Corporate governance

As a Dutch listed company we are required to comply with the Dutch Corporate Governance Code of December 9, 2003 (the "Dutch Corporate Governance Code") either by applying its provisions or explaining why we deviate from any provision. Our shareholders gave their consent to all the proposed changes aimed at compliance with the Dutch Corporate Governance Code during an Extraordinary General Meeting of Shareholders on March 3, 2004. As a result of our listing on the NYSE we are required to comply with applicable U.S. securities regulations and the listing standards of the NYSE to the extent they apply to non-U.S. companies. As a Dutch company governed by Dutch law, we follow corporate governance practices that may differ from the practices followed by U.S. domestic companies under NYSE listing standards. A summary of the significant differences in corporate governance practices that we follow under Dutch law and NYSE listing standards followed by U.S. domestic companies is published in the corporate governance section of our website at www.ahold.com.

Our Articles of Association set forth certain aspects governing our organization and corporate governance. The current text of our Articles of Association is available at the Trade Register of the Chamber of Commerce and Industry for Amsterdam and on our website at www.ahold.com.

As part of our Road to Recovery strategy, we have put in place a stronger and more transparent corporate governance and organizational structure. We continue to seek ways to improve our corporate governance by measuring ourselves against international best practice, primarily in the Netherlands and United States.

The following diagram shows the boards, committees and teams that govern Ahold and its businesses.

Corporate Executive Board

We are managed by our Corporate Executive Board, which is supervised by the Supervisory Board. The Corporate Executive Board as a whole is responsible for our management and the general affairs of Ahold.

Composition

Our Articles of Association provide that the Corporate Executive Board must consist of at least three members and that in the event of a vacancy the remaining members or the sole remaining member will conduct the management of the Company. As of September 1, 2005 the Corporate Executive Board consists of two members, being Anders Moberg, President and CEO and Peter Wakkie, Executive Vice President and Chief Corporate Governance Counsel. In accor­dance with the Articles of Association the Supervisory Board and the Corporate Executive Board have made provisions to fill the vacancy. The Corporate Executive Board appointed Joost Sliepenbeek, Ahold's Chief Accounting Officer, as CFO ad interim from September 1, 2005 until January 2, 2006. On September 26, 2005 we announced that the Supervisory Board will nominate John Rishton for appointment to the Corporate Executive Board at the annual General Meeting of Shareholders on May 18, 2006. John Rishton began serving as Ahold's Acting Executive Vice President and CFO on January 2, 2006.

Appointment

Corporate Executive Board members are appointed for a term of four years and may be reappointed for additional terms not exceeding four years. The Supervisory Board makes proposals to appoint, suspend, or dismiss a Corporate Executive Board member, and such proposals are adopted by an absolute majority of votes cast by the General Meeting of Shareholders. If another party makes the proposal, an absolute majority of votes cast, representing at least one-third of the issued share capital, is required to appoint, suspend or dismiss a Corporate Executive Board member. If this qualified majority is not achieved but a majority of the votes exercised was in favor of the proposal, then a second meeting will be held. In the second meeting, only a majority of votes exercised, regardless of the number of shares represented at the meeting is required to adopt the proposal appoint, suspend or dismiss a Corporate Executive Board member.

Conflict of Interest

Each member of the Corporate Executive Board shall immediately report any potential conflict of interest to the chairman of the Supervisory Board and to the other members of the Corporate Executive Board. A member of the Corporate Executive Board with such conflict or potential conflict of interest must provide the chairman of the Supervisory Board and the other members of the Corporate Executive Board with all relevant information. The chairman of the Supervisory Board will determine whether there is a conflict of interest. If a member of the Corporate Executive Board has a conflict of interest with the Company, such member shall not participate in the discussions and/or decision making process on a subject or transaction in relation to which such member has a conflict of interest. The chairman of the Supervisory Board shall arrange for such transactions to be disclosed in the annual report. There were no conflicts of interest in 2005.

Remuneration

The General Meeting of Shareholders on March 3, 2004 adopted our remuneration policy for Corporate Executive Board members. Details on this policy and the proposed changes thereto can be found in the "Remuneration" section of this annual report.

