4.17
Other
4.17.1 Dividend
In light of the unforeseen and unprecedented impact of COVID-19 on economic activity and the markets Accell Group is operating in, and the uncertainty regarding the length and depth of the pandemic, the Board of Management decided on 25 March 2020 to withdraw the 2019 dividend proposal from the Annual General Meeting agenda.
In June 2020, Accell Group entered into an additional € 115 million loan facility with five syndicate banks, which was partially backed by a Dutch state guarantee in favor of the banks under the so-called GO-C scheme (Garantie Ondernemingsfinanciering Corona). The GO-C facility has a term of up to two years. In June 2020, € 60 million was drawn under this facility; the remainder is available until April 1, 2021. According to the GO-C Facility, no cash dividend distributions shall be made, unless the GO-C facility is repaid and cancelled and the original financial covenants that applied prior to June 2020 are complied with. For further details regarding the covenants see note 4.9.1.1.
As a result, no dividend will be distributed over the 2020 financial year.
4.17.2 Off-balance sheet commitments
The total off-balance sheet commitments, presented at nominal value, consist of:
| Total | < 1 year | 1-5 year | > 5 year | Total | |
| 2020 | 2020 | 2020 | 2020 | 2019 | |
| € x 1,000 | € x 1,000 | € x 1,000 | € x 1,000 | € x 1,000 | |
| Operational lease commitments | 297 | 164 | 123 | 10 | 711 |
| Property, plant and equipment ordered | - | - | - | - | 1,080 |
| Marketing and merchandising commitments | 5,779 | 1,982 | 3,797 | - | 2,060 |
| Other off-balance sheet commitments | 11,958 | 7,618 | 4,340 | - | 10,382 |
|
Total
|
18,033
|
9,764
|
8,260
|
10
|
14,233
|
Accell Group has commitments from operating lease agreements for buildings and land, IT equipment, machinery and vehicles for use in its normal business operations. The commitments arising from marketing and merchandising are primarily related to sponsoring obligations. The other liabilities not included in the balance sheet consist primarily of software licensing commitments and commitments related to e-commerce initiatives.
4.17.3 Contingent assets and liabilities
Accell Group’s most significant contingent assets and liabilities are described below.
Earn-outs
In the Stock Purchase Agreement between Accell North America and Beeline Bikes Acquisition Company, LLC is included an earn-out arrangement of 10% of the operation profit for each calendar year during the term 01-01-2021 - 31-12-2024.
In the Asset Purchase Agreement between (among others) Accell North America and Alta Cycling Group LLC is included an earn-out arrangement of 15% of the operating profits for each calendar year during the term 01-01-2022 - 31-12-2026, with a maximum amount of US$ 15 million.
Accell Group has concluded a project agreement for future product developments with a manufacturer. This agreement includes a commitment on the part of Accell Group to purchase a number of products in return for exclusivity. In the event Accell Group does not (fully) comply with this purchase commitment, Accell Group is required to pay compensation for damages with a maximum of € 6 million.
Other contingent assets and liabilities
Per 31 December 2020, Accell Group holds a contingent claim of € 0.9 million in respect of custom duties. Furthermore, Accell Group has provided a number of corporate/ parent guarantees in the ordinary course of its business, together with a number of rental guarantees (€ 0.3 million).
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:
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.
4.17.5 Remuneration of the Board of Management and the Supervisory Board
Board of Management
The company’s remuneration policy is reflected in the remuneration report that has been presented to the General Meeting of Shareholders for approval. The bonuses reflected in the financial statements relate to the financial year and depend on the targets set by the Supervisory Board. As announced on 22 April 2020 in the Annual Meeting of Shareholders, the members of the Board of Management have decided to refrain from any variable compensation over 2020, due to the impact of COVID-19 on society and on Accell Group in particular. In this context, the members of the Board of Management did not receive any STI remuneration or a LTI reward over 2020.
