In September, the newly-appointed Moberg had to retreat from his original guaranteed pay and bonus package, at shareholder behest. The revised package, to be presented to shareholders this week, provides a maximum bonus of 250% of Moberg's base pay. Seven criteria have been set for 2003, divided into three categories of performance: financial, strategic and stabilization.
The stabilization category includes two measures of performance, one specifically pertaining to Ahold's Columbia, MD-based U.S. Foodservice (USF) subsidiary. The criteria in this instance is to hire new management for USF, where major accounting irregularities were discovered this year. The other criteria-relevant to USF problems as well as to issues at some other units-is to ensure that internal controls are in place through improved financial controls, internal audit procedures, functional reviews and a return to a normal reporting cycle.
If Moberg fully achieves these stabilization criteria, he will be entitled to receive 6% of the maximum 2003 bonus.
Three financial criteria constitute the greatest component of the incentive. These include improvements in cash flow before financing activities, reduced rolling inventory days, and reduced cash tangible capital expenditures. Full achievement of projected results would entitle Moberg to receive 40% of the maximum 2003 bonus. An outstanding performance would garner 70% of the maximum.
The two strategic criteria include development of an appropriate corporate strategy for Ahold and its acceptance by the supervisory board, shareholders and the financial community, on the one hand, and development of a successful financing strategy and its acceptance by the Ahold supervisory board, banks and financial markets, on the other. Moberg would be entitled to receive 24% of his maximum 2003 bonus for fulfilling these objectives.
If all bonus criteria are fully achieved, the bonus payout would be 1.7 million euros. If all bonus criteria are fully achieved and, in addition, all financial criteria outperformed, Moberg would receive a maximum 2003 bonus payout of 2.45 million euros. If all bonus criteria are not fully met, the bonus payout is zero.
Moberg told The Wall Street Journal this week that the challenges he has faced at Ahold-calming shareholders, dealing with creditors, and handling corporate governance issues-has consumed 80% of his time. This is in "stark contrast" to his days as ceo of Ikea International, a privately held company. "Instant information these days means you can't hide in the executive suite," he told the WSJ. "Sometimes you ask yourself if it is possible to fulfill all the demands on you and whether you have the right balance."