive board Mark serves on the advisory council of the as the global head of consumer products first joined Randstad in 1993 and held various Company Limited. from 1992 and was appointed CEO in 2000. University of Chicago’s Booth Graduate investment banking, co-head of healthcare School of Business. He is a trustee and serves services investment banking, and as a senior management positions during his time Between 1989 and 2000, Bill held a variety Rob is a member of the supervisory boards with the company. on the executive committee of the Chicago mergers and acquisitions analyst. of progressively senior marketing and of Pon Holdings B.V., Iddink Groep B.V. Symphony Orchestra Association. Ben is chairman of the supervisory board merchandising roles with Coca-Cola Limited and Novamedia. He is also a member of the Currently Mary Anne is a director of Dollar of Koninklijke Vopak N.V., chairman of its and Coca-Cola Bottling as well as with The advisory board of CVC Capital Partners and Age: 71 Tree, Inc. and member of its audit committee selection and appointment committee and Great Atlantic and Pacific Tea Company (A&P), member of the Netherlands Committee of Nationality: American and nominating and corporate governance a member of its remuneration committee. both in Canada and in the United States. Human Rights Watch. committee. She is a director of Alcoa, Inc. and a member of its governance and He is also a member of the supervisory Bill served as president of A&P’s Canadian Age: 67 board of Aegon N.V., chairman of its operations before his appointment as president nominating committee and public issues remuneration committee and a member of and chief executive officer of the company’s Nationality: Dutch committee. Mary Anne is also chair of the its risk committee. In addition, he serves U.S. Atlantic Region. audit committee and member of the finance, as a member of the supervisory board investment and technology committee of Bill is a member of the board of Agrifoods Hewlett Packard, Inc. and audit committee of Wolters Kluwer International Cooperative Ltd and Aimia Inc. N.V., and as a member of the boards of the Age: 58 Age: 61 Holland Festival Foundation and the Cancer Nationality: American Center Amsterdam. Nationality: Canadian Age: 59 Nationality: Dutch Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 87

Our Supervisory Board continued

Johnny Thijs Thijshas served on Ahold Delhaize’s Patrick De Maeseneire De Maeseneire has served on Ahold Dominique Leroy has Leroy served on Ahold Supervisory Board since July 24, 2016, and Delhaize’s Supervisory Board since July 24, Delhaize’s Supervisory Board since July 24, is a member of the Remuneration Committee. 2016, and is a member of the Audit, Finance 2016, and is a member of the Sustainability Prior to the merger between Ahold and and Risk Committee. Prior to the merger and Innovation Committee. Prior to the merger Delhaize, he served on Delhaize’s Board of between Ahold and Delhaize, he served on between Ahold and Delhaize, she served on Directors starting in 2014. Johnny was the Delhaize’s Board of Directors starting in 2015. Delhaize’s Board of Directors starting in 2015. former CEO of Belgian Post from 2002 to 2014 Patrick has been the CEO of Jacobs Holding Dominique began working at Belgacom and served as CEO of TerBeke from 2000 AG, major shareholder of Barry Callebaut AG, SA in 2011 as vice president of sales for the to 2002. since 2015. He is also chairman of the board consumer division. In 2012, she held the Johnny started his career in 1974 at of directors of Barry Callebaut. Patrick served position of executive vice president of the Vanderelst N.V. (Rothmans group) as product as CEO of Adecco from 2009 to 2015, and as consumer business unit of Belgacom and was and marketing manager for Belgium. In 1981, CEO of Barry Callebaut from 2002 to 2009. a member of the management committee of he was appointed to the role of marketing and Patrick started his professional career in Belgacom Group. sales manager at Masterfoods N.V. (Mars Inc.) 1980 as a consultant at Arthur Andersen. Prior to this, Dominique worked for 24 years for Belgium, the Netherlands, Germany and Between 1980 and 1997, he held executive at Unilever. She was managing director at France. In 1986, Johnny moved to Côte d’Or- positions at Wang, Apple, Sun International Unilever (Belgium) and a member of the Jacobs Suchard. Five years later he joined and the Belgian TV station VTM. Unilever Benelux management committee. Interbrew N.V. as executive vice president before becoming CEO for Europe, Asia Age: 60 Dominique has been the CEO of Proximus Pacific and Africa from 1995 to 1999. Nationality: Belgian (formerly Belgacom) and a member of the board of directors of Proximus since 2014. Johnny is chairman of the board of directors She also serves as a board member at the of Spadel SA, Corialis, HospitalLogistics and Proximus subsidiaries BICS, Be-Mobile and Recticel, a member of the board of directors Proximus Art. of H. Essers and an advisor to CVC Belgium and Lazard Frères Benelux. In addition, Dominique serves as a board member at Lotus Bakeries and is chair Age: 65 of the international advisory board of the Nationality: Belgian Solvay Brussels School of Economics and Management. She also serves as a member of the supervisory board of Saint Gobain. Age: 53 Nationality: Belgian Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 88

Corporate governance

We have designed our corporate Governance structure Governance structure Koninklijke Ahold Delhaize N.V. (“the Company” governance structure to best or “Ahold Delhaize”) is a public company under General Meeting of Shareholders Audit, Finance and Risk Committee support our business, meet the Dutch law, structured to execute our strategy needs of our stakeholders and and to balance local, regional and global Governance and Nomination Committee comply with laws and regulations. decision-making. Supervisory Board This section contains an overview of our corporate Remuneration Committee In 2017, our Company comprised a Global Support governance structure and includes information Office and five reportable segments: Ahold USA, required under the new Dutch Corporate Sustainability and Innovation Committee Delhaize America, The Netherlands, Belgium Management Board Governance Code, effective January 1, 2017 and Central and Southeastern Europe (CSE) – Executive Committee (Dutch Corporate Governance Code). each of which are made up of a number of local brands. From 2018 onwards, in line with the new management structure effective January 1, 2018, Central and we will combine the Ahold USA and Delhaize Ahold Delhaize The Belgium Southeastern America reportable segments into one reportable USA1 America1 Netherlands segment: Ahold Delhaize USA. See also Note 6 to Europe the consolidated financial statements. 1 Ahold USA and Delhaize America reportable segments have been combined into one reportable segment, Ahold Delhaize USA, Ahold Delhaize has a two-tier board structure with effect from January 1, 2018. with a Supervisory Board and Management The diagram above shows Ahold Delhaize’s The Management Board and Executive Committee Board that are accountable to our shareholders. governance structure. A list of subsidiaries, joint together support our business, meet the needs Our Management Board has ultimate responsibility ventures and associates is included in Note 36 of our stakeholders and ensure we comply with for the overall management of Ahold Delhaize. to the consolidated financial statements. relevant rules and regulations. The Supervisory Board supervises and advises the Management Board. For a more detailed description of the Management Board responsibilities of the Management Board and the The Executive Committee comprises our Executive Committee, see the Rules of Procedure Management Board and other key officers of the and Executive Committee Our Management Board has the responsibility in the Governance section of Ahold Delhaize’s Company, led by the Chief Executive Officer. for the overall management of the Company public website at www.aholddelhaize.com. The Executive Committee has been established to and oversees corporate governance. It is also involve a broader leadership team in the decision- responsible for the actions and decisions of the making process in order to optimize strategic Executive Committee, which manages our general alignment and operational execution while affairs and ensures effective implementation having the flexibility to adapt to developments of the strategy and achievement of the in the business and across the Company and Company’s objectives. the industry. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 89

Corporate governance continued

Composition of the Management Board and the Management Board and the combined Management Board members are appointed and Executive Committee experience and expertise of their members for four-year terms and may be reappointed Supervisory Board The Supervisory Board is responsible for According to our Articles of Association, the should reflect the profile of the Company as it for additional terms not exceeding four years. supervising and advising our Management Board Management Board must consist of at least three relates to nationality, age, education, gender and The Supervisory Board may at any time suspend and overseeing the general course of affairs, members. The current members are: Dick Boer, professional background. This aim for the best a Management Board member and Executive strategy, operational performance and corporate President and Chief Executive Officer; Frans fit, in combination with the availability of qualified Committee member. The other members of the governance of the Company. The Supervisory Muller, Deputy Chief Executive Officer and candidates, has resulted in Ahold Delhaize, as of Executive Committee are appointed, suspended Board is guided in its duties by the interests of the Chief Integration Officer; Jeff Carr, Chief Financial February 27, 2018, having a Management Board in and dismissed by the Supervisory Board, at the Company and the enterprise connected with the Officer; and Kevin Holt, Chief Executive Officer which all four members are male and an Executive proposal of the CEO. Company, taking into consideration the overall Ahold Delhaize USA1. The current members of Committee in which one member is female and Remuneration good of the enterprise and the relevant interests the Executive Committee are the members of the eight members are male. We seek to identify On April 19, 2016, Ahold Delhaize’s General of all its stakeholders. The Supervisory Board Management Board along with Wouter Kolk, Chief potential Board members who would enhance the Meeting of Shareholders adopted our current is responsible for monitoring and assessing its Operating Officer the Netherlands and Belgium; diversity of the Boards in the above-mentioned remuneration policy for Management Board own performance. Abbe Luersman, Chief Human Resources Officer; areas. In order to meet our diversity ambitions members. On April 12, 2017, Ahold Delhaize’s Jan Ernst de Groot, Chief Legal Officer; Marc and comply with statutory guidelines for gender Ahold Delhaize’s Articles of Association require General Meeting of Shareholders adopted an Croonen, Chief Sustainability, Transformation diversity in the coming years, we continue to the approval of the Supervisory Board for certain individual exception to this policy. You can find and Communications Officer; and Ben Wishart1, work to ensure we build robust development and major resolutions proposed to be taken by the details of this policy in Remuneration. For detailed Global Chief Information Officer. succession plans; generate diverse, balanced Management Board, including: information on the individual remuneration of slates; and take the necessary actions to retain On January 1, 2018, Pierre Bouchut stepped Management Board members, see Notes 31 • Issuance of shares our current diverse talents so we can build our down from the Management Board and Executive and 32 to the consolidated financial statements. talent pipeline and drive greater diversity at all • Acquisitions, redemptions, repurchases Committee. He will remain available as an adviser levels in our organization. Possible reappointment schedule of shares, and any reduction in issued and for specific initiatives until July 1, 2018. As of Management Board and outstanding capital January 1, 2018, Ben Wishart became a member Appointment, suspension and dismissal • Allocation of duties within the Management of the Executive Committee. On April 11, 2018, The General Meeting of Shareholders can appoint, Date of first Year of possible Name appointment reappointment Board and the adoption or amendment of the at the annual General Meeting of Shareholders, suspend or dismiss a Management Board Dick Boer May 3, 2007 2019 Rules of Procedure of the Management Board Wouter Kolk will be nominated for appointment to member by an absolute majority of votes cast, Jeff Carr April 17, 2012 2020 and the Executive Committee the Management Board. upon a proposal made by the Supervisory Board. Frans Muller March 14, 20162 2020 If another party makes the proposal, an absolute • Significant changes in the identity or the nature At Ahold Delhaize, we believe that a diverse and 2 majority of votes cast, representing at least one- Kevin Holt March 14, 2016 2020 of the Company or its enterprise fully representative Management Board and third of the issued share capital, is required. If this 2 Effective July 24, 2016. Executive Committee contributes to well-balanced Presidium qualified majority is not achieved, but an absolute decision-making processes and the optimal Evaluation Following the merger between Ahold and majority of the votes exercised was in favor of the functioning of both the Management Board and The Management Board and the Executive Delhaize, a Presidium was introduced that meets proposal, then a second meeting may be held. the Executive Committee. In accordance with Committee conducted a self-assessment by on a monthly basis with the Chief Executive Officer In the second meeting, only an absolute majority provision 2.1.5 of the Dutch Corporate Governance means of a structured dialogue chaired by the and the Deputy Chief Executive Officer and Chief of votes exercised, regardless of the number of Code, Ahold Delhaize’s diversity policy states CEO. Items that were assessed and discussed Integration Officer. The Presidium is composed shares represented at the meeting, is required to that the composition of the Executive Committee included the composition of the Boards, meeting of the Chairman and first Vice Chairman of the adopt the proposal. processes and procedures, discussions and 1 Effective January 1, 2018. decision-making, and team dynamics. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 90