For detailed information on the individual remuneration of Corporate Executive Board members, see Note 8 and Note 9 to our consolidated financial statements included in this annual report.

The charter for the Corporate Executive Board can be found in the corporate governance section of our website.

Disclosure and Compliance Committee

The Disclosure and Compliance Committee oversees the collection and analysis of financial and non-financial information, both for us and for our consolidated subsidiaries. The Committee works to ensure that this information is complete and accurate. The Committee checks this information prior to its inclusion in periodic SEC reports, annual reports and disclosures made to the public or the financial community throughout the year. Three subcommittees, one co-ordinating the annual report process, a second overseeing our internal and external websites and a third monitoring our global information security, assist the Disclosure and Compliance Committee. The Committee also assists the Corporate Executive Board in ensuring that Ahold has effective policies and procedures in place to promote compliance with applicable laws, regulations and Ahold's Global Code of Professional Conduct and Ethics.Ahold's Global Code of Professional Conduct and Ethics is available in the corporate governance section of our website at www.ahold.com and applies to all of our employees above a certain job grade level, including our principal executive officer, principal financial officer, principal accounting officer and persons performing similar functions.

Ahold Leadership Team

The Ahold Leadership Team aligns group strategy and operational initiatives and advises the Corporate Executive Board in these areas. The members of the Corporate Executive Board, the CEOs of the Stop & Shop/Giant-Landover, Giant-Carlisle/Tops, Albert Heijn and Central Europe arenas, ICA AB and U.S. Foodservice, as well as our Chief Business Support Officer and our Chief Human Resources Officer, are all members of the Ahold Leadership Team.

Supervisory Board

The Supervisory Board is responsible for supervising the policy of the Corporate Executive Board, the general course of affairs of the Company and the enterprise connected with it. The Supervisory Board is guided by the interests of the Company and the enterprise connected with it, and must take into account the relevant interests of all those involved in the Company.

The Supervisory Board is responsible for its own performance.

Our Articles of Association require the approval of the Supervisory Board for certain major resolutions proposed to be taken by our Corporate Executive Board, including:

• issuing shares;
• acquisitions, redemptions, repurchases of our shares and any reduction in our issued and outstanding capital;
• allocating duties within the Corporate Executive Board and the adoption or amendment of the charter of the Corporate Executive Board; and
• significant changes in the identity or the nature of the Company or its enterprise.

Appointment

Our Supervisory Board determines the number of its own members. Following a proposal made by the Supervisory Board to appoint, suspend or dismiss a Supervisory Board member, an absolute majority of votes cast at the General Meeting of Shareholders is required to approve such a proposal. If another party makes the proposal, an absolute majority of votes cast, representing at least one-third of the issued share capital, is required to appoint, suspend or dismiss a Supervisory Board member. If this qualified majority is not achieved but a majority of the votes exercised was in favor of the proposal, then a second meeting may be held. In the second meeting, only a majority of votes exercised, regardless of the number of shares represented at the meeting is required to adopt the proposal to appoint, suspend or dismiss a Supervisory Board member. A Supervisory Board member is appointed for a four-year term and is eligible for reappointment. However, a Supervisory Board member may not serve for more than 12 years.

The composition of our Supervisory Board must be such that the combined experience, expertise and independence of its members best enables the Supervisory Board to carry out its responsibilities. As we are an international retailer, the charter of the Supervisory Board provides that the composition of the Supervisory Board should preferably reflect knowledge of European and American market conditions, financial institutions and corporate governance.

If a Supervisory Board member is concurrently a member of another company's supervisory board, the charter of our Supervisory Board states that the main duties arising from and/or the number and nature of the memberships on any other company's supervisory board must not conflict or interfere with that person's duties as a member of our Supervisory Board. The same applies to the number of non-Ahold supervisory board memberships that person may hold.

Independence of Supervisory Board members

The Supervisory Board has decided that the members of the Supervisory Board must be independent as defined by the Dutch Corporate Governance Code. However, the Supervisory Board charter allows for no more than one member not to be independent as defined by the Dutch Corporate Governance Code.

