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Payback Time for Ahold's Ex-Executives
Clawback arrangements are becoming increasingly common. But few companies have clawed back quite as aggressively as Ahold, the Dutch supermarket operator.
The company, which runs the Stop & Shop and Giant chains in the U.S. among others, said today that its former chief executive and chief financial officers had agreed to refund a total of almost $8 million.
The refunds were not the product of formal clawback provisions—contractual clauses requiring executives to give back any compensation that is later found to be based on phony revenue number or other metrics.
(A recent study by Equilar, the executive compensation consulting firm, found that 42 percent of the publicly traded members of the Fortune 100 disclosed clawback provisions in 2006, compared with about 17 percent in 2005.)
But the Ahold refunds were similar in spirit: A company demanding that ex-executives not benefit from lying about their performances. The paybacks were part of a settlement of employment arbitration cases between the company and former C.E.O. Cees Van der Hoeven and former finance chief Michiel Meurs. Van der Hoeven and Meurs were forced out of the company in 2003, after the discovery of an accounting scandal at the company's wholesale food unit, U.S. Foodservice Inc.
Seven former suppliers pleaded guilty to conspiracy charges after acknowledging that they helped executives meet earnings targets by inflating promotional allowances by $800 million.
Van der Hoeven and Meurs had each filed arbitration claims against Ahold after they left the company. Van der Hoeven said he was owed more than $6 million; Meurs sought $2.8 million. Ahold filed counterclaims, which led to today's settlement.
by Mark Stein
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