Corporate governance continued

Supervisory Board, Mats Jansson and Jan Conflict of interest Adoption of resolutions Hommen. Its main task is to prepare the agenda of Each member of the Supervisory Board is Shares and shareholders’ rights Subject to certain exceptions provided by Dutch General Meeting of Shareholders Supervisory Board meetings, deal with the content required to immediately report any potential law or our Articles of Association, resolutions Ahold Delhaize’s shareholders exercise their of Supervisory Board meetings and to stay in close conflict of interest to the Chairman of the are passed by an absolute majority of votes cast rights through annual and extraordinary General contact with the CEO and Deputy CEO. Supervisory Board and provide all relevant without a requirement for a quorum. Meetings of Shareholders. We are required information. In the event of a potential conflict More detailed information on the Supervisory to convene an annual General Meeting of Proposals submitted to the agenda by of interest, each member of the Management Board can be found in the Supervisory Board Shareholders in the Netherlands each year, shareholders require an absolute majority Board is required to immediately report this to report. The Rules of Procedure of the Supervisory no later than six months after the end of the of votes cast at the annual General Meeting the Chairman of the Supervisory Board and Board are available in the Governance Company’s financial year. Additional extraordinary of Shareholders representing at least one-third to the other members of the Management Board section of Ahold Delhaize’s public website General Meetings of Shareholders may be of the issued shares. If this qualified majority and provide them with all relevant information. at www.aholddelhaize.com. convened at any time by the Supervisory Board, is not achieved but an absolute majority of the Should a conflict of interest arise, the Supervisory the Management Board, or by one or more votes exercised was in favor of the proposal, Appointment Board or the relevant Management Board shareholders representing at least 10% of the then a second meeting may be held. In the The General Meeting of Shareholders can member may not participate in the discussions issued share capital. second meeting, only an absolute majority of appoint, suspend or dismiss a Supervisory Board and decision-making process on subjects or votes exercised is required to adopt the proposal, member by an absolute majority of votes cast, The agenda for the annual General Meeting transactions relating to the conflict of interest. regardless of the number of shares represented upon a proposal made by the Supervisory Board. of Shareholders must contain certain matters at the meeting (unless the law or our Articles If another party makes the proposal, an absolute We will record any such transactions in the as specified in Ahold Delhaize’s Articles of of Association provide otherwise). majority of votes cast, representing at least one- annual report for the relevant year, with reference Association and under Dutch law, including the third of the issued share capital, is required. If this to the conflict of interest and a confirmation that adoption of our annual financial statements. A resolution to amend the Articles of Association qualified majority is not achieved but an absolute we have complied with best practice provisions The General Meeting of Shareholders is also that would change the rights vested in the holders majority of the votes exercised was in favor of the 2.7.3 and 2.7.4 of the Dutch Corporate Governance entitled to vote on important decisions regarding of a particular class of shares requires the prior proposal, then a second meeting may be held. Code. During 2017, no member of the Supervisory Ahold Delhaize’s identity or character, including approval of a meeting of that particular class. In the second meeting, only an absolute majority Board or the Management Board had a conflict major acquisitions and divestments. A resolution to dissolve the Company may of votes exercised, regardless of the number of of interest that was of material significance to Shareholders are entitled to propose items for be adopted by the annual General Meeting shares represented at the meeting, is required. the Company. the agenda of the annual General Meeting of of Shareholders following a proposal of the A Supervisory Board member is appointed for a In addition, no transactions between the Shareholders provided that they hold at least Management Board made with the approval of four-year term and may be reappointed for another Company and legal or natural persons who 1% of the issued share capital or the shares that the Supervisory Board. Any proposed resolution four-year period. The Supervisory Board member hold at least 10% of the shares in the Company they hold represent a market value of at least to wind up the Company must be disclosed in may subsequently be reappointed again for a occurred in 2017, corresponding to the best €50 million. Proposals for agenda items for the the notice calling the annual General Meeting period of two years, which may be extended by, practice provision 2.7.5 of the Code. annual General Meeting of Shareholders must of Shareholders at which that proposal is to at most, two years. be submitted at least 60 days prior to the date be considered. of the meeting. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 91

Corporate governance continued

Voting rights Cumulative preferred financing shares Cumulative preferred shares SCAD and the members of its board are Each common share entitles its holder to cast one All outstanding cumulative preferred financing As of February 27, 2018, no cumulative preferred independent from the Company. As of February vote. Dutch law prescribes a record date to be shares have been issued to SAPFAA. Holders shares are outstanding. In March 1989, the 27, 2018, the members of the board of SCAD are: set 28 days prior to the date of the annual General of depositary receipts can obtain proxies Company entered into an agreement with the Name Principal or former occupation Meeting of Shareholders to determine whether a from SAPFAA. Dutch foundation Stichting Continuïteit Ahold W.G. van Hassel, Lawyer and former chairman person may attend and exercise the rights relating Delhaize (SCAD, previously named Stichting In accordance with its articles, the board of chairman of Dutch Bar Association to the annual General Meeting of Shareholders. Ahold Continuïteit), as amended and restated SAPFAA consists of three members: one A G.H.N.L. Chairman of Detailhandel Shareholders registered at that date are entitled to in April 1994, March 1997, December 2001, member, one B member and one C member. van Woerkom Nederland attend and to exercise their rights as shareholders and December 2003 (the Option Agreement). The A member is appointed by the general J. van den Belt Former CFO Océ in relation to the annual General Meeting of The Option Agreement was designed to, in meeting of depositary receipt holders, the B Shareholders, regardless of a sale of shares after accordance with the purpose of SCAD under its B. Vree Former CEO APM Terminals member is appointed by the Company and the C the record date. Shareholders may be represented articles, potentially exercise influence in the event Europe member is appointed by a joint resolution of the by written proxy. of a public offer or a potential change of control A member and the B member. As of February 27, For details on Ahold Delhaize’s cumulative over the Company, to safeguard the interests We encourage participation in our General 2018, the members of the board of SAPFAA are: preferred shares, see Note 20 to the consolidated of the Company and all stakeholders in the Meetings of Shareholders. We use Deutsche financial statements. The related documents are Member A: J.L. van der Giessen Company and to potentially avert, to the best of Bank Trust Company Americas, the Depositary available on our website www.aholddelhaize.com. Member B: C.W. de Monchy its ability, influences that might conflict with those for the Company’s American Depositary Receipt interests by affecting the Company’s continuity, Issuance of additional shares (ADR) facility, to enable ADR holders to exercise Member C: R. ter Haar, chairman independence or identity. and preemptive rights their voting rights, which are represented by the Ahold Delhaize pays a mandatory annual dividend Shares may be issued following a resolution by the common shares underlying the ADRs. Pursuant to the Option Agreement, SCAD has on cumulative preferred financing shares, which General Meeting of Shareholders on a proposal been granted an option for no consideration Neither Ahold Delhaize nor any of its subsidiaries is calculated in accordance with the provisions of the Management Board made with the approval to acquire cumulative preferred shares from may cast a vote on any share they hold in the of article 39.4 of the Company’s Articles of of the Supervisory Board. The General Meeting the Company from time to time until December Company. These shares are not taken into Association. For further details on cumulative of Shareholders may resolve to delegate this 2018. The Option Agreement provides for the account for the purpose of determining how many preferred financing shares and the related authority to the Management Board for a period possibility of extension by both parties’ consent. shareholders are represented or how much of voting rights, see Note 22 to the consolidated of time not exceeding five years. A resolution of the At Ahold Delhaize, a decision to extend the Option the share capital is represented at the General financial statements. General Meeting of Shareholders to issue shares, Agreement is at the discretion of the Management Meeting of Shareholders. or to authorize the Management Board to do so, Board, subject to the approval of the Supervisory is also subject to the approval of each class of Holders of depositary receipts of cumulative Board. In December 2017, the Company and shares whose rights would be adversely affected preferred financing shares may attend the SCAD commenced discussions on a possible by the proposed issuance or delegation. On April General Meeting of Shareholders. The voting extension of the Option Agreement, in accordance 12, 2017, the General Meeting of Shareholders rights on the underlying shares may be exercised with its terms which require such discussions to approved a delegation of this authority to the by the Stichting Administratiekantoor Preferente start at least one year prior to the expiration date. Management Board, relating to the issuance and Financierings Aandelen Ahold (SAPFAA), No conclusion has been reached at this time. / or granting of rights to acquire common shares a foundation organized under the laws of up to a maximum of 10% of the issued common the Netherlands. shares through October 12, 2018, and subject to the approval of the Supervisory Board. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 92

Corporate governance continued

Upon the issuance of new common shares, 1. Shareholders’ equity minus the payment Major shareholders The following table lists the shareholders on record holders of Ahold Delhaize’s common shares required to make the acquisition is not less Ahold Delhaize is not directly or indirectly owned in the AFM register on February 27, 2018, that hold have a preemptive right to subscribe to common than the sum of paid-in and called-up capital or controlled by another corporation or by any an interest of 3% or more in the share capital of shares in proportion to the total amount of their and any reserves required by Dutch law or government. The Company does not know of any the Company1. existing holdings of Ahold Delhaize’s common Ahold Delhaize’s Articles of Association; and arrangements that may, at a subsequent date, • BlackRock, Inc – 4.49% shareholding (6.14% shares. According to the Company’s Articles of result in a change of control, except as described 2. Ahold Delhaize and its subsidiaries would voting rights) disclosed on June 21, 2017 Association, this preemptive right does not apply not, as a result, hold a number of shares under Cumulative preferred shares. to any issuance of shares to Ahold Delhaize • DeltaFort Beleggingen I B.V. – 10.82% exceeding a total nominal value of 10% of Significant ownership of voting shares associates. The General Meeting of Shareholders shareholding (3.43% voting rights) disclosed the issued share capital. According to the Dutch Financial Markets 2 may decide to restrict or exclude preemptive on July 25, 2016 The Management Board has been authorized Supervision Act, any person or legal entity who, rights. The General Meeting of Shareholders • NN Group N.V. – 4.89% shareholding (2.54% to acquire a number of common shares in the directly or indirectly, acquires or disposes of may also resolve to designate the Management voting rights) disclosed on August 9, 20172 Company or depositary receipts for shares, as an interest in Ahold Delhaize’s capital or voting Board as the corporate body authorized to restrict permitted within the limits of the law and the rights must immediately give written notice to the • Stichting Administratiekantoor Preferente or exclude preemptive rights for a period not Articles of Association and subject to the approval Netherlands Authority for the Financial Markets Financierings Aandelen Ahold – 14.42% exceeding five years. of the Supervisory Board. Such acquisition of (Autoriteit Financiële Markten or AFM) if the shareholding (5.03% voting rights) disclosed 3 On April 12, 2017, the General Meeting of shares, at the stock exchange or otherwise, will acquisition or disposal causes the percentage of on August 9, 2017 Shareholders delegated to the Management take place at a price between par value and 110% outstanding capital interest or voting rights held by 1 In accordance with the filing requirements, the percentages shown include both direct and indirect capital interests and Board, subject to the approval of the Supervisory of the opening price of the shares at Euronext that person or legal entity to reach, exceed or fall voting rights and both real and potential capital interests and Board, the authority to restrict or exclude the Amsterdam by NYSE Euronext on the date of their below any of the following thresholds: voting rights. Further details can be found at www.afm.nl. preemptive rights of holders of common shares acquisition. The authorization takes into account 3% 5% 10% 15% 20% 2 The interest on record for DeltaFort Beleggingen I B.V. and NN upon the issuance of common shares and / the possibility to cancel the repurchased shares. Group N.V. includes the indirect and / or potential interest from 25% 30% 40% 50% 60% or upon the granting of rights to subscribe for This authorization is valid through October 19, depositary receipts, as well as the direct and real interest from common shares. common shares through October 12, 2018. 2018. Ahold Delhaize may acquire shares in its 75% 95% capital for no consideration or for the purpose 3 SAPFAA holds all outstanding cumulative preferred financing Repurchase by Ahold Delhaize of its The obligation to notify the AFM also applies when shares and it issued corresponding depositary receipts to of transferring these shares to associates investors that were filed under DeltaFort Beleggingen I B.V. own shares the percentage of capital interest or voting rights through share plans or option plans, without such and NN Group N.V. Therefore, in relation to the outstanding Ahold Delhaize may only acquire fully paid shares referred to above changes as a result of a change cumulative preferred financing shares, disclosures are authorization. The share buyback program of of any class in its capital for a consideration in Ahold Delhaize’s total outstanding capital or made by both SAPFAA (for the shares) and by DeltaFort €1 billion that started on January 9, 2017, was Beleggingen I B.V. and NN Group N.V. (for the corresponding following authorization by the General Meeting voting rights. In addition, local rules may apply successfully completed on December 29, 2017. depositary receipts). of Shareholders and subject to certain provisions to investors. In total, 55,166,939 of the Company’s own shares of Dutch law and the Company’s Articles For details on the number of outstanding shares, were repurchased at an average price of €18.13 of Association, if: see Note 20 to the consolidated financial per share. On January 2, 2018, the Company statements. For details on capital structure, listings, commenced the €2 billion share buyback program share performance and dividend policy in relation that was announced on November 8, 2017. to Ahold Delhaize’s common shares, see Investors. The program is expected to be completed before the end of 2018. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 93

