Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Delhaize Annual Report 2018 52

53 Our Management Board and Executive Committee 55 Our Supervisory Board 57 Corporate governance 63 Supervisory Board report 70 Remuneration 77 How we manage risk 86 Declarations

Governance Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Annual Report 2018 53

Our Management Board and Executive Committee Our Management Board

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Female ale

PresidentFrans Muller and Chief Executive ChiefJeff CarrFinancial Officer; ChiefKevin Executive Holt Officer ChiefWouter Executive Kolk Officer Officer; Chairman and member Member Management Board Ahold Delhaize USA; Europe and Indonesia; of Management Board and and Executive Committee Member Management Board Member Management Board 1ationality Including the members of the Management Board. Executive Committee Jeff Carr has served as Chief Financial Officer and Executive Committee and Executive Committee Frans Muller started as President and Chief of Ahold Delhaize since July 24, 2016. Jeff Kevin Holt has served as Chief Executive Wouter Kolk started as Chief Executive Executive Officer of Ahold Delhaize on July 1, joined Ahold on November 14, 2011, as acting Officer Ahold Delhaize USA since January 1, Officer Europe and Indonesia on October 1, 2018. Before that, he served as Deputy Chief member of the Management Board and CFO. 2018. Prior to that, Kevin had been Chief 2018. He had been Chief Operating Officer utch Executive Officer and Chief Integration Officer Ahold’s shareholders appointed him to the Operating Officer Ahold USA since October the Netherlands and Belgium and member of since 2016. He was also Acting Chief Management Board on April 17, 2012. 2016, after serving as COO Delhaize the Executive Committee of Ahold Delhaize Operating Officer for Delhaize America from Jeff began his career at Unilever, and held America since July 24, 2016. He had earlier since September 8, 2017. British October 2016 until January 2018. Prior to senior roles in finance at Grand Metropolitan served as Executive Vice President of Wouter re-joined Ahold in 2013 as EVP Ahold Delhaize, Frans served for three years plc, Reckitt Benckiser and Associated British and CEO of Delhaize Specialty Stores and New Markets at Albert as President and CEO of Delhaize Group. Foods. From 2005 to 2009, he was group America, starting in 2014. Heijn following a six-year period as CEO merican Before joining Delhaize Group, Frans worked finance director and a member of the board Before joining Delhaize Group, Kevin was of international retailer WE Fashion. He for German retailer Metro AG for more than at easyJet plc. Jeff was then appointed to the president of retail operations for SuperValu. became Chief Executive Officer 15 years, serving in various leadership role of group finance director and a member During his tenure there, the company owned in January 2015. He first started at Ahold in positions at Metro AG, including managing of the board at FirstGroup plc, a leading the Albertsons, Jewel-Osco and Save-A-Lot 1991, and over the next 16 years served in director of Makro, member of the board of transport operator in the UK and the United chains and was the third largest food several international commercial and general Metro Cash & Carry International, president States. Jeff serves as non-executive director retailing company in the United States. management roles, including Commercial for Asia Pacific and Russia / Ukraine, and of Kingfisher plc, Europe’s leading home Director Asia-Pacific based in Singapore, improvement retailer. Prior to SuperValu, Kevin worked for three CEO of Metro Group Buying. From 2006 years with Sears Holding Company and Regional Director Albert Heijn, General until 2013, he was a member of the Metro AG Jeff has lived and worked in Europe and the 14 years with Meijer, serving in various Manager Gall & Gall and General Manager of Management Board and served as CEO United States. leadership positions, including executive . Wouter is a member of the supervisory of Metro Cash & Carry from 2008 until 2013. Age: 57 vice president of retail operations and senior boards of the Hortus Botanicus Amsterdam and concert hall Paradiso. From 1988 to 1997, Frans held various Nationality: British vice president of information technology / management and executive positions at KLM services and strategic planning. Age: 52 Cargo in Amsterdam, Frankfurt, Vienna and Before joining the retail industry, Kevin spent Nationality: Dutch Singapore. nine years at NCR delivering technology Frans is president of the European Retail solutions to large and complex organizations. Round Table and serves on the board of Age: 60 directors of the Vlerick Business School. Nationality: American Age: 57 Nationality: Dutch Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 54

Our Management Board and Executive Committee Our Executive Committee

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British Abbe Luersman Jan Ernst de Groot Ben Wishart Farhan Siddiqi merican Chief Human Resources Officer; Chief Legal Officer; Global Chief Information Officer; Chief Digital Officer; Member Executive Committee Member Executive Committee Member Executive Committee Member Executive Committee

1 Including the members of the Abbe Luersman has served as Chief Human Jan Ernst de Groot has served as Chief Ben Wishart became a member of the On January 28, 2019, Farhan Siddiqi joined Management Board. Resources Officer and member of Ahold Legal Officer since July 24, 2016. Prior to Executive Committee on January 1, 2018. Ahold Delhaize as Chief Digital Officer and Delhaize’s Executive Committee since that, he was Chief Legal Officer and member Ben joined Ahold in 2013 in the role of member of the Executive Committee. He is July 24, 2016. She is responsible for Global of Ahold’s Executive Committee since Global Chief Information Officer and has responsible for driving digital transformation Human Resources, including Talent and February 1, 2015. Jan Ernst is responsible continued in this role for Ahold Delhaize. and innovation across Ahold Delhaize’s local Diversity; Leadership and Development; for Ahold Delhaize’s legal affairs, governance He is responsible for leadership and brands, focusing on loyalty, data analytics Organizational Effectiveness and Design; and compliance functions, safety, public governance on technology matters globally, and personalization. and Total Rewards. Prior to this, Abbe had affairs and product integrity. including strategy and solution delivery, Before joining Ahold Delhaize, Farhan served served as Ahold’s Chief Human Resources Before joining Ahold, Jan Ernst was enabling digital platforms, cyber defense as chief digital officer at McDonald’s, and led Officer and member of the Executive general counsel and managing director and sourcing. the restaurant chain’s digital transformation, Committee from November 1, 2013. at TNT Express. Prior to that, he worked for He previously served as CIO of Morrisons including the launch of mobile commerce in Before that, Abbe worked for Unilever, KLM Royal Dutch Airlines in a wide range plc and Whitbread plc and held various 20,000 restaurants, a new mobile app and where she held various HR leadership roles, of business and corporate roles, most senior Information Technology roles at Tesco the upgrade of self-service ordering kiosks. most recently as head of human resources recently as managing director and a member plc. following early career roles in consulting He was also responsible for data analytics for Unilever Europe. Prior to Unilever, Abbe of the board of management. Jan Ernst with Cap Gemini and sales and marketing and extending Customer Relationship worked at Whirlpool Corporation, holding started his career at law firm De Brauw with American Express. Management capabilities. a number of senior roles in human resources, Blackstone Westbroek. Age: 56 Prior to this, Farhan held various key both in the United States and internationally. Jan Ernst is chairman of the supervisory Nationality: British leadership positions within Bank of America, Abbe is a member of the Network of council of Hivos, a supervisory board Target and General Electric, where he Executive Women board of directors, the member of ADG Dienstengroep and focused on implementing successful Gartner CHRO Global Leadership board a board member of the Hermitage Museum customer loyalty programs and digital of directors and the Netherlands American Amsterdam. payment solutions and launching strategic Chamber of Commerce board of directors. Age: 55 partnerships. Age: 51 Nationality: Dutch Age: 50 Nationality: American Nationality: American Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 55

Our Supervisory Board

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Female ale

ChairmanJan Hommen and Chairman of the ViceBill McEwanChairman and Chairman ViceJacques Chairman de Vaucleroy ChairmanRené Hooft of the GraaflandAudit, Governance and Nomination of the Remuneration Committee Jacques de Vaucleroy has served on Ahold Finance and Risk Committee Committee Bill McEwan has served on Ahold Delhaize’s Delhaize’s Supervisory Board since July 24, René Hooft Graafland has served on Ahold ationality Supervisory Board since July 24, 2016, and is 2016, and is member of the Audit, Finance Delhaize’s Supervisory Board since July 24, Jan Hommen has served on Ahold Delhaize’s and Risk Committee and the Sustainability and Supervisory Board since July 24, 2016, Chairman of the Remuneration Committee and 2016, and is Chairman of the Audit, Finance a member of the Sustainability and Innovation Innovation Committee. Prior this, he served on and Risk Committee and member of the and as its Chairman since April 11, 2018. Delhaize’s Board of Directors starting in 2005 Jan is also the Chairman of the Governance Committee. Prior to this, he served on Sustainability and Innovation Committee. anaian Delhaize’s Board of Directors as of 2011 and and was Chairman of its Governance and Prior to this, he was appointed to the Ahold merican and Nomination Committee and a member Nomination Committee. of the Sustainability and Innovation Committee. was Chairman of its Remuneration Committee. Supervisory Board on April 16, 2014, with In addition, he served as Chairman of Ahold’s Bill is the former president and CEO of Jacques has spent most of his career within effect from January 1, 2015. the ING group, where he was a member of the Supervisory Board since 2013. Jan was Vice Sobeys Inc., and was a member of the board René previously held the position of CFO and Belian Chairman of Ahold’s Supervisory Board and of directors of its parent company, Empire executive board and CEO of ING Insurance member of the executive board of Heineken Chairman of its Audit Committee from 2003 Company Limited. and Investment Management Europe. Jacques N.V. until April 2015. Before being appointed to 2007. was a member of AXA Group’s management as a member of Heineken’s executive board Between 1989 and 2000, Bill held a variety committee and CEO of the company’s Jan is the former CEO of ING Group N.V., in 2002, he held various international utch of progressively senior marketing and Northern, Central and Eastern Europe CEO of KPMG the Netherlands, CFO and merchandising roles with Coca-Cola Limited management positions with the company business unit from 2010 until 2016. He also in Europe, Asia and Africa. vice chairman of the board of management and Coca-Cola Bottling as well as with The assumed global responsibility for the AXA of Royal Philips Electronics N.V. and CFO Great Atlantic and Pacific Tea Company (A&P), Group’s life and savings and health businesses René is vice-chairman of the supervisory of Aluminum Company of America Inc. both in Canada and in the United States. from 2011 until 2016. board and chairman of the audit committee Currently, Jan is chairman of the supervisory Bill served as president of A&P’s Canadian of Wolters Kluwer N.V. and a member of operations before his appointment as Currently, Jacques is a member of the boards the supervisory board and audit committee board of Koninklijke VolkerWessels N.V., of directors of Swiss Re Ltd, Swiss Re Europe, chairman (senior advisor) of BlackRock president and chief executive officer of the of Koninklijke FrieslandCampina N.V. He is company’s U.S. Atlantic Region. Fidelity International Ltd, Zabka Polska and chairman of the boards of the Royal Theatre Netherlands, chairman of the board of Colt Technology Services Group plc. He is also trustees of United World College Nederland Bill is a member of the board of Aimia Inc. Carré Fund and the Stichting African Parks a member of the advisory boards of Artexis Foundation. René is also a member of the and a member of the supervisory board of Age: 62 Easyfairs and CVC Belgium. ProteoNic B.V. Monitoring Commission Corporate Nationality: Canadian Age: 58 Governance Code. Age: 75 Nationality: Belgian Age: 63 Nationality: Dutch Nationality: Dutch Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 56