Conflict of Interest

Each member of the Supervisory Board shall immediately report any potential conflict of interest to the chairman of the Supervisory Board. The member of the Supervisory Board with such conflict or potential conflict of interest shall provide the chairman of the Supervisory Board with all relevant information. The chairman of the Supervisory Board will determine whether there is a conflict of interest. If a member of the Supervisory Board has a conflict of interest with the Company, such member shall not participate in the discussions and/or decision making process on a subject or transaction in relation to which such member has a conflict of interest. In accordance with provision III.6.3 of the Dutch Corporate Governance Code we report that in 2005 Jan Hommen did not take part in the discussions and abstained from voting on any matter related to the sale of three shopping centers in Central Europe to ING Real Estate in view of his membership of the supervisory board of ING Groep N.V. and provisions III.6.1 through III.6.3 were complied with. No other conflicts of interest occurred in 2005.

Committees of the Supervisory Board

The Supervisory Board has established the following committees:

Audit Committee

Among other things, the Audit Committee is responsible for pre-approving all audit and permitted non-audit services and for reviewing our overall risk management and control environment, financial reporting arrangements and standards of business conduct. The Supervisory Board has determined that Jan Hommen and Stephanie Shern are the "Audit Committee Financial Experts" within the meaning of the Dutch Corporate Governance Code and as defined in Item 16a of Form 20-F. The Supervisory Board has determined that each member of the Audit Committee is "independent" as set forth in Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and as required by Section 303A.06 of the NYSE Listed Company Manual.

Selection and Appointment Committee

The Selection and Appointment Committee makes recommendations to the Supervisory Board regarding candidates for service on the Corporate Executive Board and the Supervisory Board.

Remuneration Committee

The Remuneration Committee reviews executive remuneration and recommends remuneration policies for the Corporate Executive Board to be adopted by the General Meeting of Shareholders. For a report on remuneration and the activities of the Remuneration Committee, see the "Remuneration" section of this annual report.

The following charters can be found in the corporate governance section of our website at www.ahold.com: the Supervisory Board charter, the Audit Committee charter, the Remuneration Committee charter and the Selection and Appointment Committee charter.

Shares and shareholders' rights

For details on the number of outstanding shares, see Note 23 to our consolidated financial statements included in this annual report. For details on listings, share performance, and dividend policy with respect to our common shares, see the "Investor relations" section of this annual report.

Issue of additional shares and pre-emptive rights

Shares may be issued pursuant to a resolution of the General Meeting of Shareholders upon a proposal of the Corporate Executive Board and subject to the approval of the Supervisory Board. The General Meeting of Shareholders may delegate by resolution this authority to the Corporate Executive Board for a period not exceeding five years. A resolution of the General Meeting of Shareholders to issue shares or to authorize the Corporate Executive Board to do so is subject also to the approval of each class of shares whose rights would be adversely affected by the proposed issuance or delegation. The General Meeting of Shareholders has delegated this authority to the Corporate Executive Board, subject to the approval of the Supervisory Board through November 18, 2006 with respect to the issuance and/or granting of rights to acquire common shares up to a maximum of 10% of the outstanding common shares to be increased by up to 10% in case of mergers or acquisitions.

Holders of common shares have a pre-emptive right to purchase common shares upon the issue of new common shares in proportion to the aggregate amount of their existing holdings of our common shares. According to our Articles of Association, this pre-emptive right does not apply in respect of any issuance of shares to employees of Ahold. The General Meeting of Shareholders may resolve to restrict or exclude pre-emptive rights. The General Meeting of Shareholders may also designate by resolution the Corporate Executive Board for a period not exceeding five years as the corporate body authorized to restrict or exclude pre-emptive rights. An absolute majority of votes cast in the General Meeting of Shareholders is required to adopt a resolution to restrict or exclude rights or to delegate this authority to the Corporate Executive Board, provided that at least one-half of the issued and outstanding share capital is represented at such meeting. A majority of at least two-thirds of the votes cast is required if less than one-half of the issued and outstanding share capital is represented.The General Meeting of Shareholders has delegated the authority to restrict or exclude the pre-emptive rights of holders of common shares upon the issuance of common shares and/or upon the granting of rights to subscribe for common shares to the Corporate Executive Board through November 18, 2006.

