4.17.4
Share-based payments

Accell Group has three conditional share plans and an option plan.

Conditional share plans
Accell Group has three conditional share plans whereby conditional shares can be granted:

  • share plan for members of the Board of Management and directors of subsidiaries: granting ended in 2019 and therefore the last vesting will take place in March 2021;
  • share plan for members of the Board of Management 2020 as approved by the General Meeting of Shareholders on 22 April 2020;
  • share plan for a selected group of executives (active as of 1 January 2020).

All three plans are share-based payment plans with vesting conditions. The grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes. The conditions were incorporated into the fair value at the grant date by applying a discount to the valuation obtained. A third of the share plan for the selected group of executives vests after one year and another third vests in each of the following two years, subject to a negative adjustment based on the ex-post risk analysis and on continued employment with Accell Group until the variable remuneration is paid.

The shares that have been conditionally granted comprise the following:

 

  Number at 31-12-19 Number at 31-12-20 Granting date Expiry date Share price at granting date Fair value at granting date
          x € 1 x € 1
Conditional shares
Conditional shares granted in 2017 1) 2,280 - 09/03/2017 2-3 years 22.05 208,000
Conditional shares granted in 2018 2) 10,045 950 08/03/2018 2-3 years 21.68 100,000
Conditional shares granted in 2019 3) 21,816 21,816 06/03/2019 2 years 19.58 178,000
Conditional shares granted in 2020 4) - 14,458 01/01/2020 3 years 25.63 296,000
Conditional shares granted in 2020 5) - 23,680 05/03/2020 2 years 25.00 247,000
1) 2,280 conditional shares were paid to a member of the Board of Management in 2020.
2) A total of 9,095 shares were conditionally granted to members of the Board of Management in 2018 and 950 to directors of subsidiaries.
3) All conditional shares were granted to members of the Board of Management.
4) All conditional shares were granted to selected executive employees.
5) Conditional shares granted to the Board of Management under the new plan were forfeited in 2020 based on their decision to waive those rights at the General meeting of shareholders on 22 April 2020. The granted shares presented are the compensation for the transition from the old share-based payment plan to the new share-based payment plan for the Board of Management.

 

The fair value will be charged to the income statement according to the straight-line method spread over the period between the grant date and the time that the shares are made unconditional, whereby adjustment will be made for the expected number of shares to be distributed. After final award, a lock-up period of two years applies for members of the Board of Management and three years for directors of subsidiaries under the terminated plan. 

Option plan
The granting under the option plan ceased after the approval of the new remuneration policy of the Board of Management at the General Meeting of Shareholders on 22 April 2020. The last grant under the option scheme for the Board of Management took place in March 2020. The Supervisory Board bases awards pursuant to the option scheme on the realisation of the targets agreed with the Board of Management. The outstanding and granted option rights are explained and specified in note 4.17.5.

The fair value of the employee share options was measured using an option valuation model (Black-Scholes-Merton). Service and non-market performance conditions attached to the transactions were not taken into account in measuring fair value.

The inputs used in the measurement of the fair values at the grant date of the equity-settled share-based payment plans were as follows:

 

     
  2020 2019
Expected volatility (weighted average) 28.11% 27.73%
Expected life (weighted average) 3.8 3.9
Expected dividends 1.20% 2.70%
Risk-free interest rate (based on government bonds) -0.50% 0.22%

 

Expected volatility was based on an evaluation of the historical volatility of the Accell Group N.V.’s share price, in particular over the historical period commensurate with the expected term. The expected term of the instruments is based on historical experience and general option holder behaviour.

The reconciliation to personnel expenses was as follows:

 

     
  2020 2019
  € x 1,000 € x 1,000
Conditional shares management 2016 - 48
Conditional shares management 2017 6 6
Conditional shares executives 2020 105 -
Conditional shares Board of Management 2017 - 41
Conditional shares Board of Management 2018 89 89
Conditional shares Board of Management 2019 122 -
Options Board of Management 29 8
Total expense recognised in personnel expenses
351
192

 

In the event of the full exercise of the option entitlements granted to date and the vesting of the conditional shares the number of issued shares would increase by 0.3% (2019: 0.2%). According to company policy, the options and shares granted are not covered by the company’s purchase of its own shares. In the event of equity-settlement, the company issues new shares at the moment options are exercised.

Accounting policy

The grant date fair value of equity-settled share-based payment awards granted to employees is recognised as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.