Food Lion 2008 Annual Report Download - page 61
Download and view the complete annual report
Please find page 61 of the 2008 Food Lion annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.57
Delhaize Group Our Strategy
Our Activities in 2008
Corporate Governance
Risk Factors
Financial Statements Shareholder Information
at a Glance
to the Board as a whole. Consequently, the
Board of Directors reviewed the continued
appropriateness of Board membership
each time a director qualified for re-election.
The Board of Directors made such review
with respect to the proposed renewal of the
mandate of Mr. Smits in 2006. The Board
did not feel that the long tenure of Mr. Smits
affected his independence.
>
Provision 4.5 of the Belgian Code on
Corporate Governance states, among other
things, that directors should not consider
taking more than five directorships in listed
companies. The Board of Delhaize Group
reserves the right to grant a waiver to this rule
upon request of a non-executive director.
When making its decision, the Board will
consider, among other factors, the amount
of time the non-executive director will likely
have to devote to the Company. The Board
of Directors granted such a waiver to Baron
Vansteenkiste and Count Goblet d’Alviella,
who both serve on the Boards of more than
five listed companies.
>
Provision 8.8 of the Belgian Code on
Corporate Governance prescribes that the
level of shareholding for the submission of
proposals by a shareholder to the General
Meeting of Shareholders should not exceed
5% of the share capital. Even though the
Company’s management or the Board of
Directors will always consider any proposal
submitted by shareholders in the best interest
of the Company, the Board is of the opinion
that the threshold of 5% of the share capital
is too low to oblige the Company to put any
proposal of whatever nature on the agenda
of the General Meeting of Shareholders.
The Board of Directors therefore retains
the principles in this context as prescribed
by Article 30 of the Company’s Articles of
Association and by Article 532 of the Belgian
Company Code which foresee the right of
shareholders holding more than 20% of the
share capital to ask the Board to convene a
General Meeting of Shareholders.
Undertakings Upon Change of
Control over the Company
Management associates of non-U.S. operating
companies received warrants issued by the
Board of Directors under a 2000 Warrant
Plan granting to the beneficiaries the right
to subscribe to new ordinary shares of the
Company. They also received stock options
issued by the Board of Directors under the
Stock Option Plan 2001 to 2007, granting to
the beneficiaries the right to acquire ordinary
shares of the Company. Management
associates of U.S. operating companies
received options, which qualify as warrants
under Belgian law, issued by the Board of
Directors under the Delhaize Group 2002
Stock Incentive Plan, as amended, granting
to the beneficiaries the right to subscribe
to new American Depositary Receipts of
the Company. The General Meeting of
Shareholders approved a provision of these
plans that provide that in the event of a
change of control over the Company the
beneficiaries will have the right to exercise
their options and warrants, regardless of their
vesting period. The number of options and
warrants outstanding under those plans as of
December 31, 2008 can be found under Note
29 to the Financial Statements.
The General Meeting of Shareholders
also approved a provision in the relevant
documentation relating to the convertible
bonds issued by the Company in April 2004
for an amount of EUR 300 million by which the
holders of such convertible bonds have the
right to redeem their bonds in the event of a
public offer on the Company. As of December
31, 2008 the remaining nominal value of the
convertible bonds was EUR 170.8 million.
In 2003, the Company adopted a global long-
term incentive program which incorporates
a Performance Cash Plan. The grants under
the Performance Cash Plan provide for cash
payments to the beneficiaries at the end
of a three-year period that are dependent
on Company performance against Board
approved financial targets that are closely
correlated to building long-term shareholder
value. The General Meeting of Shareholders
approved a provision of the Performance Cash
Plan that provides that the beneficiaries are
entitled to receive the full cash payment with
respect to any outstanding grant in the event of
a change of control over the Company.
On June 27, 2007 the Company issued EUR 500
million 5.625% senior notes due 2014 and USD
450 million 6.50% notes due 2017 in a private
placement to qualified investors. Pursuant to
an exchange offer registered under the U.S
Securities Act, the 6.50% Dollar Notes were
subsequently exchanged for 6.50% Dollar
Notes that are freely transferable in the U.S. The
General Meeting of Shareholders approved
the inclusion of a provision in each of these
series of notes granting its holders the right to
early repayment for an amount not in excess
of 101% of the outstanding principal amount
thereof in the event of a change of control over
the Company.
The Ordinary General Meeting of Shareholders
held on May 22, 2008 approved a change in
control clause set out in the USD 500 million
5-year revolving credit facility dated May 21,
2007 entered into by, among others, Delhaize
Group, Delhaize America, JP Morgan Chase
Bank, and the lenders under such credit facility,
as such clause is used in, and for the purpose
of, the “Event of Default” described in such
credit facility.
At the same General Meeting, shareholders
approved the inclusion of a provision granting
to the holders of the bonds, convertible bonds
or medium-term notes that the Company
may issue within the 12 months following the
ordinary shareholders meeting of May 2008,
in one or several offerings and tranches,
denominated either in US Dollars or in Euros,
with a maturity or maturities not exceeding 30
years, for a maximum aggregate amount of
EUR 1.5 billion, the right to obtain the redemption,
or the right to require the repurchase, of such
bonds or notes for an amount not in excess of
101% of the outstanding principal amount plus
accrued and unpaid interest of such bonds or
notes, in the event of a change of control of the
Company, as would be provided in the terms
and conditions relating to such bonds and/or
notes.
On February 2, 2009 the Company issued USD
300 million 5.875% senior notes due 2014 to
qualified investors pursuant to a registration
statement filed by the Company with the U.S.
Securities and Exchange Commission. The
notes contain a change of control provision
granting their holders the right to early
repayment for an amount not in excess of
101% of the outstanding principal amount
thereof in the event of a change of control over
the Company.