General Meeting of Shareholders

Our shareholders exercise their rights through annual and extraordinary General Meetings of Shareholders. These meetings must be held in the Netherlands, and specifically in the municipalities of Zaanstad, Amsterdam, the Hague, Rotterdam, Utrecht, Amersfoort or Haarlemmermeer. Each year, no later than June 30, we are required to convene an annual General Meeting of Shareholders. Additional extraordinary General Meetings of Shareholders may be convened at any time by the Supervisory Board, the Corporate Executive Board or by one or more shareholders representing at least 10% of our issued and outstanding share capital. The agenda for the annual General Meeting of Shareholders must contain certain matters as specified in our Articles of Association and under Dutch law. This includes, among other things, the adoption of our annual consolidated financial statements. Shareholders are entitled to propose items to be put on the agenda of the General Meeting of Shareholders provided they hold at least 1% of the issued and outstanding share capital or the shares held by them represent a market value of at least EUR 50 million. Adoption of such a proposal requires a majority of votes cast at the General Meeting of Shareholders representing at least one-third of the issued shares. If this qualified majority is not achieved but a majority of the votes exercised was in favor of the proposal, then a second meeting may be held. In the second meeting, only a majority of votes exercised, regardless of the number of shares represented at the meeting (unless the law provides otherwise), is required to adopt the decision. Proposals for matters to be included in the agenda for the General Meeting of Shareholders must be submitted at least 60 days before the meeting. We may, however, refrain from including a matter on the agenda if this would prejudice our vital interests. The General Meeting of Shareholders also is entitled to approve important decisions regarding the identity or the character of Ahold including major acquisitions and divestments.

The Corporate Executive Board may set a record date to determine that a person may attend and exercise the rights relating to a General Meeting of Shareholders. Shareholders registered at that date are entitled to attend and to exercise the rights of shareholders in respect of such General Meeting of Shareholders, regardless of a sale of shares after the record date. Shareholders may be represented by written proxy.

Ahold is one of the companies participating in the Shareholder Communication Channel ("Stichting Communicatiekanaal Aandeelhouders"). We have used the Shareholder Communication Channel to distribute the agenda for the annual General Meeting of Shareholders and a voting instruction form that allows shareholders to grant power to an independent proxy holder, either by email or through the internet.

Holders of ADRs will receive notice from the Depositary for our ADR facility whenever it receives notice of a General Meeting of Shareholders or solicitation of consents or proxies of holders of common shares. The Depositary will provide a statement that the owners of ADRs on the record date will be entitled to instruct the Depositary as to the exercise of any voting rights represented by the common shares underlying their ADRs. If the Depositary does not receive instructions from any owner, the Depositary will deem the owner to have instructed the Depositary to give a discretionary proxy to a person designated by us for these common shares.

Voting rights

Subject to certain exceptions provided by Dutch law or our Articles of Association, resolutions are passed by a majority of the votes cast. A resolution to amend the Articles of Association that would change the rights vested in the holders of a particular class of shares requires the prior approval of a meeting of that particular class. A resolution to dissolve the Company may be adopted by the General Meeting of Shareholders following a proposal of the Corporate Executive Board made with the approval of the Supervisory Board. Any proposed resolution to wind up the Company must be disclosed in the notice calling the General Meeting of Shareholders at which that proposal is to be considered.

No votes may be cast at a General Meeting of Shareholders in respect of shares that are held by us or any of our subsidiaries. These shares are not taken into account for the purpose of determining how many shareholders are voting and are represented, or how much of the share capital is represented at a General Meeting of Shareholders. There are no limitations, either under Dutch law or in our Articles of Association, on the right of non-residents of the Netherlands or foreign owners to hold or vote our common shares.

Each of our common shares is entitled to one vote. Holders of depositary receipts with respect to our cumulative preferred financing shares may attend the General Meeting of Shareholders. The voting rights on the underlying shares may be exercised by Stichting Administratiekantoor Preferente Financierings Aandelen Ahold (the "Administratie­kantoor"), a foundation organized under the laws of the Netherlands in the manner described in Note 28 to our consolidated financial statements included in this annual report.

