Food Lion 2011 Annual Report Download - page 48

Management’s monitoring of internal
control is performed on a continuous
basis. Operating company perfor-
mance is measured and compared
to budgets and long-term plans and
key performance indicators which may
identify anomalies indicative of a con-
trol failure. In addition, the Company
has implemented a group-wide perfor-
mance management system to monitor
and measure performance consistently
across the organization.
The Company has a professional and
independent internal audit team led
by the Chief Audit Officer who reports
functionally to the Audit Committee. The
Audit Committee reviews Internal Audit’s
risk assessment and audit plan, and
regularly receives internal audit reports
for review and discussion.
Internal control deficiencies identified by
internal audit are communicated timely
to management and periodic follow up
is performed to ensure the corrective
action has been taken.
The Company’s Board of Directors has
the ultimate responsibility for monitoring
the performance of the company and
its internal control. As such, the sepa-
rate committees, described herein, have
been formed to monitor various aspects
of the Company’s performance; and the
Terms of Reference for each Committee
are available on the Company website.
The Company determined that, as of
December 31, 2011, effective internal
controls were maintained.
Additional Governance Matters
Related Party Transactions Policy
In line with the recommendations of the
Belgian Code on Corporate Governance,
the Company adopted a Related Party
Transactions Policy containing require-
ments applicable to the members of the
Board and the Executive Management in
addition to the requirements of the con-
flicts of interest policy in the Company’s
Guide for Ethical Business Conduct, which
is available at www.delhaizegroup.com.
The Company’s Related Party Transac-
tions Policy is attached as Exhibit F to the
Company’s Corporate Governance Char-
ter. The members of senior management
and the directors of the Company and of
its subsidiaries completed a Related Party
Transaction Questionnaire in 2011 for inter-
nal control purposes. Further Information
on Related Party Transactions, as defined
under International Financial Reporting
Standards, can be found in Note 3.2 to
the Financial Statements.
Insider Trading and Market Manipulation
Policy
The Company has a Policy Governing
Securities Trading and Prohibiting Mar-
ket Manipulation (“Trading Policy”) which
reflects the Belgian and U.S. rules of
market abuse (consisting of insider trad-
ing and market manipulation). The Com-
pany’s Trading Policy contains, among
other things, strict trading restrictions
that apply to persons who regularly
have access to material non-public
information. More details concerning the
Company’s Trading Policy can be found
in the Company’s Corporate Govern-
ance Charter. The Company maintains
a list of persons having regular access
to material non-public information and
periodically informed these persons in
2011 about the rules of the Trading Policy
and about upcoming restriction periods
for trading in Company securities.
Disclosure Policy
As recommended by the Belgian Code
on Corporate Governance, the Company
has adopted a Disclosure Policy that
sets out the framework and the guid-
ing principles that the Company applies
when disclosing information. This policy
is available at www.delhaizegroup.com.
Compliance with the Belgian Code
on Corporate Governance
In line with the “comply-or-explain” prin-
ciple of the Belgian Code on Corporate
Governance, the Company concluded
that the best interests of the Company
and its shareholders are served by vari-
ance from the Code in a limited number
of specific cases. In relation to 2011, the
following variance applied:
Provision 4.5 of the Belgian Code on Cor-
porate Governance states, among other
things, that directors should not consider
taking more than five directorships in
listed companies. In the opinion of the
Board of Delhaize Group, the mere fact
that a person is a director of more than
five listed companies should not auto-
matically disqualify this person as board
member of Delhaize Group. Rather, this
situation should be reviewed on a case-
by-case basis to determine if it is likely
to affect the performance of this person
as director of Delhaize Group. For this
reason, 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 fac-
tors, the amount of time the non-exec-
utive director will likely have to devote
to the Company. The Board of Directors
granted such a waiver to Baron Van-
steenkiste and Count Goblet d’Alviella,
who both served on the Boards of more
than five listed companies. This waiver
is no longer relevant since Baron Van-
steenkiste has less than five director-
ships in listed companies and Count
Goblet d’Alviella resigned from his func-
tion as director of the Company as of
July 1st, 2011.
Undertakings Upon Change
of Control over the Company as of
December 31, 2011
Management associates of non-U.S.
operating companies received stock
options issued by the Board of Direc-
tors under the Stock Option Plans 2002
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 vest-
ing period. The number of options and
46 // DELHAIZE GROUP ANNUAL REPORT ‘11
CORPORATE GOVERNANCE