Corporate governance continued

Articles of Association External independent auditor The information required by the Decree Article 10 • The information concerning compliance with the Our Articles of Association outline certain of the The General Meeting of Shareholders appoints EU Takeover Directive is included in this Corporate Dutch Corporate Governance Code, as required Company’s basic principles relating to corporate the external independent auditor. The Audit, governance section, in the Investors section, as by article 3 of the Decree, can be found in the governance and organization. The current text Finance and Risk Committee recommends to well as in the notes referred to in these sections or section Compliance with the Dutch Corporate of the Articles of Association is available at the the Supervisory Board the external independent included in the description of any relevant contract. Governance Code. Trade Register of the Chamber of Commerce and auditor to be proposed for (re)appointment by the • The information concerning Ahold Delhaize’s Industry for Amsterdam and on our public website General Meeting of Shareholders. In addition, the Compliance with Dutch Corporate diversity policy, as required by article 3a at www.aholddelhaize.com. Audit, Finance and Risk Committee evaluates and, sub d of the Decree, can be found in the where appropriate, recommends the replacement Governance Code The Articles of Association may be amended by Ahold Delhaize complies with the relevant Management Board and Executive Committee of the external independent auditor. the General Meeting of Shareholders. A resolution principles and best practices of the Dutch and Supervisory Board sections of Corporate to amend the Articles of Association may be On April 12, 2017, the General Meeting of Corporate Governance Code applicable to the governance as well as in the Supervisory Board adopted by an absolute majority of the votes Shareholders appointed PricewaterhouseCoopers Company, in 2017, as reported in the Governance report. cast upon a proposal of the Management Board. Accountants N.V. as external independent auditor section. The Dutch Corporate Governance Code • The information concerning Ahold Delhaize’s risk If another party makes the proposal, an absolute for the Company for the financial year 2017. can be found at www.mccg.nl. management and control frameworks relating to majority of votes cast representing at least one- At the Extraordinary General Meeting of the financial reporting process, as required by third of the issued share capital is required. If this Decree Article 10 EU Shareholders on March 3, 2004, our shareholders article 3a sub a of the Decree, can be found in qualified majority is not achieved but an absolute the relevant section under How we manage risk. Takeover Directive consented to apply the Dutch Corporate majority of the votes is in favor of the proposal, According to the Decree Article 10 EU Takeover Governance Code. Ahold Delhaize continues to • The information regarding the functioning then a second meeting may be held. In the second Directive, we have to report on, among other seek ways to improve its corporate governance, of Ahold Delhaize’s General Meeting of meeting, only an absolute majority of votes, things, our capital structure, restrictions on including by measuring itself against international Shareholders and the authority and rights of our regardless of the number of shares represented voting rights and the transfer of securities, best practice. shareholders, as required by article 3a sub b of at the meeting, is required. significant shareholdings in Ahold Delhaize, the the Decree, can be found in the relevant sections The prior approval of a meeting of holders of a rules governing the appointment and dismissal Corporate Governance statement under Shares and shareholders’ rights. particular class of shares is required for a proposal of members of the Management Board and The Dutch Corporate Governance Code requires • The information regarding the composition and to amend the Articles of Association that makes the Supervisory Board and the amendment of companies to publish a statement concerning functioning of Ahold Delhaize’s Management any change in the rights that vest in the holders the Articles of Association, the powers of the their approach to corporate governance and Board, Executive Committee and Supervisory of shares of that particular class. Management Board (in particular the power to compliance with the Code. This is referred to in Board and its committees, as required by article issue shares or to repurchase shares), significant article 2a of the decree on additional requirements 3a sub c of the Decree, can be found in the Right of inquiry agreements to which Ahold Delhaize is a party and for management reports “Besluit inhoud relevant Management Board and Executive The thresholds for shareholders to exercise the which are put into effect, changed or dissolved bestuursverslag” last amended on January 1, Committee and Supervisory Board sections right of inquiry (het enquêterecht) are based on upon a change of control of Ahold Delhaize 2018 (the Decree). The information required to be included in Corporate governance as well as in article 346 sub clause 1 under c of the Dutch following a takeover bid, and any agreements included in this corporate governance statement the Supervisory Board report. Civil Code, regardless of the current nominal between Ahold Delhaize and the members of as described in articles 3, 3a and 3b of the • The information concerning the inclusion of the share capital of the Company. More information the Management Board or associates providing Decree, which are incorporated and repeated information required by the Decree Article 10 EU on the nominal value of shares can be found for compensation if their employment ceases here by reference, can be found in the following Takeover Directive, as required by article 3b of in Note 20 and Note 22 to the consolidated because of a takeover bid. sections of this Annual Report: financial statements. the Decree, can be found in the section Decree Article 10 EU Takeover Directive. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 94

Supervisory Board report

Dear shareholder, The Supervisory Board operates Composition of the Supervisory I am pleased to present our Supervisory Board Board independently and is responsible Ahold Delhaize’s Supervisory Board determines report for 2017. for supervising and advising our the number of its members. The Supervisory During our first full year as Ahold Delhaize, the Management Board as well as Board profile is published on Ahold Delhaize’s Supervisory Board fulfilled its responsibilities overseeing the general course of public website at www.aholddelhaize.com to supervise and advise the Management affairs, long-term strategy and and is updated regularly. Board and oversee the activities and operational performance of the In accordance with provision 2.1.5 of the Dutch performance of the Company for the benefit Corporate Governance Code, Ahold Delhaize’s of all our stakeholders. Company. The Supervisory Board is Mats Jansson diversity policy states that the composition of the Chairman of the Supervisory Board guided in its duties by the interests The Board put particular focus on delivering of the Company and the enterprise Supervisory Board and the combined experience the synergies we committed to at the time of the and expertise of its members should reflect the merger and overseeing further achievements connected with the Company, taking profile of the Company as it relates to nationality, on the Better Together strategy. During 2017, into consideration the overall good age, education, gender and professional the Management Board provided us with of the enterprise and the relevant background. In addition, the composition of detailed information on the performance of the interests of all its stakeholders. the Board, including its members’ combined business as well as strategic and operational experience, expertise and independence should developments. Throughout the year, we reflect the best fit for Ahold Delhaize’s profile and thoroughly reviewed, discussed and approved strategy. This aim for the best fit, in combination the strategic options presented to us by the with the availability of qualified candidates, has Management Board. resulted in Ahold Delhaize currently having a Supervisory Board in which two members are We also focused on supporting the female and 10 members are male. In order to Management Board in delivering a solid set of meet our diversity ambitions and comply with full year results and are pleased to report that statutory guidelines for gender diversity in the Ahold Delhaize is on track with its integration coming years, we pay close attention to gender and fulfilling its synergy targets. You can find diversity in selection process for new Supervisory more details on our 2017 focus areas and Board members. meetings in this Supervisory Board report. On behalf of the Supervisory Board, Mats Jansson Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 95

Supervisory Board report continued

Rules of Procedure Ongoing education Evaluation The Rules of Procedure of the Supervisory Board New members of our Supervisory Board attend a The Supervisory Board conducted a self- state that if a member is concurrently a member of multiple-day induction program at our businesses assessment in early 2018. The Board assessed the another company’s supervisory board, the main in the U.S. and the Netherlands as well as at the performance of its committees and its individual duties arising from and / or the number and nature Global Support Office in Zaandam. During the members, as well as the performance of the of any other supervisory board memberships onboarding program, new Supervisory Board Management Board and its individual members, must not conflict or interfere with that individual’s members are briefed on their responsibilities and during a private meeting. The Supervisory Board duties as a member of Ahold Delhaize’s informed by senior management on the financial, was positive, overall, about the performance Supervisory Board. social, corporate responsibility, human resources, of its committees, the Management Board and Appointment governance, legal and reporting affairs of our satisfied with the performance of the Supervisory At the annual General Meeting of Shareholders Company and its businesses. Throughout the year, Board. The Board determined that it has made on April 12, 2017, Jan Hommen was reappointed all members of our Supervisory Board visit several good progress in its continuous development as for his second four-year term and Ben Noteboom of our brands, operations and other segments of a team, has a balanced composition that suits was reappointed for his third four-year term. the Company to gain greater familiarity with senior the Company in its current stage and works well In addition, Stephanie Shern stepped down from management and to develop deeper knowledge together in an open atmosphere. As part of the the Supervisory Board after the annual General of local operations, opportunities and challenges outcome of the assessment, the Supervisory Meeting on April 12, 2017, after having served for of the business. In addition, multiple in-depth Board will keep a continuous focus on its own size 12 years. On August 8, 2017, Jack Stahl resigned workshops are held on various topics to allow and structure in order to comply with the highest from the Supervisory Board after having served the Supervisory Board members to gain greater standards of excellence and governance. one year at Ahold Delhaize and eight years on the insight into key priorities of Ahold Delhaize. Board of Directors of Delhaize. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 96

Supervisory Board report continued

Supervisory Board profile Experience Core competencies General business Social/ Name management International Retail Consumer goods Online / digital Finance employment Sustainability Disclosure Marketing IT Mats Jansson * * * * * Jan Hommen * * * * * * Jacques de Vaucleroy * * * * René Hooft Graafland * * * * * * Ben Noteboom * * * * * * Bill McEwan * * * * * * * Rob van den Bergh * * * * * Mark McGrath * * Mary Anne Citrino * * * Johnny Thijs * * * * * * Patrick De Maeseneire * * * * * * * Dominique Leroy * * * * * * * Supervisory Board1 possible reappointment schedule Name Date of first appointment Reappointment for second and third term End of current appointment Mats Jansson March 14, 20163 2020 Jan Hommen October 1, 2013 2017 2021 Jacques de Vaucleroy March 14, 20163 2020 René Hooft Graafland April 16, 20142 2018 Ben Noteboom April 28, 2009 2013 / 2017 2021 Bill McEwan March 14, 20163 2020 Rob van den Bergh April 20, 2011 2015 2019 Mark McGrath April 23, 2008 2012 / 2016 2020 Mary Anne Citrino March 14, 2016 2020 Johnny Thijs March 14, 20163 2020 Patrick De Maeseneire March 14, 20163 2020 Dominique Leroy March 14, 20163 2020

1 In its decision to nominate its members for reappointment, the Supervisory Board will take into account their tenure in the Board of Directors of the former Delhaize Group, prior to their appointment to the Supervisory Board. 2 Effective January 1, 2015. 3 Effective July 24, 2016. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 97