Repurchase by Ahold of its own shares

We may acquire fully paid shares of any class in our capital for no consideration at any time or, subject to certain provisions of Dutch law and our Articles of Association, if:
1. our shareholders' equity less the payment required to make the acquisition does not fall below the sum of paid-in and called-up capital and any reserves required by Dutch law or our Articles of Association; and
2. we and our subsidiaries would thereafter not hold shares with an aggregate nominal value exceeding 10% of our issued share capital.

Any shares held by us or our subsidiaries in our own capital may not be voted. An acquisition by us of shares in our capital of any class must be approved by resolution of our Corporate Executive Board, subject to the approval of our Supervisory Board. Shares in our own capital may only be acquired if the General Meeting of Shareholders has authorized our Corporate Executive Board to do so. Such authority may apply for a maximum period of 18 months and must specify the number of shares that may be acquired, the manner in which shares may be acquired and the price limits within which shares may be acquired. No such authority is required for the acquisition by us of fully paid shares in our own capital for the purpose of transferring these shares to our employees or employees of a group company pursuant to our share plans or option plans, provided the shares are quoted in the official price list of a stock exchange. Our Corporate Executive Board has been authorized to acquire shares through November 18, 2006, subject to the approval of our Supervisory Board. As of the date of this annual report, we have not acquired any shares under this authorization.

Cumulative preferred financing shares

All outstanding cumulative preferred financing shares have been issued to the Administratiekantoor. The purpose of the Administratiekantoor is, among other things, to acquire and hold cumulative preferred financing shares against the issue of depositary receipts, as well as to exercise all voting rights attached to these shares. Holders of depositary receipts can obtain proxies from the Administratiekantoor. Pursuant to its articles of association, the board of the Administratiekantoor consists of three members: one A member, one B member and one C member.

The A member is appointed by the general meeting of depositary receipt holders, the B member is appointed by the Company and the C member is appointed by a joint resolution of the A member and the B member. As of March 28, 2006, the members of the board of the Administratie­kantoor were:

We pay a mandatory annual dividend on our cumulative preferred financing shares, which is calculated in accordance with the provisions of article 39.4 of our Articles of Association. For further details on our cumulative preferred financing shares and the voting rights attached thereto, see Note 28 to our consolidated financial statements included in this annual report.

Cumulative preferred shares

No cumulative preferred shares are currently outstanding. We entered into an option agreement with Stichting Ahold Continuïteit ("SAC") designed to exercise influence with respect to a potential change in control over us. SAC is a Dutch foundation whose statutory purpose is to enhance our continuity, independence and identity in case of a hostile takeover attempt. As of March 28, 2006, the members of the board of SAC were:

The members of the Corporate Executive Board and the members of the board of SAC declare that they are jointly of the opinion that SAC is independent of the Company as required by the General Rules for the Euronext Amsterdam Stock Market. For details on our cumulative preferred shares, see Note 23 to our consolidated financial statements included in this annual report.

Major shareholders

We are not directly or indirectly owned or controlled by another corporation or by any government. Except as described under "Cumulative preferred shares" above, we do not know of any arrangements that may, at a subsequent date, result in a change in our control.

Significant ownership of voting shares

Pursuant to the Dutch Disclosure Act, any person or legal entity who, directly or indirectly, acquires or disposes of an interest in our capital or voting rights must immediately give written notice to us and, by means of a standard form, to the Netherlands Authority for the Financial Markets ("Autoriteit Financiële Markten") (the "AFM"), if, as a result of that acquisition or disposal, the percentage of capital interest or voting rights held by that person or legal entity falls within a different percentage range than the percentage range applicable to the capital interest or voting rights which that person or legal entity held prior to the acquisition or disposal. There is no obligation to notify us of a change if the interest remains within one of the ranges specified below, or the change is not a result of an action by the investor. The table below shows percentage ranges referred to in the Disclosure Act. In addition local rules may apply to investors.

Percentage ranges applying to Dutch statutory disclosure requirements

As of March 28, 2006, except as discussed below, we do not know of any record-owners of more than 5% of any class of capital interest and/or the related voting rights. All of the issued and outstanding cumulative preferred financing shares are held by the Administratiekantoor. The Administratiekantoor issued corresponding depositary receipts to four investors.