Our Supervisorycontinued Board

ChairmanRob van ofden the Bergh Sustainability Mary Anne Anne Citrino Citrinohas served on Ahold Dominique Leroy hasLeroy served on Ahold Mark McGrath McGrath has served on Ahold Delhaize’s Ben Noteboom Noteboom has served on Ahold Delhaize’s Supervisory Board since July 24, Supervisory Board since July 24, 2016, and is Delhaize’s Supervisory Board since July 24, and Innovation Committee Delhaize’s Supervisory Board since July 24, 2016, and is a member of the Audit, Finance 2016, and is member of the Governance and a member of the Governance and Nomination 2016, and is a member of the Remuneration Rob van den Bergh has served on Ahold and Risk Committee and the Sustainability Nomination Committee and the Sustainability Committee and the Sustainability and Committee and the Sustainability and Delhaize’s Supervisory Board since July 24, and Innovation Committee. Prior to this, and Innovation Committee. Prior to this, Innovation Committee. Innovation Committee. Prior to this, he was 2016, and is Chairman of the Sustainability she was appointed to the Ahold Supervisory she served on Delhaize’s Board of Directors He was first appointed to the Ahold first appointed to the Ahold Supervisory and Innovation Committee and member of Board on March 14, 2016. starting in 2015. Supervisory Board on April 23, 2008. Mark is Board on April 28, 2009. the Remuneration Committee. Prior to this, Mary Anne is a senior advisor to Blackstone. Dominique has been the CEO of Proximus a director emeritus of McKinsey & Company. Ben is former CEO and chairman of the he was first appointed to the Ahold She joined the Blackstone Advisory Partners (formerly Belgacom) and a member of the He led the firm’s Americas Consumer Goods executive board of Randstad Holding N.V., Supervisory Board on April 20, 2011. Group as senior managing director in 2004. board of directors of Proximus since 2014. Practice from 1998 until 2004, when he retired to which he was appointed in 2001. He Rob is former CEO of VNU N.V. Before that, Mary Anne was employed at Morgan Stanley She began working at Belgacom SA in 2011 from the company. Mark is a former director of had first joined Randstad in 1993 and held he held various other executive positions within for over 20 years, during which she served as vice president of sales for the consumer GATX and Aware Inc. various senior management positions during VNU, was a member of the executive board as the global head of consumer products division. In 2012, Dominique held the position Mark serves on the advisory council of the his time with the company. from 1992 and was appointed CEO in 2000. investment banking, co-head of healthcare of executive vice president of the consumer University of Chicago’s Booth Graduate School Ben is chairman of the supervisory board business unit of Belgacom and was a member Rob is a member of the supervisory boards services investment banking, and as a of Business. He is a trustee and serves on the of Koninklijke Vopak N.V., chairman of its of the management committee of Belgacom of Pon Holdings B.V., Iddink Groep B.V. mergers and acquisitions analyst. executive committee of the Chicago Symphony selection and appointment committee and Group. and Novamedia. He is also a member of Currently, Mary Anne is a director of Orchestra Association. a member of its remuneration committee. the advisory board of CVC Capital Partners Aluminum Company of America Inc. and Prior to this, Dominique worked for 24 years Age: 72 He is also a member of the supervisory at Unilever. She was managing director at board of Aegon N.V., chairman of its and member of the Netherlands Committee a member of its governance and nominating Nationality: American of Human Rights Watch. committee and public issues committee. Unilever (BeLux) and member of the Unilever remuneration committee and a member Benelux management committee. of its risk committee. In addition, he serves Age: 68 Mary Anne is chair of the audit committee and member of the finance, investment and Dominique is also chairwoman of the as a member of the supervisory board and Nationality: Dutch technology committee of Hewlett Packard, boards of the Proximus subsidiaries BICS audit committee of Wolters Kluwer N.V., Inc. Mary Anne also serves as non-executive and Be-Mobile and member of the board and as a member of the board of the director and member of the board risk of Proximus Art. In addition, Dominique is an Cancer Center Amsterdam. committee of Barclays plc. independent board member for the French Age: 60 Age: 59 construction materials group Saint Gobain and Nationality: Dutch chairwoman of the international advisory board Nationality: American of the Solvay Brussels School of Economics and Management. Dominique was board member of Lotus Bakeries till May 2018. Age: 54 Nationality: Belgian Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 57

Corporate governance

Governance structure We have designed our corporate Governance structure Koninklijke Ahold Delhaize N.V. (“the Company” General Meeting of Shareholders Audit, Finance and Risk Committee governance structure to best or “Ahold Delhaize”) is a public company under support our business, meet the Dutch law, structured to execute our strategy Remuneration Committee and to balance local, regional and global needs of our stakeholders and Supervisory Board decision-making. comply with laws and regulations. Governance and Nomination Committee This section contains an overview of our In 2018, our Company comprised a Global corporate governance structure and includes Support Office and four reportable segments: Sustainability and Innovation Committee information required under the new Dutch Management Board The United States, The Netherlands, Belgium, Corporate Governance Code, effective January Executive Committee and Central and Southeastern Europe (CSE) – 1, 2017 (Dutch Corporate Governance Code). each of which are made up of a number of local brands. See also Note 6 to the consolidated financial statements. Central and The United The Netherlands Belgium Southeastern Ahold Delhaize has a two-tier board structure States with a Supervisory Board and Management Europe Board that are accountable to our shareholders. Our Management Board has ultimate responsibility for the overall management The above diagram shows Ahold Delhaize’s of Ahold Delhaize. The Supervisory Board governance structure. A list of subsidiaries, joint Management Board supervises and advises the Management Board. ventures and associate companies is included in and Executive Committee Our Management Board has the responsibility Note 36 to the consolidated financial statements. The Executive Committee comprises our for the overall management of the Company Management Board and other key officers of Transition and oversees corporate governance. It is also the Company, led by the Chief Executive Officer. Following the Company’s progress since the responsible for the actions and decisions of the The Executive Committee has been established merger, 2018 was a year of transition, during Executive Committee, which manages our general to involve a broader leadership team in the which Ahold Delhaize moved into the next phase affairs and ensures effective implementation of decision-making process to optimize strategic of its governance. The roles of Deputy CEO and the strategy and achievement of the Company’s alignment and operational execution while Chief Integration Officer and Chief Sustainability, objectives. having the flexibility to adapt to developments Transformation and Communications Officer were The Management Board and Executive Committee in the business and across the Company and no longer required. In addition, the number of together support our business, meet the needs the industry. Supervisory Board members was reduced from of our stakeholders and ensure we comply with 12 to nine and the Presidium was terminated. relevant rules and regulations. The members of Executive Committee are invited to the meetings For a more detailed description of the of the Supervisory Board by invitation of the responsibilities of the Management Board and the Chairman of the Supervisory Board and attend the Executive Committee, see the Rules of Procedure Supervisory Board committee meetings relevant in the Governance section of Ahold Delhaize’s public website at www.aholddelhaize.com to their respective functional responsibilities. Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 58

Corporatecontinued governance

Composition of the Management Board At the same time we aim for the best fit, in Management Board members are appointed Evaluation and Executive Committee combination with the availability of qualified for four-year terms and may be reappointed for In 2019, the Management Board and the According to our Articles of Association, the candidates. At this moment, Ahold Delhaize has additional terms not exceeding four years. The Executive Committee conducted a self- Management Board must consist of at least a Management Board in which all four members Supervisory Board may at any time suspend assessment by means of a structured dialogue three members. The current members are: Frans are male and an Executive Committee in which a Management Board member and Executive chaired by the CEO. Items that were assessed Muller, President and Chief Executive Officer; one member is female and seven members are Committee member. The other members of the and discussed included diversity in relation to the Jeff Carr, Chief Financial Officer; Kevin Holt, male. We recognize there is room for improvement Executive Committee are appointed, suspended composition of the Management Board and the Chief Executive Officer Ahold Delhaize USA; and and we continue to seek to identify potential Board and dismissed by the Supervisory Board, at the Executive Committee, meeting processes and Wouter Kolk, Chief Executive Officer Europe and members who would enhance the diversity of the proposal of the CEO. procedures, discussions and decision-making, Indonesia. The current members of the Executive Boards in the above-mentioned areas. and team dynamics. Remuneration Committee are the members of the Management In order to meet our diversity ambitions and On April 19, 2016, Ahold Delhaize’s General Board along with Abbe Luersman, Chief comply with statutory guidelines for gender Meeting of Shareholders adopted the current Human Resources Officer; Jan Ernst de Groot, Supervisory Board diversity in the coming years, we continue to work remuneration policy for Management Board The Supervisory Board is responsible for Chief Legal Officer; Ben Wishart, Global Chief to ensure we build robust development and members. supervising and advising our Management Board Information Officer; and Farhan Siddiqi, succession plans; generate diverse, balanced and overseeing the general course of affairs, Chief Digital Officer1. You can find details of this policy in slates; and take the necessary actions to retain strategy, operational performance and corporate Remuneration. For detailed information on On July 1, 2018, stepped down as our current diverse talents so we can build our governance of the Company. The Supervisory the individual remuneration of Management President and Chief Executive Officer and on talent pipeline and drive greater diversity at all Board is guided in its duties by the interests of the Board members, see Notes 31 and 32 to the November 1, 2018, Marc Croonen stepped down levels in our organization. Company and the enterprise connected with the consolidated financial statements. from the Executive Committee. Company, taking into consideration the overall Appointment, suspension and dismissal Possible reappointment schedule well-being of the enterprise and the relevant At Ahold Delhaize, we believe that a diverse and The General Meeting of Shareholders can Management Board interests of all its stakeholders. The Supervisory fully representative Management Board and appoint, suspend or dismiss a Management Date of first Year of possible Board is responsible for monitoring and Executive Committee contributes to well-balanced Board member by an absolute majority of votes Name appointment reappointment assessing its own performance. decision-making processes and the optimal cast, upon a proposal made by the Supervisory Frans Muller March 14, 20161 20202 Ahold Delhaize’s Articles of Association require functioning of both the Management Board and Board. If another party makes the proposal, an Jeff Carr April 17, 2012 2020 the approval of the Supervisory Board for certain the Executive Committee. In accordance with absolute majority of votes cast, representing at Kevin Holt March 14, 20161 2020 provision 2.1.5 of the Dutch Corporate Governance least one-third of the issued share capital, is major resolutions by the Management Board, Wouter Kolk April 11, 2018 2022 Code, Ahold Delhaize’s diversity policy states required. If this qualified majority is not achieved, including: 1 Effective July 24, 2016. that the composition of the Executive Committee but an absolute majority of the votes exercised 2 At the 2018 General Meeting of Shareholders, the Company • Issuance of shares and the Management Board and the combined was in favor of the proposal, then a second expressed its intent to propose to shareholders in 2019 the • Acquisitions, repurchases of shares, and any experience and expertise of their members meeting may be held. reappointment of Frans Muller for a term of four years, after the 2019 General Meeting of Shareholders. reduction in issued and outstanding capital should reflect the profile of the Company as In the second meeting, only an absolute majority it relates to nationality, age, education, gender • Allocation of duties within the Management of votes exercised, regardless of the number of and professional background. Board and the adoption or amendment of the shares represented at the meeting, is required to Rules of Procedure of the Management Board adopt the proposal. and the Executive Committee • Significant changes in the identity or the nature 1 As of January 28, 2019. of the Company or its enterprise Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 59

Corporatecontinued governance

More detailed information on the Supervisory Conflict of interest Adoption of resolutions Board can be found in the Supervisory Board A member of the Supervisory Board is required Shares and shareholders’ rights Subject to certain exceptions provided by Dutch General Meeting of Shareholders report. The Rules of Procedure of the Supervisory to immediately report any potential conflict of law or our Articles of Association, resolutions are Ahold Delhaize’s shareholders exercise Board are available in the Governance section interest to the Chairman of the Supervisory Board passed by an absolute majority of votes cast their rights through annual and extraordinary of Ahold Delhaize’s public website at and provide all relevant information. In the event without a requirement for a quorum. General Meetings of Shareholders. The Company www.aholddelhaize.com. of a potential conflict of interest, the member of is required to convene an annual General Meeting Proposals submitted to the agenda by the Management Board concerned is required Appointment of Shareholders in the Netherlands each year, shareholders require an absolute majority to immediately report this to the Chairman of the The General Meeting of Shareholders can no later than six months after the end of the of votes cast at the annual General Meeting of Supervisory Board and to the other members of appoint, suspend or dismiss a Supervisory Board Company’s financial year. Extraordinary General Shareholders representing at least one-third of the Management Board and provide them with member by an absolute majority of votes cast, Meetings of Shareholders may be convened at any the issued shares. If this qualified majority is not all relevant information. upon a proposal made by the Supervisory Board. time by the Supervisory Board, the Management achieved but an absolute majority of the votes If another party makes the proposal, an absolute Should a conflict of interest arise, the Supervisory Board, or by one or more shareholders (and / or exercised was in favor of the proposal, then majority of votes cast, representing at least Board or the relevant Management Board holders of depository receipts) representing at a second meeting may be held. In the second one-third of the issued share capital, is required. member may not participate in the discussions least 10% of the issued share capital. meeting, an absolute majority of votes exercised If this qualified majority is not achieved but an and decision-making process on subjects or is required to adopt the proposal, regardless of The agenda for the annual General Meeting of absolute majority of the votes exercised was in transactions relating to the conflict of interest. the number of shares represented at the meeting Shareholders must contain certain matters as favor of the proposal, then a second meeting may (unless the law or our Articles of Association We will record any such transactions in the annual specified in Ahold Delhaize’s Articles of be held. In the second meeting, only an absolute provide otherwise). report for the relevant year, with reference to the Association and under Dutch law, including the majority of votes exercised, is required, conflict of interest and a confirmation that we adoption of our annual financial statements. The A resolution to dissolve the Company may regardless of the number of shares represented have complied with best practice provisions General Meeting of Shareholders is also entitled be adopted by the annual General Meeting at the meeting. 2.7.3 and 2.7.4 of the Dutch Corporate to vote on important decisions regarding Ahold of Shareholders following a proposal of the A Supervisory Board member is appointed for Governance Code. During 2018, no member Delhaize’s identity or character, including major Management Board made with the approval a four-year term and may be reappointed for of the Supervisory Board or the Management acquisitions and divestments. of the Supervisory Board. Any proposed another four-year period. The Supervisory Board Board had a conflict of interest that was of resolution to wind up the Company must be Shareholders (and / or holders of depository member may subsequently be reappointed for material significance to the Company. disclosed in the notice calling the annual receipts) are entitled to propose items for the a period of two years, which may be extended General Meeting of Shareholders at which In addition, no transactions between the agenda of the annual General Meeting of by, at most, two years. that proposal is to be considered. Company and legal or natural persons who Shareholders provided that they hold at least hold at least 10% of the shares in the Company 1% of the issued share capital or the shares occurred in 2018, corresponding to the best or depository receipts that they hold represent practice provision 2.7.5 of the Code. a market value of at least €50 million. Proposals for agenda items for the annual General Meeting of Shareholders must be submitted at least 60 days prior to the date of the meeting. Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 60