Supervisory Board report continued

• January 2017: The Supervisory Board held a The Supervisory Board also discussed next • June 2017: During a meeting, the Supervisory Meetings of the Supervisory Board conference call to discuss Ahold Delhaize’s Q4 steps for the implementation of the new Dutch Board was updated on developments in the During 2017, the Supervisory Board met on / full year 2016 trading statement and receive an Corporate Governance Code. The Board United States and the Company’s strategic eight occasions, of which six meetings were integration update following the merger. On the received an update on the overall integration and view and main focus areas. They received a held in person and two meetings by means of a same date, the Board of Directors of Delhaize the performance of Delhaize Belgium, including financial update on the previous month and conference call. The Management Board attended Group approved the Delhaize Group NV/SA the brand’s progress on its Transformation Plan. quarterly results to date and an outlook for Q2 these meetings and the other members of the statutory accounts and board report for the Lastly, the Supervisory Board was updated on 2017. The Supervisory Board also discussed Executive Committee, as well as other senior period from January 1, 2016, up to and including Ahold Delhaize’s enterprise risk management the financing strategy of the Company and management, were regularly invited to be present. July 23, 2016. system, IT performance systems and significant approved the Euro Commercial Paper program The Supervisory Board also held several private legal proceedings with potential impact on and Ahold Delhaize’s first public debt offering to meetings without other attendees to independently • February 2017: During a two-day meeting, the Company. the debt capital markets. review certain issues and to discuss matters the Supervisory Board met to discuss and related to the functioning of the Management and approve Ahold Delhaize’s Q4 / full year 2016 • April 2017: The Supervisory Board discussed • June 2017: During another meeting, the Supervisory Boards. The external independent results, as well as the Annual Report 2016 the performance of Delhaize Belgium. They also Supervisory Board received an extensive auditor attended the meeting of February 28, 2017, and the supplementary report for Sustainable received an update on Ahold Delhaize’s U.S. update on the integration efforts and progress. at which the 2016 Annual Report and financial Retailing 2016. In addition, the Supervisory businesses, as well as a separate update on the The implementation of the customer savings statements were recommended for adoption by Board approved the dividend proposal and performance of , including its strategic initiative was presented to the Board and the annual General Meeting of Shareholders. the 2020 Sustainable Retailing key targets. roadmap and future business opportunities. market developments across Ahold Delhaize’s During the same meeting, the agenda and Lastly, a financial update was given on the Q1 businesses were discussed. The Board also In addition to the scheduled meetings, the explanatory notes were approved for the 2017 estimates. addressed strategic initiatives across the members of the Supervisory Board review specific annual General Meeting of Shareholders to be • May 2017: During a conference call, the brands, as well as the future IT Roadmap to operations or activities of the Company; in 2017, held in April 2017. The proposal to amend the Supervisory Board discussed reports from the support the strategic framework of each of the Supervisory Board reviewed matters related individual performance ratings for the Executive external independent auditor and internal auditor the brands. to all aspects of the activities, results, strategy and Committee members was also approved by as well as the internal control report and the • August 2017: The Q2 2017 interim results were management of the Company. During its meetings the Board. On the recommendation of the governance, risk and control report. The Board presented and subsequently approved by throughout the year, the Supervisory Board Remuneration Committee, the Supervisory approved the initiation of the SEC deregistration the Supervisory Board. The Board discussed reviewed reports from its various committees Board resolved to approve the 2016 Executive at the end of July 2017. They also discussed the external and internal audit reports and the and regularly assessed the functioning of the Committee Incentive Plan Payout, in addition to and approved the Q1 2017 Interim Report. overall broadening and strengthening of the Management Board, the organizational strategy, the approval of the adjustment of the base salary In addition, the Board was informed that the control environment. Furthermore, the Board was talent management and succession planning. levels of the Executive Committee members. integration is fully on track, and the Company is updated on the U.S. organization, including the In addition, the Board members have regular In addition, the Supervisory Board received delivering its synergies. The Board received an establishment of Retail Business Services, which contact with associates in various levels of an update on the divestments in the United update on divestments in the U.S. and Belgium was reportedly on track to be up and running on management. These informal consultations ensure States and Belgium as a result of the anti-trust and was given background on IT service January 1, 2018. They received an update on the that the Supervisory Board remains well-informed processes following the merger. In light of the performance, information security and vendor IT Roadmap and priorities regarding information about the Company’s day-to-day operations. revised Dutch Corporate Governance Code, the management during Q1 2017. In addition, they security in relation to data protection; privacy Rules of Procedure of the Supervisory Board, received a review on post investments including and cyber-defense monitoring were highlighted. Management Board and Executive Committee store expansions, relocations and remodels. were updated and approved. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 98

Supervisory Board report continued

• September 2017: The Supervisory Board held a meeting in which they reviewed strategic Attendance Independence Remuneration Except for a limited number of occasions, and for The Supervisory Board confirms that during 2017 The annual remuneration of the members of the initiatives and market developments across valid reasons, all Supervisory Board members as well as on February 27, 2018, all Supervisory Supervisory Board was determined by the annual Ahold Delhaize’s brands. They received a attended all Supervisory Board meetings in 2017. Board members were independent within the General Meeting of Shareholders on April 12, 2017. financial update and discussed the long-term In all cases, the Supervisory Board members meaning of provision 2.1.10 of the Dutch Corporate Remuneration is subject to annual review by the strategy of the Company. who were not able to attend made sure they were Governance Code. Supervisory Board. • November 2017: During a two-day meeting, represented. All Supervisory Board members Chairman Supervisory Board €220,000 the Supervisory Board approved the Q3 2017 made adequate time available to give sufficient Vice Chairman (and member interim results, together with the Company’s attention to matters concerning Ahold Delhaize. of the presidium) €180,000 long-term business and finance plans, and Number of Number of annual budget plan for 2018. meetings meetings Vice Chairman €125,000 Board attendance held attended • Throughout the year 2017, the Supervisory Board Member Supervisory Board €90,000 Mats Jansson 8 6 visited multiple stores and distribution centers. Chairman Audit, Finance and Jan Hommen 8 8 Risk Committee €30,000 Jacques de Vaucleroy 8 8 Member Audit, Finance and Jack Stahl 6 6 Risk Committee €15,000 René Hooft Graafland 8 8 Chairman Other Committee €20,000 Ben Noteboom 8 8 Member Other Committee €12,500 Bill McEwan 8 8 Travel compensation intercontinental Rob van den Bergh 8 7 per round trip €7,500 Stephanie Shern 3 2 Travel compensation continental Mark McGrath 8 8 per round trip €2,500 Mary Anne Citrino 8 8 Johnny Thijs 8 8 Patrick De Maeseneire 8 7 Dominique Leroy 8 7 Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 99

Supervisory Board report continued

Audit, Finance and Risk Committee The Audit, Finance and Risk Committee also Committees of the Supervisory Board The Audit, Finance and Risk Committee assists the discussed items including: The Supervisory Board has four committees to which certain tasks are assigned. The committees Supervisory Board in its responsibility to oversee have advisory powers and provide the Supervisory Board with regular updates on their meetings. • Quarterly interim reports Ahold Delhaize’s financing, financial statements, The composition of each committee is detailed in the following table. financial reporting process and system of internal • Ahold Delhaize’s 2016 Annual Report including Governance and Sustainability and the financial statements Audit, Finance and Nomination Remuneration Innovation business controls and risk management. The Chief Risk Committee Committee Committee Committee Executive Officer, Chief Financial Officer, Chief • Review and approval of the internal audit plan Mats Jansson (Chairman) Member Legal Officer, Senior Vice President Internal Audit, • Lease accounting IFRS 16 Jan Hommen (Vice Chairman) Member6 Member Senior Vice President Accounting, Reporting, Risk • The findings in the internal audit letter and & Controls and representatives of the external Jacques de Vaucleroy the external independent auditor’s findings independent auditor are invited to, and attend, the (Vice Chairman) Member Member in relation to the internal controls over 6 Audit, Finance and Risk Committee meetings. René Hooft Graafland Chairman financial reporting Ben Noteboom Chairman Member The Audit, Finance and Risk Committee • The Company’s finance structure Bill McEwan Chairman Member determines how the external independent auditor • Treasury Rob van den Bergh Member Chairman should be involved in the content and publication • Taxation, including the accounting Mark McGrath Member of financial reports other than the financial statements. The Management Board and the for tax reforms Mary Anne Citrino Member Audit, Finance and Risk Committee report to the • Guarantees Johnny Thijs Member Supervisory Board annually on their cooperation • Self-insurance programs Patrick De Maeseneire Member with the external independent auditor, including • Recognition of vendor allowances Dominique Leroy Member the auditor’s independence. The Supervisory Board takes these reports into account when • Impairment testing of goodwill 6 René Hooft Graafland was appointed Chairman of the Audit, Finance and Risk Committee after Jack Stahl stepped down from the Supervisory Board on August 8, 2017. Jan Hommen was appointed as a member of the AFRC as per August 8, 2017. deciding on the nomination for the appointment of • Employee benefit plan measurement an external independent auditor, that is submitted and disclosures to the General Meeting of Shareholders. • Appointment of the external independent auditor In 2017, the Audit, Finance and Risk Committee • Ahold Delhaize Code of Ethics held two meetings in person, and three meetings The Audit, Finance and Risk Committee via conference calls. The attendance rate of and the Chairman of the Audit, Finance and the members of this Committee was 100%. Risk Committee also held private meetings Throughout the year, the Audit, Finance and together with the Chief Financial Officer, Senior Risk Committee closely monitored the financial Vice President Internal Audit and external closing process and reviewed the publication independent auditor. of quarterly results. Updates on internal controls were provided during all Audit, Finance and Risk Committee meetings. The Audit, Finance and Risk Committee was informed regularly on compliance and reviewed and received regular updates on the Company’s whistleblower programs. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 100

Supervisory Board report continued

With the resignation of Jack Stahl from the Remuneration Committee Conclusion Supervisory Board, René Hooft Graafland was In 2017, the Remuneration Committee held five The Supervisory Board is of the opinion that during assigned Chairman of the Audit, Finance and Risk meetings in person and one via conference the year 2017, its composition, mix and depth of Committee on August 8, 2017. Jan Hommen was call, all of which the Chief Executive Officer was available expertise; working processes; level and appointed as a member of the Audit, Finance and invited to attend. The attendance rate of the Board frequency of engagement across all prominent Risk Committee, effective August 8, 2017. members of this Committee was 97%. During the Company activities; and access to all necessary meetings, the Committee prepared proposals for and relevant information and the Company’s The Supervisory Board has determined that the Supervisory Board on an individual exception management and staff were satisfactory and René Hooft Graafland, Jan Hommen and Patrick to the remuneration policy for the Management enabled it to carry out its duties towards all the de Maeseneire are “Audit Committee Financial Board, to be adopted by the General Meeting Company’s stakeholders. Experts” within the meaning of the Dutch of Shareholders. In addition, the Remuneration Corporate Governance Code, provision 2.1.4. The Supervisory Board wishes to express its Committee prepared proposals for the individual gratitude to Stephanie Shern and Jack Stahl for Governance and Nomination Committee remuneration of members of the Management their efforts and contributions to the Company. In 2017, the Governance and Nomination Board. Lastly, the Committee gave advice on Committee held three meetings in person and one the level and structure of compensation for The Supervisory Board would also like to via conference call, all of which the Chief Executive senior personnel other than members of the thank Ahold Delhaize’s shareholders for their Officer was invited to attend. The attendance rate Management Board. support and trust in the Company and its of the Board members of this Committee was management. Finally, the Board wishes to See Remuneration for more information on our 90%. The Committee’s main areas of focus were express its appreciation for the continued remuneration policy, which aims to help us attract, long-term succession planning for the Supervisory dedication, commitment and excellent work motivate and retain the best-qualified workforce, Board and management development. of the Management Board and all of Ahold in a cost-effective way. The Committee was also involved in organizational Delhaize’s associates during 2017. and management changes and overall succession Sustainability and Innovation Committee Supervisory Board and management development processes During the course of 2017, the Sustainability and Zaandam, the Netherlands as well as governance matters. Innovation Committee held three meetings in February 27, 2018 person, all of which the Deputy Chief Executive Officer was invited to attend. The attendance rate of the Board members of this Committee was 100%. The Committee’s main areas of focus were Ahold Delhaize’s Sustainable Retailing and e-commerce strategies. In addition, digitalization and personalization data analytics were addressed in the meetings. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 101

Remuneration

Dear shareholder, For the majority of our associates, remuneration We have calculated the pay ratio between is based on collective bargaining agreements the Total Remuneration of the respective I am pleased to present our 2017 Remuneration structured primarily as fixed annual salaries or Management Board members and the average report. As one of the world’s leading food retail hourly wages. In addition, store managers and remuneration of all Ahold Delhaize associates groups, Ahold Delhaize employs 369,000 general management associates are eligible to over 2016 and 2017 to convey the year-over- associates in nine countries. In determining the receive an annual performance-based bonus. year changes. The average remuneration employment conditions of our associates, we Associates in senior management positions are of all associates in 2016 is calculated on the set compensation and benefits levels in line with eligible for performance-based annual bonuses basis of pro forma (full year 2016) labor costs. associates’ job level and local market practices. as well as Ahold Delhaize performance share The average remuneration of all associates is The remuneration practices in each of our local Bill McEwan grants that are linked to the long-term goals of calculated as the total labor costs (see Note 8 to markets are regularly reviewed to take into Chairman of the Remuneration Committee the Company. the consolidated financial statements) divided by account the market dynamics and economic of the Supervisory Board the number of associates on an FTE basis (see conditions. We are committed to the key principle The Supervisory Board’s Remuneration Five-year overview). The average remuneration of fair and equitable treatment of all associates Committee closely monitors developments in of all associates amounted to €39,572 for 2016 as we determine remuneration policies. We apply the global, regional and local labor markets and and €40,225 for 2017. The total compensation the same principles in the determination of the takes these developments into account when of the CEO, Deputy CEO, CFO and CEO Ahold Remuneration Policy for the Management Board. making recommendations on the Management Delhaize USA can be found in Note 31 to the Board compensation to the Supervisory Board As outlined in our Remuneration Policy, consolidated financial statements. for consideration and approval. Management Board remuneration is targeted at or near the median of the labor market peer The following table shows the pay ratio of the group, consisting of six AEX, six European, Chief Executive Officer, Deputy Chief Executive and six U.S. peer companies. During the past Officer, Chief Financial Officer and Chief year, the Management Board’s remuneration Executive Officer Ahold Delhaize USA compared was implemented in accordance with our to the average remuneration of all Ahold Remuneration Policy. This policy is in compliance Delhaize associates. with the Dutch Corporate Governance Code Pay ratio 2017 2016 and was adopted at the annual General Meeting CEO 114 119 of Shareholders on April 19, 2016. It became Deputy CEO1 135 – effective on July 24, 2016, the first calendar CFO 71 71 day after the merger of Ahold and Delhaize 1 was finalized. An individual exception to the CEO Ahold Delhaize USA 74 – remuneration policy for the CEO Ahold Delhaize 1 Since the Deputy CEO and the CEO Ahold Delhaize USA USA (former Chief Operating Officer Ahold USA) joined the Company on July 24, 2016, full year numbers was adopted at the annual General Meeting of for 2016 are not available. Shareholders on April 12, 2017. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 102

