Food Lion 2004 Annual Report Download - page 79

DELHAIZE GROUP  ANNUAL REPORT 2004 77
Comparison of NYSE Corporate Governance Rules Required to be
follow ed by U.S. Domestic Issuers and the Corporate Governance
Practices of Delhaize Group
Delhaize Group, as a non-U.S. company listed on the New York Stock
Exchange (“ NYSE” ), is permitted to follow home country practice in lieu of
certain corporate governance provisions of the NYSE. In accordance w ith
NYSE requirements, Delhaize Group must disclose any significant w ays
in which its corporate governance practices differ from those followed by
U.S. domestic companies under NYSE listing standards. Delhaize Group
believes that its corporate governance practices are consistent w ith those
follow ed by U.S. domestic companies under NYSE listing standards with
the following exceptions:
• The Governance Committee has one member w ho does not meet the
independence requirements of the NYSE. A governance committee of
a U.S. domestic company is required to consist solely of directors w ho
meet the independence requirements of the NYSE. The one member of
the Governance Committee who does not meet the independence requi-
rements of the NYSE will resign from the Governance Committee as of
the Ordinary General M eeting of M ay 26, 2005.
• Delhaize Group has not yet adopted corporate governance guidelines
as required for U.S. domestic companies listed on the NYSE. Under the
new Belgian Code on Corporate Governance, Delhaize Group is preparing
a corporate governance charter, which w ill be disclosed no later than
January 1, 2006. This new corporate governance charter will also meet
the NYSE corporate governance guidelines requirements applicable to
U.S. domestic companies.
Executive M anagement
Executive Committee
The Chief Executive Officer is in charge of the day-to-day management
of the Company with the assistance of the Executive Committee. The
Executive Committee, chaired by the Chief Executive Officer, prepares the
strategy proposals for the Board of Directors, oversees the operational
activities and analyzes the business performance of the Group.
A Belgian law enacted in 2002 gives the Board of Directors the pow er to
delegate under certain conditions its management authority to a manage-
ment committee (”comité de direction / directiecomité“ ). Delhaize Group’s
Board elected not to create such a committee.
The members of the Executive Committee are appointed by the Board of
Directors. The Chief Executive Officer is the sole member of the Executive
Committee w ho is also a member of the Board of Directors. The Board of
Directors decides on the compensation of the members of the Executive
Committee and other senior officers of the Company upon recommendation
of the Compensation Committee. No executive Board member attends the
meeting when the Board discusses and decides on his compensation. The
composition of the Executive Committee can be found in the M anagement
Structure section on page 70.
Remuneration Policy
The remuneration of the members of the Delhaize Group Executive
Committee and other top executives of Delhaize Group (collectively compri-
sing 15-20 executives and referred to as the “ Delhaize Group Executives” )
is determined by the Board of Directors upon the recommendation of
the Compensation Committee. Both the amount and the structure of the
compensation of the Delhaize Group Executives are analyzed on an annual
basis. To assist the Compensation Committee in its analysis of the compe-
titive environment in Europe and the United States, as well as other factors
relevant to the Committee’s evaluation of Delhaize Group Executive’s com-
pensation matters, the Committee retains the services of internationally
recognized compensation consultants.
The remuneration of the Delhaize Group Executives is designed to:
• Ensure that Delhaize Group can continuously attract, motivate and retain
high caliber and high potential executive talent for w hich Delhaize Group
competes in each region and internationally;
• Promote the achievement of Board-approved performance targets, ali-
gned with building shareholder value over the short, medium and long
term; and
• Stimulate, recognize, and reward strong individual contribution and solid
team performance.
The compensation package for the Delhaize Group Executives combines
three integrated elements that are collectively referred to as “ total direct
compensation.” Those integrated elements are base pay, annual short-term
incentive bonus and long-term incentive compensation.
In fixing compensation levels for the Delhaize Group Executives, the
compensation of executives in international and regional companies is
taken into account along with internal equity factors. The objective is
to establish target compensation levels that, as a general rule, are at or
around the median market level. The reference markets include the retail
industry in Europe and the United States, as well as other industries in
both Europe and the United States, w here appropriate for the position and
the executive. The variable, performance-based components of the total
compensation package for the Delhaize Group Executives are the dominant
portion of the total compensation package.
Base Salary
Base salary levels are designed to compensate the Delhaize Group
Executives for their position responsibilities, a particular set of competen-
cies and their experience in the position. M arket median levels for compa-
rable positions are targeted for the base pay and the base pay levels are
subject to regular annual review s. Except for annual cost of living adjust-
ments required under Belgium law for Delhaize Group Executives based in
Belgium, which typically range from 1-3% a year, there is no mechanism
for automatic adjustment.
Annual Incentive
The annual incentive bonus recognizes and rewards individual performance
of the Delhaize Group Executive as w ell as the contribution of the Delhaize
Group Executive to executive team performance. The funding levels for the