Corporatecontinued governance

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 In March 1989, the Company entered into an independent from the Company. As of February vote. Dutch law prescribes a record date to be shares have been issued to SAPFAA. Holders agreement with the Dutch foundation Stichting 26, 2019, 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 from Continuïteit Ahold Delhaize (SCAD, previously Name Principal or former occupation Meeting of Shareholders to determine whether SAPFAA. named Stichting Ahold Continuïteit), as amended W.G. van Hassel, Lawyer and former chairman a person may attend and exercise the rights and restated in April 1994, March 1997, In accordance with its articles, the board chairman of Dutch Bar Association relating to the annual General Meeting of December 2001 and December 2003 (the of SAPFAA consists of three members: one G.H.N.L. Former Chairman of Shareholders. Shareholders registered at that Option Agreement). The Option Agreement was A member, one B member and one C member. van Woerkom Detailhandel Nederland date are entitled to attend and to exercise their designed to, in accordance with the purpose The A member is appointed by the general J. van den Belt Former CFO Océ rights as shareholders in relation to the annual of SCAD under its articles, potentially exercise meeting of depositary receipt holders, the B General Meeting of Shareholders, regardless of a influence in the event of a public offer or a B. Vree Former CEO APM member is appointed by the Company and the sale of shares after the record date. Shareholders potential change of control over the Company, Terminals Europe C member is appointed by a joint resolution of the may be represented by written proxy. to safeguard the interests of the Company and A member and the B member. On February 26, For further details on Ahold Delhaize’s cumulative all stakeholders in the Company and to potentially We encourage participation in our General 2019, the members of the board of SAPFAA are: preferred shares, including restrictions on avert, to the best of its ability, influences that Meetings of Shareholders. We use Deutsche transfer, see Note 20 to the consolidated financial Member A: J.L. van der Giessen might conflict with those interests by affecting the Bank Trust Company Americas, the Depositary statements. The related documents are available Member B: C.W. de Monchy Company’s continuity, independence or identity. for the Company’s American Depositary Receipt on our public website at www.aholddelhaize.com. (ADR) facility, to enable ADR holders to exercise Member C: R. ter Haar, chairman Pursuant to the Option Agreement, SCAD has Issuance of additional shares their voting rights, which are represented by the been granted an option for no consideration to Ahold Delhaize pays a mandatory annual and preemptive rights common shares underlying the ADRs. acquire cumulative preferred shares from the dividend on cumulative preferred financing Shares may be issued following a resolution Company from time to time. After actively engaging Neither Ahold Delhaize nor any of its subsidiaries shares, which is calculated in accordance with by the General Meeting of Shareholders on a with its shareholders and other stakeholders, may cast a vote on any share they hold in the the provisions of article 39.4 of the Company’s proposal of the Management Board made with the Company agreed with SCAD in May 2018 Company. These shares are not taken into Articles of Association. For further details on the approval of the Supervisory Board. The to extend the Option Agreement for a period of account for the purpose of determining how cumulative preferred financing shares, including General Meeting of Shareholders may resolve to 15 years, effective December 15, 2018. Building on many shareholders are represented or how restrictions on transfer, and the related voting delegate this authority to the Management Board shareholder feedback, the Company has agreed much of the share capital is represented at the rights, see Note 22 to the consolidated financial for a period of time not exceeding five years. with SCAD on two additional commitments: General Meeting of Shareholders. statements. A resolution of the General Meeting of • Within six months after the option is exercised, Holders of depositary receipts of cumulative Shareholders to issue shares, or to authorize the the Company will call a shareholders meeting preferred financing shares may attend the Management Board to do so, is also subject to to discuss the situation with shareholders. General Meeting of Shareholders. The voting the approval of each class of shares whose rights rights on the underlying shares may be exercised • Within one year after the option is exercised, would be adversely affected by the proposed by the Stichting Administratiekantoor Preferente the Company will call a shareholders meeting issuance or delegation. Financierings Aandelen Ahold (SAPFAA), to vote on cancellation of the shares issued On April 11, 2018, the General Meeting of a foundation organized under the laws of the to SCAD; SCAD will not vote on its shares in Shareholders approved a delegation of this Netherlands. relation to that matter. authority to the Management Board, relating to the issuance and / or granting of rights to acquire Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 61

Corporatecontinued governance

common shares up to a maximum of 10% of 1. Shareholders’ equity minus the payment November 13, 2018. The program is expected to The following table lists the shareholders on the issued share capital through October 11, required to make the acquisition is not less be completed before the end of 2019. record in the AFM register on February 26, 2019, 2019, and subject to the approval of the than the sum of paid-in and called-up capital that hold an interest of 3% or more in the share Major shareholders Supervisory Board. and any reserves required by Dutch law or capital of the Company1. Ahold Delhaize is not directly or indirectly owned Ahold Delhaize’s Articles of Association; and Upon the issuance of new common shares, or controlled by another corporation or by any • BlackRock, Inc – 5.01% shareholding (6.97% holders of Ahold Delhaize’s common shares 2. Ahold Delhaize and its subsidiaries would government. The Company does not know of any voting rights) disclosed on February 21, 2019 have a preemptive right to subscribe to common not, as a result, hold a number of shares arrangements that may, at a subsequent date, • DeltaFort Beleggingen I B.V. – 10.82% shares in proportion to the total amount of their exceeding a total nominal value of 10% of result in a change of control, except as described shareholding (3.43% voting rights) disclosed existing holdings of Ahold Delhaize’s common the issued share capital. under Cumulative preferred shares. on July 25, 20162 shares. According to the Company’s Articles of In line with the above, the Management Board Significant ownership of voting shares Association, this preemptive right does not apply has been authorized by the General Meeting • NN Group N.V. – 4.89% shareholding (2.54% According to the Dutch Financial Markets to any issuance of shares to associates. The of Shareholders on April 11, 2018, to acquire voting rights) disclosed on August 9, 20172 Supervision Act, any person or legal entity who, General Meeting of Shareholders may decide a number of shares in the Company. Such directly or indirectly, acquires or disposes of an • Stichting Administratiekantoor Preferente to restrict or exclude preemptive rights. The acquisition of shares, at the stock exchange interest in Ahold Delhaize’s capital or voting rights Financierings Aandelen Ahold – 15.88% General Meeting of Shareholders may also or otherwise, will, for common shares, take must immediately give written notice to the shareholding (5.43% voting rights) disclosed resolve to designate the Management Board place at a price between par value and 110% Netherlands Authority for the Financial Markets on October 2, 20183 as the corporate body authorized to restrict of the opening price of the shares at Euronext (Autoriteit Financiële Markten or AFM) if the or exclude preemptive rights for a period not Amsterdam by NYSE Euronext on the date of 1 In accordance with the filing requirements, the percentages acquisition or disposal causes the percentage shown include both direct and indirect capital interests and exceeding five years. their acquisition. voting rights and both real and potential capital interests and of outstanding capital interest or voting rights held voting rights. Further details can be found at www.afm.nl. On April 11, 2018, the General Meeting of For cumulative preferred financing shares, this by that person or legal entity to reach, exceed 2 The interest on record for DeltaFort Beleggingen I B.V. and Shareholders delegated to the Management will take place at a price between 100% and 110% or fall below any of the following thresholds: NN Group N.V. includes the indirect and / or potential interest from depositary receipts, as well as the direct and real Board, subject to the approval of the Supervisory of the amount paid up (including share premium) 3% 5% 10% 15% 20% interest from common shares. Board, the authority to restrict or exclude the on the relevant shares. The authorization takes 25% 30% 40% 50% 60% 3 SAPFAA holds all outstanding cumulative preferred financing preemptive rights of holders of common shares into account the possibility of cancelling the shares and it issued corresponding depositary receipts to 75% 95% investors that were filed under DeltaFort Beleggingen I B.V. upon the issuance of common shares and / or repurchased shares. This authorization is valid and NN Group N.V. Therefore, in relation to the outstanding upon the granting of rights to subscribe for through October 11, 2019. Ahold Delhaize may cumulative preferred financing shares, disclosures are The obligation to notify the AFM also applies common shares through October 11, 2019. acquire shares in its capital for no consideration made by both SAPFAA (for the shares) and by DeltaFort when the percentage of capital interest or voting Beleggingen I B.V. and NN Group N.V. (for the corresponding or for the purpose of transferring these shares to depositary receipts). Repurchase by Ahold Delhaize rights referred to above changes as a result of associates through share plans or option plans, of its own shares a change in Ahold Delhaize’s total outstanding For further details on the number of outstanding without such authorization. The share buyback Ahold Delhaize may only acquire fully capital or voting rights. In addition, local rules shares, and the percentages of the issued share program of €2 billion that started on January 2, paid-up shares of any class in its capital for may apply to investors. capital they represent, see Note 20 to the 2018, was successfully completed on December a consideration following authorization by the consolidated financial statements. For details on 20, 2018. In total, 100,723,877 of the Company’s General Meeting of Shareholders and subject capital structure, listings, share performance and own shares were repurchased at an average price to the approval of the Supervisory Board dividend policy in relation to Ahold Delhaize’s of €19.86 per share. On January 2, 2019, the and certain provisions of Dutch law and the common shares, see Investors. Company commenced the €1 billion share Company’s Articles of Association, if: buyback program that was announced on Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 62

Corporatecontinued governance

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 Dutch Corporate Governance Code, as required Company’s basic principles relating to corporate the external independent auditor. The Audit, Corporate governance section, in the Investors by article 3 of the Decree, can be found in the governance and organization. The current text Finance and Risk Committee recommends to section, as well as in the notes referred to in these section Compliance with the Dutch Corporate of the Articles of Association is available at the the Supervisory Board the external independent sections or included in the description of any Governance Code. Trade Register of the Chamber of Commerce auditor to be proposed for (re)appointment by relevant contract. • The information concerning Ahold Delhaize’s and Industry for Amsterdam and on our public the General Meeting of Shareholders. In addition, diversity policy, as required by article 3a website at www.aholddelhaize.com. the Audit, Finance and Risk Committee evaluates sub d of the Decree, can be found in the and, where appropriate, recommends the Compliance with Dutch Corporate The Articles of Association may be amended by Management Board and Executive Committee replacement of the external independent auditor. Governance Code the General Meeting of Shareholders. A resolution Ahold Delhaize complies with the relevant and Supervisory Board sections of Corporate to amend the Articles of Association may be On April 11, 2018, the General Meeting of principles and best practices of the Dutch governance as well as in the Supervisory adopted by an absolute majority of the votes cast Shareholders appointed Corporate Governance Code applicable to the Board report. upon a proposal of the Management Board. If PricewaterhouseCoopers Accountants N.V. Company in 2018, as reported in the Governance • The information concerning Ahold Delhaize’s risk another party makes the proposal, an absolute as external independent auditor for the Company section. The Dutch Corporate Governance Code management and control frameworks relating to majority of votes cast representing at least for the financial year 2018. can be found at www.mccg.nl. the financial reporting process, as required by one-third of the issued share capital is required. article 3a sub a of the Decree, can be found in At the Extraordinary General Meeting of If this qualified majority is not achieved but an the relevant section under How we manage risk. Shareholders on March 3, 2004, our shareholders absolute majority of the votes is in favor of the Decree Article 10 EU consented to apply the Dutch Corporate • The information regarding the functioning proposal, then a second meeting may be held. Takeover Directive According to the Decree Article 10 EU Takeover Governance Code. Ahold Delhaize continues to of Ahold Delhaize’s General Meeting of In the second meeting, only an absolute majority Directive, we have to report on, among other seek ways to improve its corporate governance, Shareholders and the authority and rights of our of votes, regardless of the number of shares things, our capital structure; restrictions on voting including by measuring itself against international shareholders, as required by article 3a sub b of represented at the meeting, is required. rights and the transfer of securities; significant best practice. the Decree, can be found in the relevant sections The prior approval of a meeting of holders of shareholdings in Ahold Delhaize; the rules under Shares and shareholders’ rights. a particular class of shares is required for a governing the appointment and dismissal of • The information regarding the composition and Corporate Governance statement proposal to amend the Articles of Association members of the Management Board and the The Dutch Corporate Governance Code requires functioning of Ahold Delhaize’s Management that makes any change in the rights that vest Supervisory Board and the amendment of the companies to publish a statement concerning Board, Executive Committee and Supervisory in the holders of shares of that particular class. Articles of Association; the powers of the their approach to corporate governance and Board and its committees, as required by article Management Board (in particular the power to compliance with the Code. This is referred 3a sub c of the Decree, can be found in the Right of inquiry issue shares or to repurchase shares); significant to in article 2a of the decree on additional Management Board and Executive Committee The thresholds for shareholders to exercise the agreements to which Ahold Delhaize is a party requirements for management reports “Besluit and Supervisory Board sections included right of inquiry (“het enquêterecht”) are based on and which are put into effect, changed or inhoud bestuursverslag” last amended on in Corporate governance as well as in the article 2:346 sub clause 1 under c of the Dutch dissolved upon a change of control of Ahold January 1, 2018 (the Decree). The information Supervisory Board report. Civil Code, regardless of the current nominal Delhaize following a takeover bid; and any required to be included in this corporate share capital of the Company. More information • The information concerning the inclusion of the agreements between Ahold Delhaize and the governance statement as described in articles 3, on the nominal value of shares can be found information required by the Decree Article 10 EU members of the Management Board or 3a and 3b of the Decree, which are incorporated in Note 20 and Note 22 to the consolidated Takeover Directive, as required by article 3b of associates providing for compensation if their and repeated here by reference, can be found in financial statements. the Decree, can be found in the section Decree employment ceases because of a takeover bid. the following sections of this Annual Report: Article 10 EU Takeover Directive. Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 63