Remuneration continued

As set forth in the Remuneration Policy, the Therefore, to put Ahold Delhaize’s pay ratios into In 2017, the Company announced the total compensation of our Management perspective, the graph illustrates Ahold Delhaize’s upcoming retirement of Pierre Bouchut from Board members is positioned at the median position compared to its peers in the European the Management Board as well as the intended level of the peer group we’ve selected for and U.S. markets as well as the AEX companies appointment of Wouter Kolk to the Management U .S benchmarking (see page 103). The following in the peer group. The ratios mentioned in the . Board. The latter appointment will be brought p e table illustrates the pay ratio of our CEO table and the graph are derived from the publicly e forward for shareholder approval at the annual E rs ur op compared to the pay ratios of other CEOs in disclosed 2016 annual reports of the respective e General Meeting of Shareholders on April 11, a n the peer group. It is important to note that pay companies. For comparison purposes the p 2018. The implementation of these Management e e r ratios across industries are impacted by the ratios have been calculated using the same s Board changes will be in accordance with our different mix of functions from one industry methodology as used for Ahold Delhaize’s Remuneration Policy. to another. Even within the same industry, pay ratio. A E The Remuneration Committee also conducted comparing pay ratios is challenging due to X Pay ratio Ahold Delhaize CEO compared to interviews on Management Board remuneration different market conditions (a mix of high- and pay ratios of other CEOs in the peer group 0 200 300 400 and its link to the Company’s overall strategy low-paying countries). (2016 figures) with each of the members of the Management Our remuneration policy remains unchanged Average Board. The Remuneration Committee will for 2018. At the Supervisory Board’s discretion, Average European Average continue to monitor and review Ahold Delhaize’s Ahold Delhaize AEX peers peers U.S. peers effective in 2018, two replacements have been Remuneration Policy to ensure that it continues to 119 115 179 238 made in the labor market and Total Shareholder be aligned to support the strategy and long-term 103.5% 66.5% 50% Return (TSR) peer groups due to corporate growth of the Company, the needs of all internal actions at Metro and Staples. Metro demerged into and external stakeholders, and our commitment The average pay ratio for the CEO position in the Ceconomy and Metro Cash & Carry. The former to making a sustainable contribution to society full peer group is 188. The graph illustrates Ahold Metro has been replaced in each of the two peer at large. If the Supervisory Board determines Delhaize’s position versus the labor market peer groups by Metro Cash & Carry. Staples was that changes to the existing Remuneration Policy group as defined in the Remuneration Policy. delisted as a consequence of its purchase by are appropriate and required, we will seek Sycamore and has been replaced by Lowe’s The Supervisory Board will continue to monitor shareholder approval at future General Meetings. Companies in each of the two peer groups. the development of pay ratios both within the Company and in comparison with the peer group. I look forward to presenting this Remuneration report for discussion with all our shareholders at our upcoming annual General Meeting of Shareholders on April 11, 2018. Bill McEwan Chairman of the Remuneration Committee of the Supervisory Board Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 103

Remuneration continued

The annual cash incentive is focused on the key European peers U.S. peers AEX Ahold Delhaize’s remuneration Remuneration policy financial metrics of a retail organization: sales Remuneration philosophy Tesco Kroger Unilever policy was prepared in accordance growth, operating margin and operating cash Ahold Delhaize’s remuneration policy is aligned Carrefour Costco Philips flow. Our focus and goal is to expand market with the Dutch Corporate with the Company’s strategy and supports a Metro Target Heineken share, while at the same time grow margins to Governance Code. It was adopted at strong and aligned performance culture. Our Casino Guichard Walgreen Randstad increase profitability and manage capital spending remuneration policy aims at attracting, motivating Perrachon Boots Alliance the General Meeting of Shareholders and expenses prudently to secure strong and and retaining the best-qualified talent. on April 19, 2016. The remuneration sustainable cash flow. J Sainsbury Best Buy Akzo Nobel policy became effective on July 24, Management Board remuneration policy W M Morisson Staples Relx The long-term incentive is measured against (i) 2016, the first calendar day after the The Supervisory Board designed the Management our internal measure on Return on Capital (RoC), In anticipation of potential changes to the merger of Ahold and Delhaize was Board’s remuneration policy to align with the Company’s strategy and to support its pay-for- (ii) our external measure of the Company’s share labor market peer group due to delisting, mergers finalized. An individual exception performance culture, while aiming to be effective, performance relative to that of its peers: Total or other extraordinary circumstances, the to the remuneration policy was transparent and simple. While developing the Shareholder Return (TSR) and (iii) the Company’s Supervisory Board has the discretion to substitute adopted at the General Meeting remuneration policy, we conducted scenario contribution to society through sustainability comparable companies. In general, geographical objectives. Performance for our long-term of Shareholders on April 12, 2017. analyses to determine the risks to which variable composition leads in the determination of a remuneration may expose the Company. incentives is measured over a revolving three- replacement company: for example, if a U.S.- year period. based company drops out, it is replaced The basic elements of the Total Direct by another U.S.-based company. Compensation provided to Management The structure of our remuneration policy aligns Board members are (1) a base salary, (2) an the focus of the Management Board with the The composition (risk profile) of the Total Direct annual cash incentive and (3) a long-term interests of the Company’s shareholders, Compensation levels is also taken into account equity-based program. In line with our overall our local communities and society at large. when benchmarking base salary levels. The target remuneration philosophy, the Management Compensation and awards are tied to and Total Direct Compensation level is typically around Board’s Total Direct Compensation is structured dependent on the delivery of our strategy in a the median, with base salary levels slightly below and more heavily weighted on variable annual responsible and sustainable way. the median and long-term incentives at the and long-term incentives tied to the realization Market competitive pay higher end of the market to support the pay-for- of financial and societal performance criteria. The competitiveness of the Management Board performance culture and long-term focus. These performance criteria are a cornerstone remuneration is benchmarked annually against An individual exception to the remuneration policy of the Company’s strategy. a labor market peer group that reflects the of the Management Board applies for the CEO Company’s geographic operating areas and the Ahold Delhaize USA (Kevin Holt). The Supervisory markets most relevant in relation to the recruitment Board determines the remuneration for the CEO and retention of top management. Since Ahold Ahold Delhaize USA on the basis of a local Delhaize is a Dutch-headquartered company, the reference market, the U.S. retail labor market AEX market practice in the Netherlands is included. reference group comprising 14 companies. The peer group consists of 18 companies, including peer companies in Europe and the United States as well as AEX-listed companies. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 104

Remuneration continued

Base salary Long-term equity-based program: Linked to TSR In anticipation of potential changes to the The level of the Management Board members’ Global Reward Opportunity Another 40% of the total GRO award is linked performance peer group due to delisting, base salary is derived from the benchmarking of The Management Board members participate to TSR (share price growth and dividends paid mergers or other extraordinary circumstances, Total Direct Compensation. Adjustment of the base in the Company’s long-term incentive program: over the performance period), with performance the Supervisory Board has the discretion to salary is at the discretion of the Supervisory Board. Global Reward Opportunity (GRO). Under the at vesting benchmarked against the TSR include substitute comparable companies. GRO program, shares are granted through performance of a peer group. The number Annual cash incentive plan: Linked to Sustainable Retailing a three-year program. The vesting of these of shares that vest depends on the Company’s Executive Committee Incentive Plan For the remaining 20% of the total GRO award, performance shares is subject to performance relative ranking in the peer group. An independent The Management Board members participate the performance at vesting is measured against over a three-year period. The GRO program external adviser determines the ranking in the Executive Committee Incentive Plan sustainable retailing targets. This measure relates employs two financial measures: RoC (40%) based on TSR performance. No shares will (EIP). The EIP is an annual cash incentive plan to the Company’s Sustainable Retailing strategic and TSR (40%). In addition, a non-financial vest to Management Board members if the that employs three equally weighted financial ambitions. The targets set under this non-financial performance measure (20%) related to Sustainable Company ranks below the seventh position in measures: sales growth (30%), underlying performance measure are both qualitative Retailing targets is included. the performance peer group. The table below operating margin (30%) and operating cash and quantitative. Dependent on performance, indicates the percentage of performance shares flow (30%), as well as personal objectives (10%). In line with market practice, the target value of the the number of shares that may vest may range that vests based on the Company’s ranking. The at-target payout as a percentage of base long-term incentives granted under the program between zero and a maximum of 150% of the Shares that will vest as % salary is 100%, contingent on full achievement differs by role. For the CEO, the target value is Company ranking of originally granted amount number of shares granted. of the objectives, with a cap at 150% of the base 235% of base salary; for the Deputy CEO and Ranking 1 175% Shareholding requirements and salary in the event of above-target performance. CEO Ahold Delhaize USA, the target value is Ranking 2 150% ownership guidelines 200% of base salary; for the CFO, the target value Management Board members must retain is 175% of base salary; and for the COO Europe Ranking 3 125% the shares awarded under the GRO program the target value is 150% of base salary. Ranking 4 110% Ranking 5 100% for a period of at least five years from the grant The total GRO award is comprised of three date. The sale of a portion of the shares is Ranking 6 80% portions of shares, linked to RoC, TSR and permissible to finance taxes due at the date of Ranking 7 50% sustainability targets, respectively. vesting. All members of the Management Board Ranking 8 – 14 0% are required to hold shares in the Company with Linked to RoC a value equal to at least 150% of their base salary. Of the total GRO award, the first 40% is linked TSR performance peer group The holding may accumulate by retaining all to a three-year RoC target. Dependent on Tesco Kroger after-tax shares from the GRO program and does performance, the number of shares that eventually Carrefour Costco not require personal share purchases. vest may range between zero and a maximum Metro Target of 150% of the number of shares granted. Casino Guichard Walgreen Perrachon Boots Alliance J Sainsbury Best Buy W M Morisson Staples Walmart Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 105

Remuneration continued

Claw-back Loans Future outlook Base salary A claw-back provision is applicable to the Ahold Delhaize does not provide loans or In light of changes to the labor market reference thousands Management Board members’ annual cash advances to members of the Management Board. group and TSR peer group due to the demerger €1,037 incentive plan (EIP) as well as the long-term equity Nor does the Company issue guarantees to the of Metro Group and delisting of Staples, the CEO €1,013 incentive program (GRO). benefit of members of the Management Board. Supervisory Board will include substitute €1,000 comparable companies. For benchmarking Pensions and other contract terms Additional arrangements purposes, from 2018 onwards, Metro Cash & €1,027 Pension In addition to the remuneration of the Management Deputy €446 Carry will replace Metro Group, and Lowe’s CEO1 All existing pension arrangements in the Board members, a number of additional Companies will replace Staples in the labor market Netherlands have been brought in line with the arrangements apply. These include expense and peer group. For relative TSR measurement, this €732 applicable fiscal pension regulations. The pension relocation allowances, medical insurance and substitution comes into effect for the 2016 and €675 plan for Management Board members is accident insurance, use of company cars and, CFO 2017 GRO awards and to-be-granted GRO €666 calculated similarly to that of all other associates if applicable, expatriate allowances, which apply share awards. CEO €858 of the Company in the Netherlands and is referred to other senior associates and are in line with AD €329 to as a defined benefit plan, based on career local market practice. In addition, third-party tax USA1,2 average salary. The retirement age (in 2017) is services will be provided to ensure compliance 2017 Management Board 0 400 800 1,200 67. The pensionable salary is capped at around with the relevant legislative requirements. Remuneration €100,000 (2017: € 98,995). Each Management The Management Board remuneration for 2017 Base salary 2017 (Service) Agreements Board member working on a Dutch contract is in accordance with the Management Board Base salary 2016 The term of appointment for all Management Board pays a pension premium contribution identical remuneration policy. This policy was adopted Base salary 2015 members is four years. If the Company terminates at the General Meeting of Shareholders on to that of all other Ahold Delhaize associates in 1 For the members appointed to the Management Board in 2016, the (service) agreement of any member of the the Netherlands. In addition, Management Board April 19, 2016, and an individual exception was the 2016 base salary reflects a partial year. Management Board, the severance payment is adopted at the General Meeting of Shareholders members receive a gross (age-dependent) 2 For 2017, CEO AD USA refers to the COO Ahold USA. limited to one year’s base salary. The same applies pension allowance and can choose to participate on April 12, 2017. The salary of the CEO AD USA has been converted from if an initial (service) agreement for four years is not U.S. dollars into euros using the 2017 year-to-date average in a Net Pension Arrangement by investing the net continued in the event the Management Board 2017 Base salary $ / € exchange rate of 0.8868. (after tax) amount. The Net Pension Arrangement The base salaries of members of the Management member is not reappointed. The agreement may For 2016, CEO AD USA refers to the COO Delhaize America is identical to that of all other associates of the be terminated by the Company with a notice Board were adjusted effective January 2017, for the period up to October 1, 2016, and the COO Ahold USA Company in the Netherlands whose pensionable for the period starting October 1, 2016. The salary of the CEO period of 12 months and by the Management and for the CEO Ahold Delhaize USA effective salary exceeds the cap. Participation in this Net AD USA has been converted from U.S. dollars into euros using Board member with a notice period of six months. May 2017 in accordance with the adoption of the the 2016 year-to-date average $ / € exchange rate of 0.912519. Pension Arrangement is voluntarily. individual exception by the General Meeting of Members of the Management Board working on Shareholders on April 12, 2017. a non-Dutch contract are offered pension plans in line with local practices. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 106