The remuneration of the individual members of the Board of Management is as follows:
| Salary | Fringe benefits (lease car) | Termination benefit | Bonus | Pension contributions | Share-based payments | Total 2020 | Total 2019 | |
| in € | in € | in € | in € | in € | in € | in € | in € | |
| A.H. Anbeek | 497,000 | 15,936 | - | - | 118,404 | 99,999 | 731,339 | 772,419 |
| R.S. Baldew | 390,000 | 24,116 | - | - | 59,488 | 74,825 | 548,429 | 639,583 |
| J.J. Both | 328,000 | 17,423 | - | - | 70,734 | 66,147 | 482,304 | 536,271 |
|
Total
|
1,215,000
|
57,475
|
-
|
-
|
248,626
|
240,971
|
1,762,072
|
1,948,273
|
The stock option entitlements that have been granted comprise the following:
| Award date | Number at 01-01-20 | Issued in 2020 | Exercised 2020 | Forfeited in 2020 | Number at 31-12-20 | Exercise price | Expiration date | Liability at 31-12-20 | |
| A.H. Anbeek | 08/03/2018 | 1,850 | - | - | - | 1,850 | 21.68 | 08/03/2026 | 6,697 |
| R.S. Baldew | 06/03/2019 | 1,650 | - | - | 1,650 | 19.58 | 06/03/2027 | 5,247 | |
| R.S. Baldew | 05/03/2020 | - | 6,350 | - | - | 6,350 | 25.00 | 05/03/2028 | 28,645 |
| J.J. Both | 08/03/2018 | 2,950 | - | - | - | 2,950 | 21.68 | 08/03/2026 | 10,679 |
| J.J. Both | 09/03/2017 | 6,850 | - | - | - | 6,850 | 22.05 | 09/03/2025 | 18,564 |
| J.J. Both | 24/02/2016 | 7,850 | - | - | - | 7,850 | 18.96 | 24/02/2024 | 18,762 |
|
|
|
21,150
|
6,350
|
-
|
-
|
27,500
|
|
|
88,593
|
After awarding the options, the options vest immediately but remain in lock-up for three years. After the lock-up period there is an exercise period of five years. At 31 December 2020 the intrinsic value of the options was
€ 115,876, as the share price of Accell Group N.V. stood at € 25.85, which was higher than the exercise prices of the options.
The conditional shares that have been granted comprise the following:
| Award date | Number at 01-01-20 | Granted in 2020 | Vested 2020 | Forfeited in 2020 | Number at 31-12-20 | Vesting date | Fair value at award date | Liability at 31-12-20 | |
| A.H. Anbeek | 05/03/2020 | - | 19,360 | - | -19,360 | - | 05/03/2023 | 201,667 | - |
| A.H. Anbeek | 05/03/2020 | - | 9,680 | - | - | 9,680 | 05/03/2022 | 100,833 | 50,417 |
| A.H. Anbeek | 06/03/2019 | 12,155 | - | - | - | 12,155 | 06/03/2021 | 99,185 | 99,185 |
| A.H. Anbeek | 08/03/2018 | 1,830 | - | - | -1,830 | - | 08/03/2020 | 16,531 | - |
| R.S. Baldew | 05/03/2020 | - | 15,200 | - | -15,200 | - | 05/03/2023 | 158,333 | - |
| R.S. Baldew | 05/03/2020 | - | 7,600 | - | - | 7,600 | 05/03/2022 | 79,167 | 39,584 |
| R.S. Baldew | 06/03/2019 | 1,617 | - | - | - | 1,617 | 06/03/2021 | 13,195 | 13,195 |
| J.J. Both | 05/03/2020 | - | 12,800 | - | -12,800 | - | 05/03/2023 | 133,333 | - |
| J.J. Both | 05/03/2020 | - | 6,400 | - | - | 6,400 | 05/03/2022 | 66,667 | 33,334 |
| J.J. Both | 06/03/2019 | 8,044 | - | - | - | 8,044 | 06/03/2021 | 65,639 | 65,639 |
| J.J. Both | 08/03/2018 | 7,265 | - | - | -7,265 | - | 08/03/2020 | 65,627 | - |
|
|
|
30,911
|
71,040
|
-
|
-56,455
|
45,496
|
|
1,000,177
|
301,352
|
Conditional shares granted to the members of the Board of Management under the new plan were forfeited in 2020 on the basis of their decision to waive those rights at the General Meeting of Shareholders on 22 April 2020. The conditional shares that were granted in 2018 were forfeited due to the fact that the set performance criteria were not met.