Supervisory Board report

Dear shareholder, the Company into its next phase. At the same Composition of the Supervisory Jan Hommen I am pleased to present our Supervisory Board time, we thank Dick Boer for his outstanding Board Chairman of the report for 2018. leadership and total dedication throughout his Ahold Delhaize’s Supervisory Board determines Supervisory Board 20-year career at Ahold and Ahold Delhaize. the number of its members. The Supervisory During 2018, the Supervisory Board fulfilled its Also in 2018, our Chairman, Mats Jansson, retired Board profile is published on Ahold Delhaize’s responsibilities to supervise and advise the from the Board. Mats did a great job in bringing public website at www.aholddelhaize.com and Management Board and oversee the activities Ahold and Delhaize together and he will always is updated regularly. and performance of the Company for the benefit be considered a friend to the Company. We also of all our stakeholders. In accordance with provision 2.1.5 of the Dutch thank Johnnie Thijs and Patrick de Maeseneire, Corporate Governance Code, Ahold Delhaize’s The year 2018 showed that the merger and who retired from the Board during the year, for diversity policy states that the composition of the integration of Ahold and Delhaize had created their active contributions to our Company. Supervisory Board and the combined experience a solid and efficient platform for growth. At the Throughout the second half of the year, we and expertise of its members should reflect the same time, the Company was able to maintain a thoroughly reviewed, discussed and approved profile of the Company as it relates to nationality, strong business performance and build a culture the refresh of Ahold Delhaize’s long-term strategy age, education, gender and professional of success, in the midst of a retail market presented to us by the Management Board, background. In addition, the composition of environment that is changing rapidly. Technology, resulting in the introduction of the Leading the Board, including its members’ combined new business models, eCommerce and social Together strategy. experience, expertise and independence, demography demand new skills and leadership should reflect the best fit for Ahold Delhaize’s at all levels of the Company. The Management Board provided us with profile and strategy. detailed information on the performance of the This also means we are moving into the next business as well as strategic and operational At this moment, two members of Ahold Delhaize’s phase of our governance. We reduced the developments, allowing us to focus on supporting Supervisory Board are female and seven number of members on our Supervisory Board, the Management Board in delivering a solid set members are male. We think that the size of our in line with our ambition as disclosed in 2016. of full year results. We are pleased to report that Board is appropriate, but we recognize there is In the next two years, we will need to replace four 2018 was a successful year, which has enabled room for improvement in its gender diversity and or five members of the Board due to retirements. us to lay down a solid foundation for the years to will continue to pay close attention to this aspect For that reason, we are proposing two new come. We thank the members of the Management in the selection process for new Supervisory members to our Board for approval by Board and the Executive Committee and all Board members. shareholders at this year’s annual General associates across the Company for their Meeting. We are looking for new leadership, new commitment and support. energy, new skills and more diversity to support the Company in the future. You can find more details on our 2018 focus areas and meetings in this Supervisory Board report. In 2018, the Board put particular focus on the leadership change from Dick Boer to Frans Muller On behalf of the Supervisory Board, with a view to the long-term success of the Jan Hommen Company. We are confident that Frans Muller, along with his leadership team, will be able to lead Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 64

Supervisorycontinued Board report

Rules of Procedure Appointments and other changes Ongoing education Evaluation The Rules of Procedure of the Supervisory Board After the annual General Meeting of Shareholders Throughout the year, all members of our The Supervisory Board conducted a self- state that if a member is concurrently a member on April 11, 2018, Mats Jansson stepped down Supervisory Board visit several of our brands, assessment in early 2019. The Board assessed of another company’s supervisory board, the from the Supervisory Board and was succeeded operations and other segments of the Company its own performance as well as the performance main duties arising from and / or the number as Chairman of the Board by Jan Hommen. to gain greater familiarity with senior management of its committees and its individual members. and nature of any other supervisory board and to develop deeper knowledge of local The performance of the Management Board and Bill McEwan succeeded Jan Hommen in his memberships must not conflict or interfere with operations and business opportunities and its individual members was assessed during role as Vice Chairman of the Supervisory Board. that individual’s duties as a member of Ahold challenges. In addition, multiple in-depth a private meeting. René Hooft Graafland was reappointed for his Delhaize’s Supervisory Board. workshops are held on various topics to allow second four-year term and Johnny Thijs and Overall, the Supervisory Board was positive the Supervisory Board members to gain greater Patrick de Maeseneire stepped down from the about the performance of the Management insight into Ahold Delhaize’s key priorities. Supervisory Board. Board. The Supervisory Board was satisfied with New members of our Supervisory Board attend a the performance of its committees and its multiple-day induction program at our businesses functioning as a board. The Supervisory Board in the U.S. and the Netherlands as well as at the concluded that it functions well as a team, in a Global Support Office in Zaandam. During the constructive and open spirit, and that its reduced onboarding program, new Supervisory Board size is more suitable for the Company. As part of members are briefed on their responsibilities and the outcome of the assessment, the Supervisory informed by senior management on the financial, Board will keep a focus on its own composition social, sustainability, human resources, in light of the rapid changes happening in the governance, legal and reporting affairs of our industry, to continue to comply with the highest Company and its businesses. standards of excellence and governance. Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 65

Supervisorycontinued Board report

Supervisory Board profile Experience Core competencies General business Social/ Name management International Retail Consumer goods Online / digital Finance employment Sustainability Disclosure Marketing IT Jan Hommen * * * * * * Bill McEwan * * * * * * * Jacques de Vaucleroy * * * * René Hooft Graafland * * * * * * Rob van den Bergh * * * * * Mary Ann Citrino * * * Dominique Leroy * * * * * * * * Mark McGrath * * Ben Noteboom * * * * * *

Supervisory Board1 possible reappointment schedule Name Date of first appointment1 Reappointment for second and third term End of current appointment Jan Hommen October 1, 2013 2017 2021 Bill McEwan March 14, 20163 2020 Jacques de Vaucleroy March 14, 20163 2020 René Hooft Graafland April 16, 20142 2018 2022 Rob van den Bergh April 20, 2011 2015 2019 Mary Anne Citrino March 14, 2016 2020 Dominique Leroy March 14, 20163 2020 Mark McGrath April 23, 2008 2012 / 2016 2020 Ben Noteboom April 28, 2009 2013 / 2017 2021

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 Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 66

Supervisorycontinued Board report

• January 2018: The Supervisory Board held a • April 2018: As a follow up to earlier deliberations, • June 2018: During a meeting, the Supervisory Meetings of the Supervisory Board conference call to discuss and approve Ahold the Supervisory Board held a conference call Board received an update on trends in the U.S. During 2018, the Supervisory Board met on Delhaize’s Q4 / full year 2017 trading statement to discuss and approve the recommendation retail landscape. The Board also discussed 10 occasions, of which six meetings were held in and the upcoming date of expiration of the of the Governance and Nomination Committee an update on eCommerce in both the U.S. person in Europe and the United States and four option agreement with Stichting Continuïteit with respect to the appointment of Frans Muller and Europe and approved the investment to meetings by means of a conference call. The Ahold Delhaize. as President and Chief Executive Officer in expand bol.com’s fulfillment center. The Board Management Board attended these meetings relation to the retirement of Dick Boer, as well discussed the latest developments with respect and the other members of the Executive • February 2018: During a two-day meeting, the as the changes in the Supervisory Board itself, to the Stop & Shop strategy, including the Committee, as well as other senior management, Supervisory Board discussed and approved including the appointment of Jan Hommen as business case for the launch of a new and were regularly invited to be present. Ahold Delhaize’s Q4 / full year 2017 results, as well as the Annual Report 2017. In addition, the new Chairman. During another meeting, improved in-store experience in 21 stores in The Supervisory Board also held several private the Supervisory Board approved the dividend the Supervisory Board received updates on Hartford, Connecticut. The Supervisory Board meetings without other attendees to independently proposal. During the same meeting, the the strategic plans for Delhaize Belgium, Ahold discussed an update on the process leading to review certain issues and to discuss matters agenda and explanatory notes for the April Delhaize USA eCommerce (including an update a refresh of the Ahold Delhaize strategy, to be related to the functioning of the Management 2018 annual General Meeting of Shareholders on the purpose of Digital Labs) and Stop presented in November. Lastly, the Supervisory Board, Executive Committee and Supervisory were established. On the recommendation of & Shop. The Supervisory Board also received Board received a review on post investments, Board itself. The external independent auditor the Remuneration Committee, the Supervisory an IT update, as well as a separate update including store expansions, relocations attended the meeting of February 27, 2018, at Board resolved to approve the 2017 Executive on product integrity, and approved the 2018 and remodels. which the 2017 Annual Report and financial Committee Incentive Plan Payout, in addition DJSI targets. • August 2018: The Q2 2018 interim results were statements were recommended for adoption by to the approval of the salary review and • May 2018: During a conference call, the presented and subsequently approved by the annual General Meeting of Shareholders. The salary adjustment of the Executive Committee Supervisory Board discussed the extension of the Supervisory Board. The Board discussed external independent auditor also attended the members. In addition, the Supervisory Board the option agreement with Stichting Continuïteit the external and internal audit reports and the quarterly meetings, at which the financial results received an update on the following key Ahold Delhaize and approved its extension overall broadening and strengthening of the were discussed. strategic topics: (i) the repositioning of the Stop as well as two additional commitments to control environment. During its meetings throughout the year, the & Shop brand, (ii) the Ahold Delhaize USA incorporate feedback from shareholders. • September 2018: The Supervisory Board held Supervisory Board reviewed reports from its eCommerce strategy, and (iii) the Delhaize In addition, the Supervisory Board discussed a meeting in which the Board reviewed the various committees and regularly assessed the Belgium strategy. Lastly, the Supervisory Board reports from the external independent auditor opportunities for a refresh of the Company’s organizational strategy, talent management and was updated on Ahold Delhaize’s enterprise and internal auditor as well as the internal strategy. They participated in a structured succession planning. In addition, the Board risk management system, IT performance control report and the governance, risk and dialogue on the key trends recognized in the members have regular contact with associates systems, post-investment reviews and significant control report, including an update on the retail marketplace and which of these trends in various levels of management and, on two legal proceedings with potential impact on GDPR-readiness of the Company. The Board would provide opportunities for the Company occasions, made informal visits to individual the Company. also discussed and approved the Q1 2018 to accelerate growth. The Supervisory Board brands. These informal consultations ensure that Interim Report. In addition, the Supervisory received an update on the operating model of the Supervisory Board remains well-informed Board discussed an update on the new IFRS the Ahold Delhaize USA organization and was about the Company’s day-to-day operations. accounting standard for leases and received informed about plans for the Ahold Delhaize an update on cyber security. Europe organization. Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 67

Supervisorycontinued Board report

• November 2018: During a two-day meeting, the Supervisory Board approved the Q3 2018 Attendance Independence Except for a limited number of occasions, and for valid reasons, all Supervisory Board members The Supervisory Board confirms that during 2018 interim results, together with the Company’s attended all Supervisory Board meetings in 2018. In all cases, the Supervisory Board members who as well as on February 26, 2019, all Supervisory long-term business and finance plans, and were not able to attend made sure they were represented. All Supervisory Board members made Board members were independent within the annual budget plan for 2019. In addition, the adequate time available to give sufficient attention to matters concerning Ahold Delhaize. meaning of provision 2.1.10 of the Dutch Supervisory Board discussed reports from the Governance & Sustainability & Corporate Governance Code. external independent auditor and internal auditor Supervisory Audit, Finance & Nomination Remuneration Innovation as well as the internal control report and the Board Risk Committee Committee Committee Committee governance, risk and control report. Lastly, the No. of No. of No. of No. of No. of No. of No. of No. of No. of No. of Remuneration meetings meetings meetings meetings meetings meetings meetings meetings meetings meetings The annual remuneration of the members of the presentations for the upcoming Capital Markets Board attendance held attended held attended held attended held attended held attended Supervisory Board was determined by the Day event were discussed. Jan Hommen 10 10 4 41 4 4 2 2 extraordinary General Meeting of Shareholders Bill McEwan 10 10 5 5 2 2 • Throughout the year 2018, the Supervisory on March 14, 2016. Remuneration is subject to Board visited multiple stores in Europe and Jacques de Vaucleroy 10 10 4 4 3 3 1 1 annual review by the Supervisory Board. the United States. René Hooft Graafland 10 10 4 4 1 1 Chairman Supervisory Board €220,000 Rob van den Bergh 10 10 5 5 2 2 Vice Chairman (and member Mary Anne Citrino 10 7 4 3 1 1 of the presidium) €180,000 Dominique Leroy 10 8 1 1 2 1 Vice Chairman €125,000 Ben Noteboom 10 10 3 3 5 5 1 1 Member Supervisory Board €90,000 Mark McGrath 10 9 4 4 2 2 1 1 Chairman Audit, Finance Mats Jansson 4 1 2 2 and Risk Committee €30,000 Johnny Thijs 4 2 2 2 Member Audit, Finance Patrick de Maeseneire 4 3 1 0 and Risk Committee €15,000

1 Attendance in his capacity as Chairman of the Supervisory Board. Chairman Other Committee €20,000 Member Other Committee €12,500 Travel compensation intercontinental per round trip €7,500 Travel compensation continental per round trip €2,500