Remuneration continued

2017 Annual cash incentive plan: EIP Actual EIP 2017 Long-term equity-based program: GRO The EIP uses three equally weighted financial thousands The Management Board members participate in Ahold Delhaize’s long-term equity-based incentive measures: sales growth (30%), operating margin program, GRO. The 2017 GRO award was made the day after the 2017 annual General Meeting €991 (30%) and operating cash flow (30%). In addition, CEO €1,271 of Shareholders. personal objectives (10%) are included. €1,350 The vesting of the GRO performance shares is subject to performance over a period of three years Ahold Delhaize does not disclose the €981 and the GRO program employs two financial measures: Return on Capital (40%) and Total Shareholder Deputy €323 actual targets per performance measure, CEO1 Return (40%). In addition, a non-financial performance measure (20%) is included related to Sustainable as this is considered to be commercially Retailing targets. For this purpose, performance is measured on the basis of both an external and an sensitive information. €699 internal target. The Dow Jones Sustainability Index (the external target) measures how the Company €773 CFO performs on sustainability against peers in the sector. The percentage of healthy own-brand food sales 2017 EIP Performance measures €899 of total own-brand food sales (the internal target) is the measure we use to drive performance in pursuit €820 Sales growth 30% CEO of our company objective to facilitate healthier eating. AD €252 Operating margin USA1,4 2017 GRO grant 30% To calculate the number of shares to be granted, the at-target value of the award is divided by the six- Operating cash flow 0 350 700 1,050 1,400 30% month average share price preceding the annual award date, calculated over the fourth quarter of 2016 2,3 Personal 10% Actual EIP 2017 and the first quarter of 2017. Scenario analyses are prepared regularly to estimate the possible future Actual EIP 2016 payout levels. Actual EIP 2015 At-target grant and maximum vesting performance shares 1 For the members appointed to the Management Board in 2016, Performance shares the 2016 EIP reflects a partial year. RoC TSR Sustainability Total at-target Total maximum The at-target payout as a percentage of base 2 2017 EIP represents accrued annual cash incentives to be (40%) (40%) (20%) grant vesting salary is 100%, contingent on full achievement paid in 2018 and subject to shareholder approval of the CEO 94% 94% 47% 235% 376% financial statements. of the objectives, with a cap at 150% of the base Deputy CEO 80% 80% 40% 200% 320% salary in the event of above-target performance. 3 The overall 2017 financial performance multiplier was 93%. This reflects our financial results being modestly below target. CFO 70% 70% 35% 175% 280% The individual EIP amounts also include the component linked CEO AD USA 80% 80% 40% 200% 320% to individual performance. COO EU 60% 60% 30% 150% 240% 4 For 2017, CEO AD USA refers to the COO Ahold USA. The EIP of the CEO AD USA has been converted from U.S. dollars into All percentages constitute a percentage of base salary. euros using the 2017 year-to-date average $ / € exchange rate of 0.8868. For 2016, CEO AD USA refers to the COO Delhaize America for the period up to October 1, 2016, and the COO Ahold USA for the period starting October 1, 2016. The 2016 EIP of the CEO AD USA has been converted from U.S. dollars into euros using the 2016 year-to-date average $ / € exchange rate of 0.912519. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 107

Remuneration continued

2017 GRO share grant calculation – Example CEO Number of shares granted (award At-target Award value value divided by share grant (base salary1 six-month average (% of base salary) at-target grant %) share price) RoC performance shares 94% 975.118 48,819 TSR performance shares 94% 975,118 48,819 Sustainability performance shares 47% 487,560 24,410 235% 2.437.79 6 122.048

1 Table assumes base salary of €1,037,360 and six-month average share price of €19.97.

2017 GRO share grant calculation – Example CFO Number of shares granted (award At-target Award value value divided by share grant (base salary2 six-month average (% of base salary) at-target grant %) share price) RoC performance shares 70% 512,578 25,662 TSR performance shares 70% 512,578 25,662 Sustainability performance shares 35% 256,289 12,831 175% 1,281,445 64,155

2 Table assumes base salary of €732,254 and six-month average share price of €19.97. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 108

How we manage risk

Risk appetite Governance, Risk Management & Compliance Framework Taking risks in a responsible way Our risk appetite is defined by our Supervisory is key to being able to fulfill our Board and Management Board and is integrated stakeholders’ expectations into the businesses through our strategy, global In order to meet our Better Together objectives, we Values, strategy policies, procedures, controls, and budgets. must be agile and entrepreneurial so that we can & objectives Our appetite for each risk is determined by respond quickly and effectively to rapid changes considering our business objectives as well as in the retail landscape and take advantage of potential threats to achieving those objectives and business opportunities whenever and wherever can be categorized as follows: they exist. Meeting these challenges requires us to Leadership & Monitor & Assurance Identify & manage risk take risks in a responsible way. Having a proactive risk culture Strategic approach to risk management that is embedded In pursuing our Better Together strategy, Ahold in our business processes benefits our decision- Delhaize is prepared to take risks in a responsible making and helps us create and preserve value. way that takes our stakeholders’ interests into Managing risks and unpredictable conditions in Policies & Procedures account. Through our annual strategic cycle, a timely way increases the likelihood that we will we follow a logical and systematic process of achieve our business objectives, while ensuring analysis, dialogue and planning to optimize our compliance with internal and external requirements. decision-making. We use a fact-based analysis of our different markets and brands to support We strive for a culture of openness and risks and risk management practices with the our strategic decision-making process in a way transparency in which risks are identified and Risk management Management Board as a regular part of the that considers financial, economic, social and addressed proactively. Risk management is an and internal control business planning and performance cycle. political developments that may impact our integral part of responsible leadership. Enterprise risk management Additionally, the Management Board considers ability to achieve our objectives. Generally, the Ahold Delhaize’s enterprise risk management the risks impacting the Company from a strategic Company’s risk appetite is between average and At Ahold Delhaize, we have created a Governance, (ERM) program is designed to provide executive perspective and provides complementary above average. Risk Management and Compliance (GRC) management with an understanding of the insights into existing and emerging risks, which Framework that allows us to effectively identify, Company’s key business risks and associated risk Operational assess and manage our risks. This GRC Framework are subsequently included in the consolidated management practices. Within each business, Operational risks include unforeseen incidents consists of global policies and controls as well as ERM process. Ahold Delhaize’s enterprise risk management identifies the principal risks to that could result from failures in internal processes a GRC committee structure that functions as a management program influences the formation the achievement of the business objectives or systems, human error, or adverse external platform to address relevant risks across functional of policies, procedures and controls; the and the actions needed to mitigate these risks. events that could negatively impact the day-to- areas of our Company. In 2017, we implemented scope of internal audit activities; and the focus Senior brand and global executives periodically day operation of our business. Our risk appetite the GRC committee structure at the local brand of the business planning and performance review these risks and the related mitigation related to the management and execution of process. During 2017, we fully integrated our level and continued to integrate and harmonize practices. The observations are aggregated our day-to-day business is generally low, as risk management program into one consistent our policy and control framework across the Ahold into an enterprise risk management report that we seek to minimize the downside impact of approach for both the former Ahold and former Delhaize businesses. We are constantly reviewing is presented to the Management Board and operational failures. Delhaize group companies. and updating our global policies, procedures Supervisory Board, as required by the Dutch and controls to ensure consistency in our overall Corporate Governance Code. Our local brand compliance and to support the successful management is required to review their principal execution of our strategy. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 109

How we manage risk continued

Financial Scenario Associated principal risks Description In the table to the left are two extreme scenarios With respect to financial risks, Ahold Delhaize Competitive • Competitive environment Failure to design and execute our strategic promises that are considered severe but possible. None of has a prudent financial strategy, the principles of pressure could result in not achieving the anticipated benefits these scenarios individually threaten the viability which are governed by the treasury policy. We are of price repositioning and cost savings programs of the Company, however, the compound impact committed to maintaining an investment-grade or other strategic initiatives. of these scenarios has been evaluated as the most credit rating and are averse to any risks that could severe stress scenario. jeopardize the integrity of our financial reporting. Failure over a long period of time to adapt These scenarios are hypothetical and purposefully Our financial risk management, risk appetite and to new market dynamics and consumer behaviors severe for the purpose of illustrating outcomes that sensitivities are further detailed in Note 30 of the could also lead to loss of market share to new could have the ability to threaten the viability of the consolidated financial statements. market entrants or new shopping channels. Company. In the case of these scenarios arising, Compliance These factors may have a material adverse effect mitigation plans at global and brand level have At Ahold Delhaize, an essential part of our on the Company’s financial position, results of been defined, and if applicable, various options strategic framework is behaving according to operations and liquidity. are available to the Company to maintain liquidity our values. One of Ahold Delhaize’s values is Information • Business continuity In the event of a successful data breach, and support ongoing operations. These options “Integrity,” which means that the Company and all include: accessing new external funding early, security, and / • Information security the Company could be subject to material monetary its associates do the right thing to earn customers’ more radical short-term cost-reduction actions or data breach and privacy penalties, loss of customers and damage to our trust. We strive for full compliance with laws and and business corporate reputation; it could also lead to potential and adjustments to capital allocation. regulations and with our policies and procedures • Strategic initiatives disruption litigation. Control framework everywhere we do business. Consequently, our The Ahold Delhaize control framework risk appetite in this area is very low. incorporates risk assessment, control activities Three lines of defense model Sensitivity analysis and monitoring into our business practices at At Ahold Delhaize, we follow closely the impact of entity-wide and functional levels. A three lines different internal and external risk factors on our Management Board Audit, Finance & of defense model has been adopted to provide operations. The purpose of our sensitivity analysis Executive Committee Risk Committee/ reasonable assurance that risks to achieving is to assess these risks on the Company’s current Senior Management Supervisory Board important objectives are identified and mitigated. strategy to determine their impact on our business Three lines of defense model and the viability of our business model, as well as In a time of significant transition and change, our ability to meet our financial liabilities and other 1st Line of Defense: 2nd Line of Defense: 3rd Line of Defense: Ahold Delhaize has carried forward the obligations. Our strategy is based on assumptions Group and Risk Management, Control, Internal Audit unwavering commitment to integrity that was relating to: the global economic climate, changes Business Management Compliance and other at the core of Ahold and Delhaize Groups prior in consumer behaviors, competitor actions, market specialized functions to the merger. dynamics and our current and planned structure, Role Role Role among other factors. Own and manage Facilitate, support and Provide the risk challenge in implementing independent effective risk management assurance Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 110