We have reviewed public notifications on record with the AFM. We have also reviewed the public filings with the SEC. The following filings were made:

• DeltaFort Beleggingen I B.V. is registered to have notified the AFM that as per December 17, 2003 it held a capital interest of 9.5% and an interest in voting rights of 0.78%.
• Capital Research & Management filed a Schedule 13G with the SEC, dated February 10, 2006, showing that it owned 140 million, or 9.0%, of our common shares as per December 30, 2005.
• Brandes Investment Partners, L.P. filed a Schedule 13G with the SEC, dated February 14, 2006, showing that it owned 213.7 million or 13.7% of our common shares as per December 31, 2005.

Further provisions of our Articles of Association

Below we set out two further provisions of our Articles of Association with respect to the objects of Ahold and provisions on the dissolution and liquidation of Ahold.

Description of the objects of Ahold

Our objectives pursuant to article 2 of our Articles of Association are "to promote or join others in promoting companies and enterprises, to participate in companies and enterprises, to finance including the giving of guarantees and acting as surety for the benefit of third parties as security for liabilities of companies and enterprises with which the Company is joined in a group or in which the Company owns an interest or with which the Company collaborates in any other way, to conduct the management of and to operate companies engaged in the wholesale and retail trade in consumer and utility products and companies that produce such products, to operate restaurants and companies engaged in rendering public services, including all acts and things which relate or may be conducive thereto in the broadest sense, as well as to promote, to participate in, to conduct the management of and, as the case may be, to operate businesses of any other kind."

Liquidation

In the event of our dissolution and liquidation, the surplus assets remaining after satisfaction of all our debts will be distributed in accordance with the provisions of Dutch law and our Articles of Association in the following order:
1. to the holders of cumulative preferred shares, the nominal amount or the amount paid thereon, if lower, as well as any dividends in arrears and dividends over the current dividend period until the date of payment of liquidation proceeds;
2. to the holders of cumulative preferred financing shares, the nominal amount and share premium paid on these shares, as well as any dividends in arrears and dividends over the current dividend period until the date of payment of liquidation proceeds;
3. to the holders of common shares, the nominal amount of these shares, as well as their proportional share in the common shares share premium account; and
4. holders of the 120 outstanding founders' certificates will receive 10% of the balance remaining after the distributions mentioned above have been made and after the amounts of the general reserves and profit reserves created since December 31, 1961 have been deducted in accordance with our Articles of Association.

The balance remaining after all of the above distributions shall be for the benefit of the holders of our common shares in proportion to the aggregate nominal value of common shares held by each of them.

Auditor

The General Meeting of Shareholders appoints the external auditor. The Audit Committee recommends the external auditor to be proposed for approval by the General Meeting of Shareholders. In addition, the Audit Committee evaluates and, where appropriate, recommends the replacement of the external auditors. The Audit Committee also pre-approves the fees for audit and permitted non-audit services to be performed by the external auditors as negotiated by the Corporate Executive Board. The Audit Committee shall not approve the engagement of the external auditors to render non-audit services prohibited by applicable laws and regulations or that would compromise their independence.

On June 2, 2004, the General Meeting of Shareholders appointed Deloitte Accountants B.V. as external auditor for the Company for the fiscal years 2004 and 2005.

Compliance with Dutch Corporate Governance Code

We apply all of the relevant provisions of the Dutch Corporate Governance Code, with the following exceptions:

• We require Corporate Executive Board members to keep shares obtained under a long-term incentive plan for three years after vesting, instead of the five years recommended by the Dutch Corporate Governance Code in best practice principle II.2.3. This exception is included in the remuneration policy adopted by the General Meeting of Shareholders on March 3, 2004.
• The Vice-Chairman of our Supervisory Board, Jan Hommen, has accepted chairmanships and memberships of supervisory boards of several Dutch listed companies. Following the calculation method of the Dutch Corporate Governance Code in best practice principle III.3.4, he is deemed to hold six memberships instead of the recommended maximum of five. This exception is caused by unforeseen circumstances and Mr. Hommen will resolve this in due course.