In the execution of the remuneration of the Supervisory Board members, the Company has given consideration to the changes made in 2018 in the composition and the responsibilities of the Supervisory Board and its related committees. Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 68

Supervisorycontinued Board report

The Audit, Finance and Risk Committee The Audit, Finance and Risk Committee also Committees of the Supervisory Board determines how the external independent auditor discussed items including: The Supervisory Board has four committees to which certain tasks are assigned. The committees should be involved in the content and publication have advisory powers and provide the Supervisory Board with regular updates on their meetings. • Quarterly interim reports of financial reports other than the financial The composition of the committees has changed over 2018 and is detailed in the following table. statements. The Management Board and the • Ahold Delhaize’s 2017 Annual Report including Governance and Sustainability and the financial statements Audit, Finance and Nomination Remuneration Innovation Audit, Finance and Risk Committee report to the Risk Committee Committee Committee Committee Supervisory Board annually on their cooperation • Review and approval of the internal audit plan Jan Hommen (Chairman) Chairman Member with the external independent auditor, including • Lease accounting IFRS 16 Bill McEwan (Vice Chairman) Chairman Member the auditor’s independence. The Supervisory • Management report on internal controls over Board takes these reports into account when Jacques de Vaucleroy financial reporting (Vice Chairman) Member Member deciding on the nomination for the appointment of • The findings in the internal audit letters and René Hooft Graafland Chairman Member an external independent auditor that is submitted to the General Meeting of Shareholders. the external independent auditor’s findings Rob van den Bergh Member Chairman in relation to the internal controls over Mary Anne Citrino Member Member In 2018, the Audit, Finance and Risk Committee financial reporting held two meetings in person, and two meetings Dominique Leroy Member Member • 2017 audit findings financial statements Mark McGrath Member Member via conference calls. The attendance rate of the Board members of this Committee was 87%. • The Company’s finance structure Ben Noteboom Member Member Throughout the year, the Audit, Finance and Risk • Treasury Audit, Finance and Risk Committee Committee closely monitored the financial closing • Taxation, including the accounting The Audit, Finance and Risk Committee assists the Supervisory Board in its responsibility to oversee process and reviewed the publication of quarterly for tax reforms results. Updates on internal controls were Ahold Delhaize’s financing, financial statements, financial reporting process and system of internal • Guarantees business controls and risk management. The Chief Executive Officer, Chief Financial Officer, Chief provided during all Committee meetings. The • Self-insurance programs Legal Officer, Senior Vice President Internal Audit, Senior Vice President Accounting, Reporting, Audit, Finance and Risk Committee was informed Risk & Controls and representatives of the external independent auditor are invited to, and attend, regularly on compliance and reviewed and • Recognition of vendor allowances the Audit, Finance and Risk Committee meetings. received regular updates on the Company’s • Impairment testing of goodwill whistleblower programs. • Employee benefits (including pensions and multi-employer pension plans) measurement and disclosure • Appointment of the external independent auditor • Ahold Delhaize Code of Ethics • Compliance, fraud and safety matters • Global Data Protection Regulation Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 69

Supervisorycontinued Board report

The Audit, Finance and Risk Committee and The Committee also discussed the changes See Remuneration for more information on our The Supervisory Board would like to thank Mats the Chairman of the Audit, Finance and Risk in the retail industry and business models remuneration policy, which aims to help us Jansson, Johnny Thijs and Patrick de Maeseneire Committee also held private meetings together requiring new types of leadership and skills in attract, motivate and retain the best-qualified for their many contributions to the Supervisory with the Chief Financial Officer, Senior Vice our Boards and management layers. In reviewing workforce, in a cost-effective way. Board and to the Company. President Internal Audit and external the composition of the Supervisory Board, the Sustainability and Innovation Committee The Supervisory Board would also like to thank independent auditor. Committee concluded that additional knowledge During the course of 2018, the Sustainability Ahold Delhaize’s shareholders for their continued of retail, eCommerce and digitalization are The Supervisory Board has determined that René and Innovation Committee held two meetings in support and trust in the Company and its welcome. Two new board members with Hooft Graafland, Mary Ann Citrino and Jacques person, both of which the Chief Executive Officer management team. Finally, the Board would like knowledge and experience in these areas are de Vaucleroy are “Audit Committee Financial was invited to attend. Since June 2018, the to express its gratitude for the continued hard work being proposed by the Supervisory Board for Experts” within the meaning of the Dutch Sustainability and Innovation Committee has and commitment of the Management Board and approval by shareholders at this year’s annual Corporate Governance Code, provision 2.1.4. comprised all members of the Supervisory Board, all associates during 2018. General Meeting. given the importance of embedding sustainability Governance and Nomination Committee Supervisory Board In addition, the Committee carefully deliberated and technology in all activities of the Company. In 2018, the Governance and Nomination Zaandam, the Netherlands on the extension of the option agreement with The attendance rate of the Board members of this Committee held three meetings in person and February 26, 2019 Stichting Continuïteit Ahold Delhaize, taking into Committee was 92%. The Committee’s main one via conference call, all of which the Chief account the interest of all stakeholders. The areas of focus were Ahold Delhaize’s Sustainable Executive Officer was invited to attend. Committee was also involved in key organizational Retailing and eCommerce strategies. In addition, The attendance rate of the Board members and management changes, as well as other technology, robotics, digitalization and of this Committee was 100%. The Committee’s governance matters. personalization data analytics were addressed main area of focus was moving the Company in the meetings. Remuneration Committee into the next phase of its governance, including In 2018, the Remuneration Committee held four Conclusion the transition in leadership of the Company, the meetings in person and one via conference call, The Supervisory Board is of the opinion that transition of the Chairman’s position and the all of which the Chief Executive Officer was during the year 2018, its composition, mix and downsizing of the Supervisory Board. invited to attend. The attendance rate of the depth of available expertise; working processes; Board members of this Committee was 100%. level and frequency of engagement across During the meetings, the Committee discussed all prominent Company activities; and access Frans Muller’s new compensation package and to all necessary and relevant information and Dick Boer’s retirement package. The Committee the Company’s management and staff were prepared a proposal for the Supervisory Board satisfactory and enabled it to carry out its duties for an adjustment of the remuneration policy for towards all the Company’s stakeholders. the Management Board, to be adopted by the General Meeting of Shareholders in 2019. In addition, the Remuneration Committee prepared proposals for the individual remuneration of members of the Management Board. Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 70

Remuneration

Dear shareholder, As discussed elsewhere in this Annual Report, By introducing key annual strategic imperatives Bill McEwan I am pleased to present our 2018 Remuneration following the successful finalization of our to our short-term incentive plan and an earnings Chairman of the report. As one of the world’s leading food retail merger and integration, we took the opportunity per share growth measure to our long-term Remuneration groups, Ahold Delhaize and its brands employ to revisit and refresh our strategy. On November incentive plan, our Remuneration Policy will be Committee of the over 372,000 associates in nine countries. In 13, 2018, we introduced our Leading Together more closely tied to performance on our new Supervisory Board determining the employment conditions of their strategy at an Ahold Delhaize Capital strategy. The Policy will be brought forward associates, our brands set compensation and Markets Day. for shareholder approval at the annual General benefits levels in line with job level and local Meeting of Shareholders on April 10, 2019, On the basis of this, the Remuneration market practices and regularly review and is outlined in more detail in the shareholder Committee reviewed our Remuneration Policy remuneration practices, taking into account circular. to ensure that it was still aligned to support the market dynamics and economic conditions. strategy and long-term growth of the Company, For the majority of associates, remuneration Our remuneration policy was prepared in the needs of all internal and external is based on collective bargaining agreements accordance with the Dutch Corporate stakeholders, and our commitment to making structured primarily as fixed annual salaries or Governance Code and adopted by the General a sustainable contribution to society. The hourly wages. In addition, store managers and Meeting of Shareholders. The remuneration Remuneration Committee also conducted general management associates are eligible policy is based on our commitment to the key interviews with each of the Management Board to receive an annual performance-based principle of fair and equitable treatment of all members on Management Board remuneration bonus. Associates in senior management associates and aligned to support our strategy and its link to our strategy. positions are eligible for performance-based and long-term growth. During the past year, annual bonuses as well as Ahold Delhaize Following this thorough review, the Supervisory the Management Board’s remuneration performance share grants that are linked to the Board proposes that the Company’s was implemented in accordance with our long-term goals of the Company. Remuneration Policy be amended, effective Remuneration Policy. 2019, in connection with the developments in The Supervisory Board’s Remuneration our markets and the introduction of the Leading Committee closely monitors developments in Together strategy. We believe that the proposed the global, regional and local labor markets amended Remuneration Policy reflects even and takes these into account when making stronger alignment with the interests of all our recommendations on the Management Board stakeholders. compensation to the Supervisory Board for consideration and approval. Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 71

Remunerationcontinued

The following table shows the pay ratio of the We have calculated the pay ratio between the Therefore, to put Ahold Delhaize’s pay ratios The Supervisory Board will continue to Chief Executive Officer, Chief Financial Officer, total remuneration of the respective Management into perspective, the graph illustrates Ahold monitor the development of pay ratios both Chief Executive Officer Ahold Delhaize USA Board members and the average remuneration of Delhaize’s position compared to its peers in the within the Company and in comparison with and Chief Executive Officer Ahold Delhaize all associates across the group over 2016, 2017 European and U.S. markets as well as the AEX the peer group. Europe and Indonesia compared to the and 2018 to convey the year-over-year changes. companies in the peer group. The ratios I look forward to presenting our proposed average remuneration of all Ahold Delhaize The average remuneration of all associates is mentioned in the table and the graph are derived remuneration policy as well as this Remuneration associates. calculated as the total labor costs (see Note 8 from the publicly disclosed 2017 annual reports report for discussion with all our shareholders to the consolidated financial statements) divided of the respective companies. For comparison Pay ratio 2018 2017 2016 at our upcoming annual General Meeting of 1 by the number of associates on an FTE basis purposes, the ratios have been calculated using CEO 124 114 119 Shareholders on April 10, 2019. CFO 71 71 71 (see Five-year overview). The average the same methodology as used for Ahold remuneration of all associates amounted to Delhaize’s pay ratio. Bill McEwan CEO Ahold Delhaize USA2 90 74 – €40,225 for 2017 and €40,074 for 2018. The Pay ratio Ahold Delhaize CEO compared to CEO Ahold Delhaize total compensation of the CEO, CFO, CEO Europe and Indonesia3 – – – pay ratios of other CEOs in the peer group Ahold Delhaize USA and CEO Ahold Delhaize (2017 figures) 1 For 2018, CEO refers to Frans Muller. In order to reflect a Europe and Indonesia can be found in Note 31 Average full year remuneration, the 2018 remuneration comprises to the consolidated financial statements. Ahold Average European Average Average full the remuneration up to July 1, 2018, received in his Delhaize AEX peers peers U.S. peers peer group capacity as Deputy CEO and from July 1, 2018, received As set forth in the Remuneration Policy, in his capacity as CEO. For 2017 and 2016, CEO refers to 114 127 191 295 204 Dick Boer. the total compensation of our Management 89.8% 59.7% 38.6% 55.9% 2 Since the CEO Ahold Delhaize USA joined the Company Board members is positioned around the on July 24, 2016, full year numbers for 2016 are not median level of the peer group we’ve selected available. The graph illustrates Ahold Delhaize’s position 3 Since the CEO Ahold Delhaize Europe and Indonesia was for benchmarking (see page 72). The following versus the labor market peer group as defined appointed on April 11, 2018, full year numbers for 2016, table illustrates the pay ratio of our CEO in the Remuneration Policy. 2017 and 2018 are not available. compared to the pay ratios of other CEOs in the peer group. It is important to note that pay ratios across uroean S eers eers industries are impacted by the different mix of functions from one industry to another. Even within the same industry, comparing pay ratios is challenging due to different market conditions (a mix of high- and low-paying countries). Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 72