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In early 2017, we launched the Ahold Delhaize Monitoring and assurance While the Company will no longer be subject Governance, Risk management and Code of Ethics, which is based on four We use a comprehensive business planning to the Sarbanes Oxley Act regulations related Compliance Committee ethical principles: and performance review process to monitor the to control over financial reporting, we are still The global Governance, Risk and Compliance Company’s performance. This process covers subject to the Dutch Corporate Governance Code, (GRC) Committee is responsible for reviewing the • We respect each other the adoption of strategy, budgeting and the which is consistent with Sarbanes Oxley in spirit Company’s governance, risk management and • We follow the law reporting of current and projected results. and substance. Consequently, we have decided compliance processes. The GRC Committee is • We act ethically in all our relationships We assess business performance according to to keep our current internal control environment chaired by the Chief Legal Officer and (i) advises • We have the courage to speak up both financial and non-financial targets. In order in place. All of our businesses are required the Management Board and Executive Committee to meet business needs and the requirements to continue to maintain a sound internal control on matters concerning the GRC Framework, The Code of Ethics is intended to help each of the Dutch Corporate Governance Code, we environment with robust policies, procedures, including an overall GRC vision and strategy, associate understand and follow relevant have a Group-wide management certification controls and a strong financial discipline, and (ii) oversees activities to develop and maintain compliance and ethical principles, and to know process in place, which requires that the executive to comply with our current internal controls a fit-for-purpose GRC Framework and (iii) engages when and where to ask for advice or report a management team members at each of our framework so that we can continue to provide with Ahold Delhaize’s senior management on compliance or ethics breach, which includes reporting entities send letters of representation a high level of assurance to our senior leadership, important developments in the context of GRC. the use of whistleblower lines, available to our to the Financial Disclosure Committee on Audit, Finance and Risk Committee, investors and To support local management and provide visibility associates in each of our locations. a quarterly basis. external regulators. regarding local risks to the global GRC Committee, each of our brands has a local GRC committee In 2017, our brands’ whistleblower lines received These letters confirm whether the reporting At the direction of the global Governance, Risk that operates in parallel to the global GRC 6,817 reports. Approximately 34% of the reports entities are in compliance with Ahold Delhaize’s & Compliance Committee, the GSO Compliance committee process. were made anonymously. On average, 94% Code of Ethics, policies on fraud prevention team along with the GSO Risks and Controls team of the reports were investigated and resolved and detection, accounting and internal control are finalizing their review of the current global During 2017, the global GRC Committee met on within the quarter in which they were received. standards, and disclosure requirements. policies, procedures and related internal control a quarterly basis. In addition to Ahold Delhaize’s In 2017, there were no substantiated reports of framework with the respective operational and Chief Legal Officer (Chairman), the Chief Executive On July 31, 2017, Ahold Delhaize filed significant financial reporting, accounting, fraud executive owners. Their aim is to ensure that the Officer and the Chief Financial Officer sit on the a certification with the U.S. Securities and or ethical violations. revised global standards address all relevant risks GRC Committee, along with other members of Exchange Commission (SEC) in connection to the Company and that the control objectives are local and global management responsible for our The principles in the Code apply to all with the deregistration of its ordinary shares, consistent, are applicable to all our business units governance, risk management, accounting and associates of Ahold Delhaize and its businesses. which has terminated the Company’s U.S. and provide a robust level of assurance. Both our reporting, compliance and assurance functions. Associates of certain defined grade levels are corresponding reporting obligations with Risk & Controls and Internal Audit functions trained in compliance with the Code on an annual the SEC. basis. The full Code is available in the corporate help to ensure that we maintain and improve the governance section of Ahold Delhaize’s public integrity and effectiveness of our system of risk website at www.aholddelhaize.com. management and internal control. Internal Audit undertakes regular risk-based, objective and critical audits. These functions also monitor the effectiveness of corrective actions undertaken by management. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 111

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With respect to financial reporting based on Our principal risks remain substantially unchanged Declaration the current state of affairs, it is justified that Risk factors from 2016. The risk related to the Ahold Delhaize Annual declaration on risk management The principal risk factors that may impede the the financial reporting is prepared on a going merger has been updated to reflect the completion and control systems regarding financial achievement of Ahold Delhaize’s objectives concern basis and management has assessed of the merger and current focus on the integration. reporting risks with respect to strategy, operations, financial whether the risk management and control The aggregation of risks to the Ahold Delhaize Ahold Delhaize supports the Dutch Corporate and compliance matters are described in the systems provide reasonable assurance that the enterprise risk management report did not result in Governance Code and makes the following following section. The enterprise risk management 2017 financial statements do not contain any new principal risks, although nuances have been declaration in accordance with provision I.4.3: system, the governance and control standards material misstatements. This assessment was identified and processed. incorporated within our GRC Framework, and The Management Board is responsible for based on the criteria set out in COSO: Internal the monitoring systems described above are the The risks described below are not the only risks establishing and maintaining adequate internal risk Control – Integrated Framework 2013 and our principal means by which we identify and manage the Company faces. There may be additional risks management and control systems. Such systems internal control framework. It included tests of the these risks. Management is not aware of any of which we are currently unaware or risks that are designed to manage rather than eliminate design and operating effectiveness of entity-level critical failings in these systems during 2017. management believes are immaterial or otherwise the risk of failure to achieve important business controls, transactional controls at significant common to most companies, but which may in objectives, and can only provide reasonable locations, and relevant general computer controls. The following overview of risks relating to Ahold the future have a material adverse effect on Ahold and not absolute assurance against material Any control weaknesses not fully remediated Delhaize should be read carefully when evaluating Delhaize’s financial position, results of operations, misstatement or loss. Management is not at year-end were evaluated. Based on this the Company’s business, its prospects and the liquidity and the actual outcome of matters referred aware of any critical failings of these systems assessment, the Management Board determined forward-looking statements contained in this to in the forward-looking statements contained during 2017. that the Company’s financial reporting systems Annual Report. The following risks, which may or in this Annual Report. For additional information are adequately designed and operated may not materialize, could have a material adverse This report includes those material risks and regarding forward-looking statements, see the effectively in 2017 and provide reasonable effect on Ahold Delhaize’s financial position, uncertainties that are relevant to the expectation Cautionary notice. assurance that the financial statements are free results of operations and liquidity or could cause of the Company’s continuity for the period of of material misstatement. actual results to differ materially from the results twelve months after the preparation of the report. contemplated in the forward-looking statements contained in this Annual Report. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 112

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1 Ahold Delhaize’s principal risks and uncertainties Risk Strategic area Key risk drivers Mitigating actions Potential consequences Business continuity (O) A better place • Dependence on IT (legacy) systems • Business continuity governance structure While Ahold Delhaize continues to maintain and invest in Disruption of critical business to shop • Centralized office and product • Business continuity strategic guidelines business continuity and disaster recovery plans, business processes may result in distribution facilities and tactical policy interruptions could have a material adverse effect on the non-availability of products Company’s financial position, results of operations, liquidity, • Dependence on logistics service providers • Business continuity framework with for customers customer perception and reputation. • Dependence on suppliers of strategic guidance and procedures own-brand products and services • Business continuity and disaster • Cyber threats recovery plans • Events of an exceptional nature • Insurance program • Network protection (firewall, intrusion detection / prevention systems, email filtering) • Cyber-defense monitoring Competitive environment Our sustainable • Consumer value perception • Research and monitoring of Ahold Delhaize is focused on the execution of its strategic and economic conditions (S) business model (price, assortment, quality) consumer behavior promises. Unforeseen effects could impair the effectiveness Changes to the competitive • Changing customer behavior • Price benchmarking competition of Ahold Delhaize’s strategy and reduce the anticipated landscape and a weak benefits of its price repositioning and cost savings programs (e.g., online shopping) and competition • Analysis of economic developments macroeconomic climate without or other strategic initiatives. These factors may have a • Lack of distinctiveness appropriate response could • Actively monitoring and developing material adverse effect on the Company’s financial position, threaten Ahold Delhaize’s ability • Consumer purchasing power e-commerce business results of operations and liquidity. to achieve its strategic objectives under pressure • Approved strategies For more information see the Business review section. • Inflationary forces impacting cost • Promotional activities of goods sold • Building more personalized • Pressure on margin customer relationships • Strengthening own brands to meet changing customer expectations on quality, health, and sustainability

1 Risk objectives: strategic (S), operational (O), financial (F) and compliance (C) risks listed in alphabetical order. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 113

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Risk Strategic area Key risk drivers Mitigating actions Potential consequences Information security and A better place • Consumer confidence • Strategic and tactical information security Ahold Delhaize’s business operations generate and privacy (O, C) to shop • Sensitivity of data policy and guidelines maintain confidential commercial and personal information A lack of security around, or concerning customers, associates, suppliers and the A better place • Changing or conflicting privacy legislation • Information security and non-compliance with, privacy Company. Data breaches with disclosure of confidential to work or regulations privacy governance requirements for customer or information to unintended third parties may negatively • Control standards for information associate data might negatively • Use of third parties to process impact Ahold Delhaize’s corporate reputation and management and security impact strategic initiatives and store data competitive position or result in litigation or regulatory relating to customer loyalty • Global security threats • Security and Privacy by Design action. This could have a material adverse effect on • Growth of online sales • Payment Card Industry (PCI) and privacy Ahold Delhaize’s financial position or reputation. compliant control framework • Lack of awareness of regulations and internal requirements • Information security capabilities • Information security and data privacy awareness programs • Cyber insurance coverage Labor (O) A better place • People management and • Associate engagement survey A work stoppage or other event due to the failure of one or Ahold Delhaize‘s brands to work associate engagement and response more of Ahold Delhaize’s brands to renegotiate a collective might not be able to negotiate bargaining agreement, or otherwise, could be disruptive to Our sustainable • Expiring collective bargaining agreements • Performance management cycle extensions or replacements our businesses, lead to adverse publicity and have a material business model • Relationships with the relevant trade unions • Contract negotiation process on acceptable terms, or face adverse effect on the Company’s results of operations and unfavorable expectations • Functions that support relationships financial position. or demands from trade unions with trade unions • Contingency plans Legislative and regulatory Our sustainable • Increased focus on compliance, • Knowledge and awareness of regulations Ahold Delhaize’s activities are subject to various laws and environment (C) business model and enforcement • Monitoring, review and reporting regulations in each local market where it operates. The cost A changing legislative and • Public opinion / pressure on changes of compliance with any of these laws could impact Ahold regulatory environment might Delhaize’s operations and reduce its profitability. See further • International and national tax developments • Operational procedures and guidance increase the cost of doing discussion of the consequences of the legislative and business, tax levels and the • Local regulatory changes • Education of regulators and regulatory risks below. complexity of our operations • Diversity of jurisdictions public policymakers, e.g., through industry associations • Changing political climate • Tax policy • Unfavorable position of retail in the value chain • Engaging with stakeholders Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 114

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Risk Strategic area Key risk drivers Mitigating actions Potential consequences Merger-related changes Our sustainable • Integration of the businesses more difficult • Governance structure with direct If Ahold Delhaize is unable to realize the organizational at Ahold Delhaize in business model or time-consuming than expected Management Board involvement and growth opportunities as well as other benefits after the United States (S) and Supervisory Board oversight implementing the new U.S. structure and organization, Our promises • Process and structural changes We could be unable to realize this could have a material adverse effect on the Company’s • Key staff leaving the Company • Integration management office, the expected benefits of the plans and processes reputation or have a material adverse effect on Ahold merger after the integration Delhaize’s financial position. • Monthly integration reviews • Synergy targets • The creation of Ahold Delhaize USA and one Retail Business Services organization to support our brand-centric strategy for the United States Pension plan funding (F) Our sustainable • Low interest rates • Governance structure with a Company- A decrease in equity returns or interest rates may negatively Ahold Delhaize is exposed business model • Stock market performance wide pension committee responsible affect the funding ratios of Ahold Delhaize’s pension to the financial consequences for monitoring pension plan funding funds, which could lead to higher pension charges and • Changing pension laws of a number of defined benefit for Company-sponsored and multi- contributions payable. According to Dutch law and / or pension plans covering a large • Longevity employer plans contractually agreed funding arrangements, Ahold Delhaize number of its associates in • Increasing U.S. healthcare costs may be required to make additional contributions to its the Netherlands and in the pension plans if minimum funding requirements are not met. United States In addition, a significant number of union associates in the United States are covered by multi-employer plans (MEPs). Significant increases in healthcare and pension funding requirements could have a material adverse effect on the Company’s financial position, results of operations and liquidity. See more details on risks related to MEPs in Other risks and uncertainties below and in Note 23 to the consolidated financial statements. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 115

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Risk Strategic area Key risk drivers Mitigating actions Potential consequences Product safety (O, C) A better place • Internationalization of the supply chain • Product safety policies Though it has mitigating actions in place, Ahold Delhaize The consumption of own-brand to shop • Incidents across the world • Control standards for food may face product safety problems, including disruptions products or other food or to the supply chain caused by food-borne illnesses and • Increased number of own-brand products and non-food products non-food products could result negative consumer reaction to incidents, which may have • Standard operating procedures in our customers’ injury, illness • Transparency and speed of a material adverse effect on the Company’s reputation, or death, due to food fraud communications (social media) • Dedicated product integrity guidance results of operations and financial position. in the supply chain or other and controls in our brands developments • Monitoring of performance in the business • Tracing of product origins and conditions of production • Third-party certification • Insurance program • Participation in industry associations • Exploring new technologies (e.g., blockchain) Strategic initiatives (S) Our sustainable • Changing retail environment • Ahold Delhaize’s governance structure Ahold Delhaize is implementing its Better Together strategy. Activities are increasingly business model • Dependencies between projects • Approved strategies If the Company is not able to deliver on the objectives of its undertaken in the form of underlying strategic projects, the realization of key elements Our promises and operational activities • Program and project management projects. Ahold Delhaize might of its strategy may be at risk. This could have a material • Availability of required capabilities not be able to deliver on the • Business review process adverse effect on Ahold Delhaize’s financial position, results objectives of its strategic projects of operations and liquidity. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 116