After vesting, the shares are subject to a lock-up period of two years.
At the end of 2020 Mr. Anbeek held 7,000 shares in Accell Group N.V. and Mr. Both held 7,399 shares.
Internal pay ratio
The pay ratio from continuing operations of the Board of Management compared with the average employee compensation in 2020 was 13:1 (2019: 15:1). The pay ratios can vary over time as a result of the Accell Group’s annual performance. This performance impacts the remuneration of the Board of Management more than that of all other employees.
The ratio consists of the average remuneration of the Board of Management compared with the average cost of all other employees of Accell Group. The average remuneration of the Board of Management is calculated from the sum of the fixed salary, short-term incentives, share-based payments, pensions and other benefits of the three members (3 FTEs) of the Board of Management. The average cost of all other employees is calculated from the personnel costs (see note 4.7.4) and the average number of employees during the year (3,139 FTEs) minus 3.
Supervisory Board
The remuneration of the individual members of the Supervisory Board was as follows:
4.17.6 Related parties
Identification of related parties
In addition to the Board of Management and the Supervisory Board (see note 4.17.5) Accell Group recognises related party relationships with its associates and joint ventures (see note 4.20.3).
Associates and joint ventures
The transactions during the financial year and balances outstanding at year-end between group companies and associates and joint ventures are presented below:
| Transaction values for the year | Balance outstanding at year-end | |||
| 2020 | 2019 | 2020 | 2019 | |
| € x 1,000 | € x 1,000 | € x 1,000 | € x 1,000 | |
|
Sale of goods and services
|
|
|
|
|
| Atala SpA | 1,142 | 4,284 | 727 | 261 |
|
Purchase of goods
|
|
|
|
|
| Atala SpA | 9,769 | 3,916 | 1,391 | 158 |
|
Dividends received
|
|
|
|
|
| Atala SpA | - | 343 | - | - |
The amounts outstanding are not provided for and will be settled in cash and cash equivalents. No guarantees have been given or received. No expense has been recognised for bad or doubtful debts in respect of the amounts owed by related parties. All sales and purchases are priced on an arm’s length basis. Transactions and balances between Accell Group and its non-consolidated companies have not been eliminated for consolidation purposes.
4.17.7 Auditor fees
The total costs for the services rendered by KPMG Accountants N.V. and its network consist of:
| KPMG Accountants N.V. | Other KPMG network | Total KPMG | KPMG Accountants N.V. | Other KPMG network | Total KPMG | |
| 2020 | 2020 | 2020 | 2019 | 2019 | 2019 | |
| € x 1,000 | € x 1,000 | € x 1,000 | € x 1,000 | € x 1,000 | € x 1,000 | |
| Audit of the financial statements | 873 | 479 | 1,352 | 754 | 463 | 1,217 |
| Other audit assignments | - | - | - | 20 | 2 | 23 |
| Tax services | - | 18 | 18 | - | 19 | 19 |
| Other non-audit services | - | - | - | - | - | - |
|
Total costs
|
873
|
496
|
1,370
|
775
|
484
|
1,259
|
4.17.8 Subsequent events
In February 2021, Accell Group reached an agreement on the sale of the fitness and motorcycle parts business of Vartex AB, Sweden. This business is not part of Accell Group’s strategic activities and reported third-party revenue of € 8.3 million in 2020 (allocated to the Bikes segment). The business-related assets (including real estate) with a carrying amount of € 4.2 million will be transferred in March 2021.