Remunerationcontinued

In line with our overall remuneration philosophy, Market competitive pay Ahold Delhaize’s remuneration policy Remuneration policy the Management Board’s Total Direct The competitiveness of the Management Remuneration philosophy Compensation is structured and more heavily Board remuneration is benchmarked annually was prepared in accordance with Ahold Delhaize’s remuneration policy is aligned weighted on variable annual and long-term against a labor market peer group that reflects the Dutch Corporate Governance with the Company’s strategy and supports a incentives tied to the realization of financial the Company’s geographic operating areas Code. It was adopted at the General strong performance culture. Our remuneration and business performance criteria. These and the markets most relevant in relation to the policy aims at attracting, motivating and retaining Meeting of Shareholders on April 19, performance criteria are a cornerstone of the recruitment and retention of top management. the best-qualified talent. 2016. The remuneration policy Company’s strategy. Since Ahold Delhaize is a Dutch-headquartered became effective on July 24, 2016, Management Board remuneration policy company, the AEX market practice in the The annual cash incentive is focused on the The Supervisory Board designed the Management Netherlands is included. The peer group consists the first calendar day after the key financial metrics of a retail organization: Board’s remuneration policy to align with the of 18 companies, including peer companies merger of Ahold and Delhaize was sales growth, underlying operating margin and Company’s strategy and to support our pay-for- in Europe and the United States as well as finalized. An individual exception operating cash flow. Our goal is to expand market performance culture, while aiming to be effective, AEX-listed companies. share, while at the same time focusing on margins to the remuneration policy was transparent and simple. While developing the to increase profitability and managing capital adopted at the General Meeting remuneration policy, we conducted scenario European peers U.S. peers AEX spending and expenses prudently to secure analyses to determine the risks to which variable Tesco Kroger Unilever of Shareholders on April 12, 2017. strong and sustainable cash flow. remuneration may expose the Company. Carrefour Costco Philips The long-term incentive is measured against (i) Metro Cash & Carry Target Heineken The basic elements of the Total Direct our internal measure on Return on Capital (RoC), Compensation provided to Management Board Casino Guichard Walgreen Randstad (ii) our external measure of the Company’s share members are (1) a base salary, (2) an annual Perrachon Boots performance relative to that of its peers: Total cash incentive and (3) a long-term equity-based Alliance Shareholder Return (TSR) and (iii) the Company’s program. In addition to the Total Direct J Sainsbury Best Buy Akzo Nobel contribution to society through sustainability Compensation, members of the Management W M Morrison Lowe’s Relx objectives. Performance for our long-term Board are offered pensions and additional Companies incentives is measured over a revolving three- arrangements in accordance with local practices. year period. In anticipation of potential changes to the The structure of our remuneration policy labor market peer group due to delisting, aligns the focus of the Management Board with mergers or other extraordinary circumstances, the interests of the Company’s shareholders, the Supervisory Board has the discretion to our local communities and society at large. substitute comparable companies. In general, Compensation and awards are tied to and geographical composition leads in the dependent on the delivery of our strategy determination of a replacement company: in a responsible and sustainable way. for example, if a U.S.-based company drops out, it is replaced by another U.S.-based company. Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 73

Remunerationcontinued

The composition (risk profile) of the Total Direct Annual cash incentive plan: In line with market practice, the target value of the Shares that will vest as % Compensation levels is also taken into account Executive Committee Incentive Plan long-term incentives granted under the program Company ranking of originally granted amount when benchmarking base salary levels. The The Management Board members participate differs by role. For the CEO, the target value is Ranking 1 175% target Total Direct Compensation level is typically in the Executive Committee Incentive Plan (EIP). 235% of base salary; for the Deputy CEO and Ranking 2 150% around the median, with base salary levels The EIP is an annual cash incentive plan CEO Ahold Delhaize USA, the target value is Ranking 3 125% slightly below the median and long-term that employs three equally weighted financial 200% of base salary; for the CFO, the target value Ranking 4 110% incentives at the higher end of the market to measures: sales growth (30%), underlying is 175% of base salary; and for the CEO Ahold Ranking 5 100% support the pay-for-performance culture and operating margin (30%) and operating cash flow Delhaize Europe and Indonesia the target value Ranking 6 80% long-term focus. (30%), as well as personal objectives (10%). is 150% of base salary. Ranking 7 50% The at-target payout as a percentage of base An individual exception to the remuneration policy The total GRO award is comprised of three salary is 100%, contingent on full achievement Ranking 8-14 0% of the Management Board applies for the CEO portions of shares, linked to RoC, TSR and of the objectives, with a cap at 150% of the Ahold Delhaize USA (Kevin Holt). The Supervisory sustainability targets, respectively. base salary in the event of above-target TSR performance peer group Board determines the remuneration for the performance. Linked to RoC Tesco Kroger CEO Ahold Delhaize USA on the basis of a local Of the total GRO award, the first 40% is Carrefour Costco reference market, the U.S. retail labor market Long-term equity-based program: linked to a three-year RoC target. Dependent Metro Cash & Carry Target reference group. Global Reward Opportunity on performance, the number of shares that The Management Board members participate Casino Guichard Walgreen Boots Alliance Base salary eventually vest may range between zero and in the Company’s long-term incentive program: Perrachon The level of the Management Board members’ a maximum of 150% of the number of shares Global Reward Opportunity (GRO). Under the J Sainsbury Best Buy base salary is derived from the benchmarking granted. GRO program, shares are granted through W M Morrison Lowe’s Companies of Total Direct Compensation. Adjustment of a three-year program. The vesting of these Linked to TSR Walmart the base salary is at the discretion of the performance shares is subject to performance Another 40% of the total GRO award is linked Supervisory Board. over a three-year period. The GRO program to TSR (share price growth and dividends paid In anticipation of potential changes to the employs two financial measures: RoC (40%) over the performance period), with performance performance peer group due to delisting, and TSR (40%). In addition, a non-financial at vesting benchmarked against the TSR mergers or other extraordinary circumstances, performance measure (20%) related to performance of a peer group. The number the Supervisory Board has the discretion to Sustainable Retailing targets is included. of shares that vest depends on the Company’s include substitute comparable companies. relative ranking in the peer group. An independent external adviser determines the ranking based on TSR performance. No shares will vest to Management Board members if the Company ranks below the seventh position in the performance peer group. The table below indicates the percentage of performance shares that vests based on the Company’s ranking. Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 74

Remunerationcontinued

Linked to Sustainable Retailing Claw-back In addition, Management Board members receive (Service) Agreements For the remaining 20% of the total GRO award, A claw-back provision is applicable to the a gross (age-dependent) pension allowance The term of appointment for all Management the performance at vesting is measured against Management Board members’ annual cash and can choose to participate in a Net Pension Board members is four years. If the Company Sustainable Retailing targets. This measure incentive plan (EIP) as well as the long-term Arrangement by investing the net (after tax) terminates the (service) agreement of any relates to the Company’s Sustainable Retailing equity incentive program (GRO). amount. The Net Pension Arrangement is member of the Management Board, the strategic ambitions. The targets set under this identical to that of all other associates of the severance payment is limited to one year’s base Pensions and other contract terms non-financial performance measure are both Company in the Netherlands whose pensionable salary. The agreement may be terminated by the Pension qualitative and quantitative. Dependent on salary exceeds the cap. Participation in this Company with a notice period of 12 months and All existing pension arrangements in the performance, the number of shares that are able Net Pension Arrangement is voluntarily. by the Management Board member with a notice Netherlands have been brought in line with to vest may range between zero and a maximum period of six months. the applicable fiscal pension regulations. The Members of the Management Board working on of 150% of the number of shares granted. pension plan for Management Board members is a non-Dutch contract are offered pension plans Future outlook Shareholding requirements calculated similarly to that of all other associates in line with local practices. We will propose to the General Meeting of and ownership guidelines of the Company in the Netherlands and is Shareholders that the Company’s remuneration Loans Management Board members must retain the referred to as a defined benefit plan, based policy be amended in connection with the Ahold Delhaize does not provide loans or shares awarded under the GRO program for a on career average salary. The retirement age developments in the market and the introduction advances to members of the Management Board. period of at least five years from the grant date. (in 2018) is 68. The pensionable salary is capped of the Leading Together strategy presented Nor does the Company issue guarantees to the The sale of a portion of the shares is permissible at around €100,000 (2018: €100,546). Each at the Company’s 2018 Capital Markets day. benefit of members of the Management Board. to finance taxes due at the date of vesting. All Management Board member working on a Dutch The proposed remuneration policy is outlined members of the Management Board are required contract pays a pension premium contribution Additional arrangements in the shareholder circular. to hold shares in the Company with a value equal identical to that of all other Company associates In addition to the Management Board to at least 150% of their base salary. The holding in the Netherlands. members’ remuneration, a number of additional may accumulate by retaining all after-tax shares arrangements apply. These include expense from the GRO program and does not require and relocation allowances, medical and personal share purchases. accident insurance, use of company cars and, if applicable, expatriate allowances, which apply to other senior associates and are in line with local market practice. In addition, third-party tax services will be provided to ensure compliance with the relevant legislative requirements. Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 75

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ae aar 2018 Annual cash incentive plan: EIP ca 2018 Management Board thousans The EIP uses three equally weighted financial thousans Remuneration measures: sales growth (30%), underlying The Management Board remuneration for 2018 operating margin (30%) and operating cash is in accordance with the Management Board flow (30%). In addition, personal objectives remuneration policy. This policy was adopted (10%) are included. at the General Meeting of Shareholders on F April 19, 2016, and an individual exception was F Ahold Delhaize does not disclose the actual adopted at the General Meeting of Shareholders targets per performance measure, as this is considered to be commercially sensitive on April 12, 2017. information. 2018 Base salary S S The base salaries of members of the erorance eare Management Board were adjusted effective uroe uroe January 2018, and for the newly appointed Sales growth I I CEO effective July 1, 2018, at the time of his Operating margin 0 350 700 1,050 1,400 appointment as CEO. 0 400 800 1,200 Operating cash flow ctual IP Base salary ctual IP Base salary Personal ctual IP Base salary 1 For 2018, CEO refers to Frans Muller. In order to reflect a full 1 For 2018, CEO refers to Frans Muller. In order to reflect a full year remuneration, the 2018 remuneration comprises the year remuneration, the 2018 remuneration comprises the remuneration up to July 1, 2018, received in his capacity as remuneration up to July 1, 2018, received in his capacity as Deputy CEO and from July 1, 2018, received in his capacity Deputy CEO and from July 1, 2018, received in his capacity as CEO. For 2017 and 2016, CEO refers to Dick Boer. as CEO. For 2017 and 2016, CEO refers to Dick Boer. The at-target payout as a percentage of base salary is 100%, contingent on full achievement 2 For the member appointed to the Management Board in 2016, 2 For the member appointed to the Management Board in the 2016 EIP reflects a partial year. 2016, the 2016 base salary reflects a partial year. of the objectives, with a cap at 150% of the base 3 For the member appointed to the Management Board in 2018, 3 The CEO Ahold Delhaize USA’s salary has been converted salary in the event of above-target performance. the 2018 EIP reflects a partial year. from U.S. dollars into euros, for 2018 using the 2018 year-to- date average $ / € exchange rate of 0.8476, for 2017 using 4 The overall 2018 financial performance multiplier was 111%. the 2017 year-to-date average $ / € exchange rate of 0.8868 The individual EIP amounts also include the component linked and for 2016 using the 2016 year-to-date average $ / € to individual performance. exchange rate of 0.9125. 5 2018 EIP represents accrued annual cash incentives to be 4 For the member appointed to the Management Board in paid in 2019 and subject to shareholder approval of the 2018, the 2018 base salary reflects a partial year. financial statements. 6 The EIP of the CEO Ahold Delhaize USA has been converted from U.S. dollars into euros, for 2018 using the 2018 year-to- date average $ / € exchange rate of 0.8476, for 2017 using the 2017 year-to-date average $ / € exchange rate of 0.8868 and for 2016 using the 2016 year-to-date average $ / € exchange rate of 0.9125. Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 76

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2018 Long-term equity-based program: GRO 2018 GRO share grant calculation – Example CEO The Management Board members participate in Ahold Delhaize’s long-term equity-based incentive Number of shares At-target share grant At-target share grant Award value granted (award value program, GRO. The 2018 GRO award was made the day after the 2018 annual General Meeting of (% of base salary) (% of base salary) (base salary1 divided by six-month Shareholders. up to July 1, 2018 from July 1, 2018 at-target grant %) average share price) RoC performance As mentioned, the vesting of the GRO performance shares is subject to performance over a period of shares 80% 94% 906,664 51,408 three years and the program employs two financial measures: RoC (40%) and TSR (40%). In addition, a non-financial performance measure (20%) is included that relates to Sustainable Retailing targets. TSR performance shares 80% 94% 906,664 51,408 Sustainable retailing performance is measured for this purpose on the basis of both an external and Sustainability an internal target. The Dow Jones Sustainability Index (the external target) measures how the Company performance shares 40% 47% 453,332 25,704 performs on sustainability against peers in the sector. The percentage of healthy own-brand food sales 200% 235% 2,266,660 128,520 as a proportion of total own-brand food sales (the internal target) is the measure we use to drive performance in pursuit of our company objective to facilitate healthier eating. 1 For 2018, CEO refers to Frans Muller. In order to reflect the full year grant, the 2018 base salary and GRO at-target grant comprises the remuneration up to July 1, 2018, received in his capacity as Deputy CEO, and from July 1, 2018, received in his 2018 GRO grant capacity as CEO. Table assumes a base salary of €1,027,472 and an at-target share grant percentage of 200% for the period up to July 1, 2018, and a base salary of €1,053,159 and an at-target share grant percentage of 235% for the period from July 1, 2018. To calculate the number of shares to be granted, the at-target value of the award is divided by the The six-month average share price applied is €17.64. six-month average share price preceding the annual award date, calculated over the fourth quarter of 2017 and the first quarter of 2018. Scenario analyses are prepared regularly to estimate the possible 2018 GRO share grant calculation – Example CFO Number of shares future payout levels. At-target Award value granted (award value share grant (base salary1 divided by six-month At-target grant and maximum vesting performance shares (% of base salary) at-target grant %) average share price) Performance shares RoC performance shares 70% 522,829 29,644 RoC TSR Sustainability Total at-target Total maximum (40%) (40%) (20%) grant vesting TSR performance shares 70% 522,829 29,644 CEO 94% 94% 47% 235% 376% Sustainability CFO 70% 70% 35% 175% 280% performance shares 35% 261,415 14,822 CEO Ahold 175% 1,307,073 74,110

Delhaize USA 80% 80% 40% 200% 320% 1 Table assumes a base salary of €746,899 and six-month average share price of €17.64. CEO Ahold Delhaize Europe and Indonesia 60% 60% 30% 150% 240%