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Insurance programs (F) Pension funds and multi-employer plans (F) Other financial risks (F) Other risks and uncertainties Ahold Delhaize manages its insurable risks A significant number of union employees in the Other financial risks include foreign currency In addition to the principal risks and uncertainties through a combination of self-insurance and United States are covered by multi-employer translation risk, credit risk, interest rate risk, linked to our strategy above, the Company has commercial insurance coverage. A large part plans based on obligations arising from collective liquidity risk and contingent liabilities to third risks in the following areas: of our operations is self-insured for workers’ bargaining agreements. The risks to the Company parties relating to lease guarantees. Sustainable retailing (S, O) compensation, general liability, property, vehicle involved with participating in MEPs include For information relating to these financial risks, Increased regulatory demands, stakeholder accident and certain healthcare-related claims. the following: see Note 30 and Note 34 to the consolidated awareness and the growing sentiment that large Self-insurance liabilities are estimated based • The Company’s contributions to a multi- financial statements. retailers must address sustainability issues across on actuarial valuations. While we believe that employer plan in which it participates may be the entire supply chain mean that Ahold Delhaize’s the actuarial estimates are reasonable, they are Unforeseen tax liabilities (C) used to fund benefits to employees of other brands and reputation may suffer if it does subject to changes caused by claim reporting Because Ahold Delhaize operates in a number participating employers. not adequately address relevant sustainability patterns, claim settlement patterns, regulatory of countries, its income is subject to taxation in issues affecting the food retail industry. We have economic conditions and adverse litigation results. • If the Company seeks to withdraw from some differing jurisdictions and at differing tax rates. integrated Sustainable Retailing into our Better It is possible that the final resolution of some claims of its MEPs, it must obtain the agreement of the Significant judgment is required in determining Together strategy to ensure that it is part of our may require us to make significant expenditures applicable unions and, in connection with this, the consolidated income tax position. We seek daily business, and that we continue to improve in excess of our existing reserves. In addition, the Company may be required to pay those to organize our affairs in a sustainable manner, our performance, with a focus on three strategic third-party insurance companies that provide the plans an amount based on its allocable share taking into account the applicable regulations of areas: promoting healthier eating, reducing fronting insurance that is part of our self-insurance of the unfunded vested benefits of the plan, the jurisdictions in which we operate. As a result food waste and creating healthy and inclusive programs require us to provide certain collateral. referred to as a withdrawal liability. of Ahold Delhaize’s multi-jurisdictional operations, workplaces. Through the implementation of our We take measures to assess and monitor the • If another participating employer stops it is exposed to a number of different tax risks strategy, we aim to strengthen the communities financial strength and credit-worthiness of the contributing to an MEP in which the Company including, but not limited to, changes in tax laws where we operate. commercial insurers from which we purchase participates (e.g., due to bankruptcy), the or interpretations of such tax laws. The authorities insurance. However, we remain exposed to a Company and other remaining participating in the jurisdictions where Ahold Delhaize operates In addition to addressing risks to our brand and degree of counterparty credit risk with respect to employers may have to increase their may review the Company’s tax returns and may reputation, our Better Together and Sustainable such insurers. If conditions of economic distress contributions to fund the unfunded obligations of disagree with the positions taken in those returns. Retailing strategies will position us well against were to cause the liquidity or solvency of our the plan allocable to the withdrawing employer. An adverse outcome resulting from any settlement the following other risks: an inability to meet our counterparties to deteriorate, we may not be or future examination of the Company’s tax returns customers’ changing needs or expectations for • An MEP in which the Company participates may able to recover collateral funds or be indemnified may result in additional tax liabilities and may healthy and sustainable products; increasing become insolvent and the Company may be from the insurer in accordance with the terms adversely affect its effective tax rate, which could costs due to waste or negative externalities in our required, in certain circumstances, to increase and conditions of our policies. have a material adverse effect on Ahold Delhaize’s supply chain; negative impact to our associate its contributions to fund the payment of benefits financial position, results of operations and engagement if we do not support associates’ by the MEP. liquidity. In addition, any review by the authorities changing expectations of employers; lack of In addition, Ahold Delhaize may be required could cause Ahold Delhaize to incur significant suppliers able to meet improved food safety and to pay significantly higher amounts to fund U.S. legal expenses and divert management’s attention sustainability standards; and insufficient action associate healthcare plans in the future. from the operation of our businesses. to address climate change and its impact. For additional information, see Note 23 to the For more information see Our Better Together consolidated financial statements. strategy. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 117

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Risks related to the legislative and regulatory From time to time, Ahold Delhaize and its environment and litigation (C) businesses are parties to legal and regulatory Ahold Delhaize and its businesses are subject proceedings in a number of countries, including to various federal, regional, state and local laws the United States, and may be subject to and regulations in each country in which they investigations or inquiries, including but not operate, relating to, among other areas: zoning; limited to investigations or inquiries by the land use; antitrust restrictions; workplace safety; competition authorities related to alleged violations public health including food and non-food of competition laws in jurisdictions where they safety; environmental protection; alcoholic conduct business. Based on the prevailing beverage, tobacco and pharmaceutical sales; regulatory environment or economic conditions in and information security. Ahold Delhaize and the markets in which Ahold Delhaize businesses its businesses are also subject to a variety of operate, litigation, investigations or inquiries may laws governing the relationship with associates, increase in frequency and materiality. These legal including but not limited to minimum wage, and regulatory proceedings may include matters overtime, working conditions, healthcare, disabled involving personnel and employment issues, access and work permit requirements. The cost personal injury, antitrust claims, data privacy of compliance, or the failure to comply with, and data protection claims, franchise claims and any of these laws could impact the operations other contract claims and matters, among others. and reduce the profitability of Ahold Delhaize We estimate our exposure to these legal and or its businesses and thus could affect Ahold regulatory proceedings and establish provisions Delhaize’s financial condition, reputation or results for the estimated liabilities where it is reasonably of operations. Ahold Delhaize and its businesses possible to estimate and where the potential are also subject to a variety of antitrust and similar realization of a loss contingency is more likely laws and regulations in the jurisdictions in which than not. they operate, which may impact or limit Ahold The assessment of exposures and ultimate Delhaize’s ability to realize certain acquisitions, outcomes of legal and regulatory proceedings divestments, partnerships or mergers. involves uncertainties. Adverse outcomes of these legal proceedings, or changes in our assessments of proceedings, could potentially result in material adverse effects on our financial results. For further information, see Note 34 to the consolidated financial statements. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 118

Non-financial information and diversity

The EU Directive on the disclosure of Theme Section Ahold Delhaize website Page non-financial and diversity-related Business model Our Better Together strategy defines Our Better Together strategy 28-29 information was published at the the kind of group we want to be, what Our purpose 30-31 drives us, and how our brands will Our sustainable business model 32-37 end of 2014. It was transposed into win in all our markets. Our promises 38-45 Dutch legislation before the end Our values 46-48 of 2016, resulting in two separate Environmental At Ahold Delhaize, we are reducing Our promises https://www.aholddelhaize.com/en/ 44-45 decrees: Disclosure of non-financial matters our energy intensity and emissions Our response to stakeholder needs sustainable-retailing/ 49-57 information (“Bekendmaking by assessing and reducing the How we manage risk sustainable-retailing-in-practice/ 108-117 niet-financiële informatie”) and environmental impact of our Sustainability performance climate-impact/ 250 Disclosure of diversity policy operations. We have already uncovered plenty of opportunities: (“Bekendmaking diversiteitsbeleid”). from the refrigerators, transport These decrees make it mandatory methods and energy we use, for companies to include non- to how we dispose of waste. financial and diversity-related Social and We recognize that diversity Our promises https://www.aholddelhaize.com/en/ 42-43 information in their annual reports. personnel matters and inclusion are critical to our Our values sustainable-retailing/ 46-48 The information required under these decrees Company’s success – they Our response to stakeholder needs sustainable-retailing-in-practice/ 49-57 is incorporated throughout this report. The table make us better and increase How we manage risk create-an-inclusive-and-healthy- 108-117 to the right provides an overview of the key topics associate engagement. Sustainability performance workplace/ 250 to be addressed and where they can be found. Respect for We are committed to respecting Our promises https://www.aholddelhaize.com/en/ 38-45 human rights the human rights of our associates, Our values sustainable-retailing/sustainable- 46-48 our customers, our communities and Our response to stakeholder needs retailing-in-practice/create-an-inclusive- 49-57 the people who work throughout our and-healthy-workplace/our-position-on- supply chains. human-rights/ https://www.aholddelhaize.com/en/ about-us/code-of-ethics/ https://www.aholddelhaize.com/en/ about-us/code-of-ethics/our-standards- of-engagement/ Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 119

Non-financial information and diversity continued

The information required under the two decrees is incorporated throughout this report. The table Theme Section Ahold Delhaize website Page to the right provides an overview of the key topics Anti-corruption Being a trustworthy retailer of Our values https://www.aholddelhaize.com/en/ 46-48 to be addressed and where they can be found. and bribery choice is very important for us. about-us/code-of-ethics/ We are committed to conducting business with integrity, in an ethically responsible manner and in compliance with the law in all countries and jurisdictions in which we operate. Diversity We strive to create a workplace Our promises 43 that reflects the diversity of our Our Management Board 83 communities and where each and Executive Committee 85 person feels valued and inspired Our Supervisory Board 255 to develop to their full potential. Sustainable Retailing data In the composition of our Management and Supervisory Boards, we aim for diversity of nationality, age, education, gender and professional background. Who we are The world around us Business review Governance Financials Sustainability performance Investors Ahold Delhaize Annual Report 2017 120

Declarations

This Annual Report, including the 2017 Introduction Declarations financial statements, which are audited by This 2017 Ahold Delhaize Annual Report The members of the Management Board, as PricewaterhouseCoopers Accountants N.V., dated February 27, 2018, (the Annual Report) required by section 5:25c, paragraph 2, under c has been presented to the Supervisory comprises regulated information within the of the Dutch Act on Financial Supervision, confirm Board. The 2017 financial statements and the meaning of sections 1:1 and 5:25c of the Dutch that to the best of their knowledge: independent auditor’s report relating to the audit Act on Financial Supervision “Wet op het • The 2017 financial statements included in this of the 2017 financial statements were discussed financieel toezicht.” Annual Report give a true and fair view of the with the Audit, Finance and Risk Committee in For the consolidated and the parent company’s assets, liabilities, financial position and profit the presence of the Management Board and the 2017 financial statements “jaarrekening” within or loss of the Company and the undertakings external independent auditor. The Supervisory the meaning of section 2:361 of the Dutch Civil included in the consolidation taken as a whole. Board recommends that the General Meeting of Code, please refer to Financials. The members • The management report included in this Annual Shareholders adopts the 2017 financial statements of the Management Board and the Supervisory Report gives a true and fair view of the position included in this Annual Report and recommends Board have signed the 2017 financial statements of the Company and the undertakings included the proposal to pay a cash dividend for the pursuant to their obligation under section 2:101, in the consolidation taken as a whole as of financial year 2017 of €0.63 per common share. paragraph 2 of the Dutch Civil Code. The following December 31, 2017, and of the development and Supervisory Board sections of this Annual Report together form the performance of the business for the financial Mats Jansson (Chairman) management report, or the “bestuursverslag” year then ended. Jan Hommen (Vice Chairman) within the meaning of section 2:391 of the Dutch • The management report includes a description Jacques de Vaucleroy (Vice Chairman) Civil Code: Message from our CEO, Who we of the principal risks and uncertainties that the René Hooft Graafland are, The world around us, Business Review, Our Company faces. Ben Noteboom Management Board and Executive Committee, Bill McEwan Our Supervisory Board, Corporate governance, Management Board Rob van den Bergh How we manage risk, Remuneration and the Dick Boer Mark McGrath subsection Remuneration included in the President and Chief Executive Officer Mary Anne Citrino Supervisory Board report. Frans Muller Johnny Thijs For other information, or “overige gegevens” within Deputy Chief Executive Officer Patrick De Maeseneire the meaning of section 2:392 of the Dutch Civil and Chief Integration Officer Dominique Leroy Code, please refer to subsection Other information Jeff Carr under Financials, and to the section Investors. Chief Financial Officer Kevin Holt Chief Executive Officer Ahold Delhaize USA