All percentages constitute a percentage of base salary. Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 77

How we manage risk

Governance, Risk Management & Compliance Framework In order to successfully execute Risk management and our Leading Together strategy, we internal control Enterprise risk management must be agile and entrepreneurial Ahold Delhaize’s enterprise risk management Values, Strategy so that we can respond quickly (ERM) program is designed to provide executive & Objectives and effectively to rapid changes management with an understanding of the in the retail landscape and take Company’s key strategic and business risks and advantage of business opportunities associated risk management practices. Within Leadership & each business, management identifies the Monitor & Assurance Identify & Manage Risk whenever and wherever they exist. Risk Culture Meeting these challenges requires us to take principal risks to the achievement of business risks in a responsible way. Having a proactive objectives and the actions needed to mitigate approach to risk management that is embedded these risks. Senior brand and global executives in our business processes benefits our decision- review these risks and the related mitigation making and helps us create and preserve value. Policies & Procedures practices twice per year, incorporating them into the development of the Company’s strategy and We strive for a culture of transparency in which the regular Business Planning and Performance risks are identified and addressed proactively. process. Risk management is an integral part of responsible leadership. Their observations are aggregated into an The global GRC committee is comprised of In addition, the GRC committee engages with ERM report that is presented to the Management Ahold Delhaize’s Chief Legal Officer (Chairman), senior management and advises the Management Board and Supervisory Board, as required by Governance, Risk Management the Chief Executive Officer and the Chief Financial Board and Executive Committee regarding the Dutch Corporate Governance Code. Ahold and Compliance Officer, along with other members of local and strategic, operational, financial and compliance Delhaize’s ERM program drives the formation At Ahold Delhaize, we operate a Governance, global management responsible for our related matters. A similar GRC structure and of policies, procedures and controls, the scope Risk Management and Compliance (GRC) governance, risk management, accounting and committee exists within each of the brands, which of internal audit activities, and the business Framework that allows us to effectively identify, reporting, compliance and assurance functions. operates in parallel to the global GRC process. planning and performance process. assess and manage our risks. This GRC This committee is responsible for the implementation During 2018, the GRC Committee met on a Framework consists of global policies and and monitoring of the Company’s governance, quarterly basis, and completed an update of our controls as well as a GRC Committee structure risk management and compliance processes. that functions as a forum for addressing relevant global policies. We also implemented an annual risks across the functional areas of our Company. review process for all global policies and related controls to ensure that they remain current and are able to effectively mitigate risks, to support meaningful compliance and the successful execution of our strategy. Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 78

How we continuedmanage risk

Risk appetite Financial Scenario Associated principal risks Description Our risk appetite is defined by our Supervisory Ahold Delhaize has a prudent financial strategy Competitive • Competitive A sustained failure to effectively design and Board and Management Board and is integrated focused on maintaining our solid investment- pressure environment execute our strategic promises could lead to an into the businesses through our strategy, global grade credit rating. We are averse to any risks inability to adapt to new market dynamics driven policies, procedures, controls and budgets. that could jeopardize the integrity of our financial by consumer behaviors and competition, and Our appetite for each risk is determined by reporting. Our financial risk management, risk result in a loss of market share to new market considering key opportunities and potential appetite and sensitivities are further detailed in entrants or new shopping channels. threats to achieving our strategic objectives Note 30 of the consolidated financial statements. and can be categorized as follows: These factors may have a material adverse Compliance effect on the Company’s financial position, Strategic At Ahold Delhaize, an essential part of our results of operations and liquidity. We use fact-based analysis that derives insights strategic framework is behaving according to from our different markets and brands to support our values. One of our values is “integrity,” which Information • Business continuity In the event of a successful data breach, the our strategic decision-making process in a way means that the Company and all its associates security, and / • Information security and Company could be subject to material monetary that considers the financial, economic, social and do the right thing to earn customers’ trust. or data breach data privacy penalties, loss of customers and damage to our political developments that may impact our ability We strive for full compliance with laws and and business corporate reputation; it could also lead to to achieve our strategic objectives. Generally, regulations and with our policies and procedures disruption potential litigation. the Company’s strategic risk appetite is between everywhere we do business. Consequently, A serious breach could also impact the average and above average. our risk appetite for non-compliance is very low. operation of significant business processes and Operational Sensitivity analysis result in non-availability of products for Operational risks include unforeseen incidents At Ahold Delhaize, we follow closely the impact customers and the inability to operate our that could result from failures in internal of different internal and external risk factors day-to-day business at the stores, distribution processes or systems, human error or adverse on our operations. The purpose of our sensitivity centers and at brand level. external events and could negatively impact analysis is to assess these risks on the the day-to-day operation of our business. Company’s current strategy to determine their The two extreme scenarios above are considered In the case of these scenarios arising, mitigation Our risk appetite related to the disruption impact on our business and the viability of our severe but possible. None of these scenarios plans at global and brand level have been of our day-to-day business is generally low, business model, as well as our ability to meet individually threaten the viability of the Company, defined, and if applicable, various options are as we seek to minimize the downside impact our financial liabilities and other obligations. however, the compound impact of these available to the Company to maintain liquidity and of operational failures. Our strategy is based on assumptions relating scenarios has been evaluated as the most severe support ongoing operations. These options to: the global economic climate, changes in stress scenario. include: accessing new external funding early, consumer behaviors, competitor actions, market more radical short-term cost-reduction actions dynamics and our current and planned structure, The scenarios above are hypothetical and and adjustments to capital allocation. among other factors. purposefully severe for the purpose of illustrating outcomes that could have the ability to threaten the viability of the Company. Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 79

How we continuedmanage risk

Compliance and ethics The principles in the Code apply to all associates Three lines of defense model At Ahold Delhaize, our shared values support of Ahold Delhaize and its businesses. Associates an ethical culture and are the foundation of our of certain defined grade levels are trained in Audit, Finance and commitment to conduct our business by doing compliance with the Code on an annual basis. Management Board — Executive Committee — Senior Management Risk Committee / what’s right, every day. Our Code of Ethics is The full Code is available in the corporate Supervisory Board based on four ethical principles: governance section of Ahold Delhaize’s public website at www.aholddelhaize.com. • We respect each other: People are our most valuable assets. We are committed to provide In addition to our Code of Ethics, we have global 1st Line of Defense: 2nd Line of Defense: 3rd Line of Defense: Group and Opco Risk Management, Control, Internal Audit a safe, secure and inclusive environment where policies that address key risks to our business. Management Compliance and other all associates and customers are respected Some of these policies relate to internal specialized functions and appreciated. processes such as financial reporting, capital investments, purchasing and tax. Other policies Role Role Role • We follow the law: We comply with applicable Own and manage Facilitate, support and challenge Provide laws and regulations everywhere we do relate to legal and regulatory risks, such as the risk business in implementing independent business and do not tolerate violations of competition and antitrust, data privacy, and effective risk management assurance the law. corruption and bribery. • We act ethically in all our relationships and In 2018, our brands’ whistleblower lines received avoid conflicts of interest. 7,280 reports. Approximately 40% of the reports Control framework In order to meet business needs and the • We have the courage to speak up when were made anonymously. On average, reports The Ahold Delhaize control framework requirements of the Dutch Corporate Governance misconduct or ethical violations are observed, were investigated and resolved within 20 days. incorporates risk assessment, control activities Code, we have a Group-wide management or when there are questions regarding the In 2018, there were no substantiated reports and monitoring into our business practices at certification process in place, which requires interpretation or application of our Code or of significant financial reporting, accounting, entity-wide and functional levels. A three lines that the executive management team members other external laws and regulations and internal fraud or ethical violations. of defense model (above) has been adopted at each of our reporting entities send letters policies and standards. Corruption and bribery to provide reasonable assurance that risks of representation to the Financial Disclosure to achieving important objectives are identified Committee on a quarterly basis. These letters Applying our values and ethical principles Ahold Delhaize and its brands are committed and mitigated. confirm whether the reporting entities are in enables associates to make good choices and to conducting business in an ethically compliance with Ahold Delhaize’s Code of Ethics, protect our relationships with our colleagues, responsible manner and complying with the Monitoring and assurance policies on fraud prevention and detection, our customers, and our communities. The Code law in all countries and jurisdictions in which A key element of our GRC framework accounting and internal control standards, of Ethics is intended to help each associate we operate. This commitment specifically is monitoring and assurance. We use and disclosure requirements. understand and follow relevant compliance and includes compliance with laws relating to a comprehensive business planning and ethical principles, and to know when and where anti-corruption and bribery. The Ahold Delhaize performance review process to monitor the All our businesses are required to maintain to ask for advice or report a compliance or ethics Code of Ethics and our Global Anti-Corruption Company’s performance. This process covers a sound internal control environment with robust breach, which includes the use of whistleblower and Bribery Policy prohibit any form of corruption the adoption of strategy, budgeting and the policies, procedures and controls and a strong lines available to associates in each of our or bribery, including facilitation payments. reporting of current and projected results. financial discipline, and to comply with our locations. We assess business performance according current internal controls framework so that we to both financial and non-financial (including can continue to provide a high level of assurance sustainability indicators) targets. to our senior leadership; Audit, Finance and Risk Committee; investors and external regulators. Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 80

How we continuedmanage risk

During 2018, and at the direction of the This report includes those material risks and Materialization of these risks could prevent us from global GRC Committee, the GSO Ethics and uncertainties that are relevant to the expectation Principal risks and uncertainties meeting our customers’ changing needs and The principal risks and uncertainties included in Compliance team and the Group Risk and of the Company’s continuity for the period of expectations for healthy and sustainable products the following table represent the most significant Controls team completed a review of the key twelve months after the preparation of the report. that are sourced with care for people and the risks identified which may impede the global policies that address the most relevant environment. The primary risk drivers identified With respect to financial reporting based on achievement of Ahold Delhaize’s objectives with risks to our business, the related standards and relate to our material environmental, social and the current state of affairs, it is justified that the respect to strategy, operations, financial and the required control objectives, which are governance topics and include, for example, financial reporting is prepared on a going compliance matters. Our principal risks remain consistent across and applicable to all our brands climate change, raw material scarcity and human concern basis and management has assessed substantially unchanged from 2017, although and provide a robust level of assurance. rights protections in the supply chain. These risk whether the risk management and control developments within each risk have been drivers and any relevant mitigating actions have Both our Risk & Controls and Internal Audit systems provide reasonable assurance that the identified and incorporated, with some risks been included (as applicable) within the our functions help to ensure that we maintain and 2018 financial statements do not contain any being relabeled as compared to the prior year. principal risks and uncertainties section below. improve the integrity and effectiveness of our material misstatements. This assessment was Management is not aware of any significant system of risk management and internal control. based on the criteria set out in COSO: Internal materialization of these risks during 2018. Insurance risks Ahold Delhaize manages its Internal Audit undertakes regular risk-based, Control – Integrated Framework 2013 and our insurable risks through a combination of self- The following overview of risks relating to objective and critical audits. These functions also internal control framework. It included tests of the insurance and commercial insurance coverage Ahold Delhaize should be read carefully when monitor the effectiveness of corrective actions design and operating effectiveness of entity-level for workers’ compensation, general liability, evaluating the Company’s business, its prospects undertaken by management. controls, transactional controls at significant property, vehicle accident and certain and the forward-looking statements contained in locations and relevant general computer controls. healthcare-related claims. Our self-insurance this Annual Report. The following risks are not the liabilities are estimated based on actuarial Any control weaknesses not fully remediated only risks that the Company faces, which may or Declaration valuations. While we believe that the actuarial Annual declaration on internal risk at year-end were evaluated. Based on this may not materialize and have a material adverse estimates are reasonable, they are subject to management and control systems assessment, the Management Board determined effect on Ahold Delhaize’s financial position, changes caused by claim reporting patterns, Ahold Delhaize supports the Dutch Corporate that the Company’s financial reporting systems results of operations and liquidity or cause actual claim settlement patterns, regulatory economic Governance Code and makes the following are adequately designed, operated effectively results to differ materially from the results conditions and adverse litigation results. declaration in accordance with provision 1.4.3: in 2018 and provide reasonable assurance that contemplated in the forward-looking statements Our process enables us to monitor claim the financial statements are free of material contained in this Annual Report. See the The Management Board is responsible for and settlement patterns as well as evaluation misstatement. Cautionary notice for additional information. establishing and maintaining adequate internal risk of third-party risk. management and control systems. Such systems Additional risks and uncertainties Other financial risks are designed to manage rather than eliminate In addition to the principal risks identified, the Other financial risks include foreign currency the risk of failure to achieve important business following risks were identified and considered translation risk, credit risk, interest risk, liquidity risk, objectives, and can only provide reasonable in conjunction with our annual ERM assessment: and not absolute assurance against material income tax-related risks, liabilities to third parties misstatement or loss. This report provides sufficient Sustainability risks relating to lease guarantees, contingent liabilities insights into any significant deficiencies in the We apply the results of our annual sustainability and risk related to the legislative and regulatory effectiveness of the internal risk management and materiality analysis (see Our response to environment, including litigation. For information control systems. Management is not aware of any stakeholder needs) within our annual ERM relating to these financial risks, see Notes 24, 30 critical failings of these systems during 2018. process to help us identify and incorporate and 34 to the consolidated financial statements. sustainability risk drivers within our principal risks. Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 81

How we continuedmanage risk

1 Ahold Delhaize’s principal risks and uncertainties Risk Key risk drivers Mitigation Business continuity (O) • Diverse IT landscape with dependence on legacy systems • Global business continuity strategy, governance structure and framework Disruption of critical business processes, due to a and various third-party service providers • Insurance program long-term or permanent loss of key personnel, facilities, • Business and IT systems disruption due to events of an exceptional • Regular training (including simulations) provided to senior management utilities, IT infrastructure or key suppliers, may result in nature (e.g., cyber attacks, climate change-induced extreme on crisis management and response to high-impact events non-availability of products for customers and have a weather events) significant adverse impact on commercial operations, • Network protection (firewall, intrusion, detection and prevention systems, • Dependence on logistics service providers and suppliers of revenues, reputation and customer perception. and email filtering) strategic own-brand products and services • Cyber-defense monitoring • Monitoring of vendors and third-party service providers Competitive environment (S) • Aggressiveness of competing business models and entrance of Annual reassessment and implementation our strategy. The Leading Changes to the competitive landscape relating to non-traditional competition leading to drastic price reductions and Together strategy is based on five growth drivers: non-traditional competition, rapid expansion of rapid omnichannel expansion (e.g., discounters and same-day • Omnichannel growth omnichannel product offerings, and innovation in the delivery of fresh, healthy products at affordable prices) • Technology market without an appropriate and distinctive response • Non-traditional acquisitions, partnerships and strategic alliances by Ahold Delhaize could result in a loss of competitive with eCommerce, data analytics and robotics companies • Healthy and sustainable advantage, decrease of sales, erosion of margins and • Changing consumer trends relating to: healthy eating, product • Portfolio and scale efficiencies an inability to deliver on strategic objectives or labeling and transparency of product origin, more online shopping, • Best talent performance targets. and consumption of prepared foods For more details on our Leading Together strategy, see Who we are. • Consolidation of U.S. pharmacy market

1 Risks are listed in alphabetical order and categorized by business objective: strategic (S), operational (O), financial (F) and compliance (C). Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 82

How we continuedmanage risk

1 (continued) Ahold Delhaize’s principal risks and uncertainties Risk Key risk drivers Mitigation Information security and data privacy (O)(C) • Global security threats • Implementation of global Information Security organization, A lack of security around, or non-compliance with, • Growth of our online sales leading to increased availability policy and control framework privacy requirements relating to the capture, usage, of consumer data • Performance of “data breach” simulations across the organization processing and retention of customer and associate • Rapidly changing privacy regulations in our different markets (with various levels of management) data may lead to the exposure, misuse or • Payment Card Industry (PCI) and privacy compliant control framework misappropriation of data which could have a significant • Utilization of third parties to process and store customer and legal, financial, or reputational impact. associate data • Cyber insurance coverage • Training and monitoring established through the General Data Protection Regulation (GDPR) initiative • Rollout of personal data protection policy and awareness program • Establishment of safeguards across data value streams Labor (O) • Expiration and re-negotiation of collective bargaining agreements • Contract negotiation process with labor unions Our brands may not be able to negotiate acceptable with trade unions • Human resource function’s partnering relationship terms for extensions and replacements of contracts • Key business initiatives within the Ahold Delhaize strategy with unions and associates as a result of unfavorable demands and expectations (e.g., efficiency through innovation, robotics and automation) • Development of resource contingency plans from unions. • Regulatory and competitive increases in minimum wage • Monitoring and alignment of market practices • Labor shortages in distribution center and logistics functions

1 Risks are listed in alphabetical order and categorized by business objective: strategic (S), operational (O), financial (F) and compliance (C). Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 83

How we continuedmanage risk

1 (continued) Ahold Delhaize’s principal risks and uncertainties Risk Key risk drivers Mitigation Legislative environment (C) • Increased focus on compliance and enforcement • Real-time knowledge and awareness of regulatory developments Changes in, or failure to comply with, laws and • Changing political climate attained through our global legal, compliance and tax functions regulations could impact the operations and reduce • Proposed regional and national tax reforms • Implementation of global policies, operational procedures and internal the profitability of Ahold Delhaize or its businesses control framework and, thus, could affect its financial condition, • Lack of clarity on application of new regulations • Risk monitoring and assurance program reputation or results of operations. • Implementation of sugar taxes and other trade restrictions • Education of regulators and public policymakers, (e.g., through industry • Public opinion and pressure from governments, regulatory entities Ahold Delhaize and its businesses are also subject to associations; participation in lobbying industry bodies) a variety of antitrust and similar laws and regulations and NGOs on sustainability actions to promote healthy eating, • Transparent communications approach towards tax authorities about in the jurisdictions in which they operate, which may reduce the use of plastics, and discourage tobacco sales our legal structure impact or limit the Company’s ability to realize certain • Based on the prevailing regulatory environment or economic acquisitions, divestments, partnerships or mergers. conditions in the markets where we operate, litigations, • Continuing review of options from a tax-planning perspective investigations and inquiries may increase in frequency • Estimation of the exposure to legal and regulatory proceedings and and materiality establishment of provisions for the estimated liabilities where it is reasonably possible to estimate and where the potential realization of a loss contingency is more likely than not. For further information, see Note 34 to the consolidated financial statements People (O) (S) • Availability of top talent in key locations • Embedding of employee value propositions within each brand Brands may not be able to attract, develop • Shift in skillset for elements of our evolving business model to attract top talent and retain top talent in support of current (data analytics, omnichannel, modernized DCs, robotics, etc.) • Identification and building of workforce based on strategic capability and long-term needs and capabilities. • Workforce is more mobile and people are more eager to plans and needs (e.g., digital, eCommerce) change jobs • Associate engagement survey distribution and results, and the execution of action plans • Redefined performance and talent management cycle and development conversations • Further embedding of our leadership journey, shared values, capabilities and behaviors

1 Risks are listed in alphabetical order and categorized by business objective: strategic (S), operational (O), financial (F) and compliance (C). Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 84

How we continuedmanage risk

1 (continued) Ahold Delhaize’s principal risks and uncertainties Risk Key risk drivers Mitigation Pension and other post-employment benefits (F) • Pension and healthcare funding is impacted by low interest rates, • Our governance structure, with a pension committee responsible for U.S. and Netherlands pension and healthcare funding stock market performance, changing pension laws, longevity of monitoring pension plan funding as well as Multi-Employer Plans. Ahold Delhaize is exposed to the financial participants and increased costs in specific markets. consequences of a number of defined benefit pension plans covering a large number of associates in the Netherlands and the United States. Multi-employer plans • The Company’s contributions to an MEP in which it participates • Management of each MEP by a board of trustees appointed by the A significant number of union employees in the United may be used to fund benefits of employees of other management of the participating employers (plan sponsors) and the States are covered by Multi-Employer Plans (MEPs) participating employers. participating unions. Ahold Delhaize has been appointed as board of based on obligations arising from collective bargaining • If the Company seeks to withdraw from some of its MEPs, it must trustee member on several MEP boards and, through these positions, agreements. Ahold Delhaize's brands participate in 11 obtain the agreement of the applicable unions and, in connection manages and monitors the MEPs’ funding. MEPs and some of these have a critical (Red Zone) with this, may be required to pay those plans an amount based on • The MEPs’ contribution levels (funding) are set for each participating funding deficiency. its allocable share of the unfunded vested benefits of the plan, employer and are based on the benefit level as agreed in the collective Under normal circumstances, when an MEP reaches referred to as a withdrawal liability. bargaining agreement (CBA) and the agreed-upon funding. The rate of insolvency, it must reduce all accrued benefits to the • If another participating employer stops contributing to an MEP pension contributions is one of the terms of the CBA and considered to maximum level guaranteed by the United States’ in which the Company participates (e.g., due to bankruptcy), the be a part of the overall agreed-upon benefit package. After the expiration Pension Benefit Guaranty Corporation (PBGC). MEPs Company and other remaining participating employers may have to of a CBA, all provisions within it are subject to negotiation and could be pay annual insurance premiums to the PBGC for such increase their contributions to fund the unfunded obligations of the changed going forward, including, among others, pension and health care benefit insurance. plan allocable to the withdrawing employer. benefit levels and funding for the agreed benefit level. For more information on the financial risks related to • An MEP in which the Company participates may become insolvent our MEPs see Multi-employer plans in Note 23 to the and the Company may be required, in certain circumstances, to consolidated financial statements. increase its contributions to fund the payment of benefits by the MEP. • PBGC currently projects that its multi-employer insurance program More details on this risk, its related risk drivers and will become insolvent by the end of the PBGC’s 2025 fiscal year. current mitigating actions can be found in Note 23 If the PBGC’s multi-employer insurance program becomes insolvent, to the financial statements. it may become unable to fund the PBGC-guaranteed benefits owed by insolvent multi-employer plans, which might impact our future contributions. Various legislative initiatives to assist the PBGC and / or the multi-employer pension system in the United States are under consideration by the United States Congress, but it is unclear whether any of these initiatives will be enacted.

1 Risks are listed in alphabetical order and categorized by business objective: strategic (S), operational (O), financial (F) and compliance (C). Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 85

How we continuedmanage risk

1 (continued) Ahold Delhaize’s principal risks and uncertainties Risk Key risk drivers Mitigation Product safety (O)(C) • Internationalization of the supply chain and poor agricultural • Product safety policies, control framework and standard There is a risk that customers may become injured or practices lead to product integrity and sustainability incidents operating procedures ill from the use or consumption of food and non-food occurring across the world (e.g., related to foodborne illness and • Ahold Delhaize’s Standards of Engagement for third parties products sold by Ahold Delhaize brands, whether they manufacturers’ labor conditions) • Monitoring of performance of food safety procedures in the business are contaminated or defective, intentionally tampered • Increased speed of communications and amplification of incidents • Tracing of product origins and conditions of production with, or impacted by food fraud in the supply chain. via NGOs and social media (e.g., product recalls or human rights in • Pilot of blockchain technology for tracing products in the supply chain Additionally, negative impacts on human rights or the the supply chain) environment during the production of our products • Retailers being held accountable and scrutinized for incidents • Insurance program (e.g., human rights violations by suppliers) may occurring at any point in the supply chain negatively impact the reputation or results of Ahold • Overall increase in demand by customers for accuracy and Delhaize and / or its brands. transparency in the food supply chain • Increased number of own-brand products being developed, carried and sold by Ahold Delhaize brands

1 Risks are listed in alphabetical order and categorized by business objective: strategic (S), operational (O), financial (F) and compliance (C). Who we are Business review Governance Performance: Financial Performance: Sustainability Investors Ahold Delhaize Annual Report 2018 86

Declarations

This Annual Report, including the 2018 Introduction Declarations financial statements, which are audited by This 2018 Ahold Delhaize Annual Report The members of the Management Board, as PricewaterhouseCoopers Accountants N.V., dated February 26, 2019, (the Annual Report) required by section 5:25c, paragraph 2, under c has been presented to the Supervisory Board. comprises regulated information within the of the Dutch Act on Financial Supervision, confirm meaning of sections 1:1 and 5:25c of the Dutch that to the best of their knowledge: The 2018 financial statements and the Act on Financial Supervision “Wet op het independent auditor’s report relating to the audit • The 2018 financial statements included in financieel toezicht.” of the 2018 financial statements were discussed this Annual Report give a true and fair view with the Audit, Finance and Risk Committee in For the consolidated and the parent company’s of the assets, liabilities, financial position the presence of the Management Board and the 2018 financial statements “jaarrekening” within and profit or loss of the Company and the external independent auditor. The Supervisory the meaning of section 2:361 of the Dutch Civil undertakings included in the consolidation Board recommends that the General Meeting Code, see Performance: Financial. The members taken as a whole. of Shareholders adopts the 2018 financial of the Management Board and the Supervisory • The management report included in this statements included in this Annual Report Board have signed the 2018 financial statements Annual Report gives a true and fair view of the and recommends the proposal to pay a cash pursuant to their obligation under section 2:101, position of the Company and the undertakings dividend for the financial year 2018 of €0.70 paragraph 2 of the Dutch Civil Code. The included in the consolidation taken as a per common share. following sections of this Annual Report together whole as of December 30, 2018, and of the form the management report, or the development and performance of the business Supervisory Board “bestuursverslag” within the meaning of section for the financial year then ended. Jan Hommen (Chairman) 2:391 of the Dutch Civil Code: Message from our Bill McEwan (Vice Chairman) • The management report includes a description CEO, Group Highlights, Who we are, Business Jacques de Vaucleroy (Vice Chairman) of the principal risks and uncertainties that the Review, Our Management Board and Executive René Hooft Graafland Company faces. Committee, Our Supervisory Board, Corporate Rob van den Bergh governance, How we manage risk, Remuneration Management Board Mary Anne Citrino and the subsection Remuneration included in the Frans Muller Dominique Leroy Supervisory Board report. President and Chief Executive Officer Mark McGrath Ben Noteboom For other information, or “overige gegevens” Jeff Carr within the meaning of section 2:392 of the Dutch Chief Financial Officer Civil Code, see subsection Other information Kevin Holt under Performance: Financial, and the section Chief Executive Officer Ahold Delhaize USA Investors. Wouter Kolk Chief Executive Officer Europe and Indonesia