4.16
16. Other

16.1 Dividend

The existing reservation and dividend policy reads: Accell aims for a stable dividend policy aimed at making at least 40% of the net operating profit available to shareholders.

On 24 January 2022, Accell Group and Sprint BidCo B.V. (the "Offeror", an entity controlled by investment funds of KKR) jointly announced that they had reached conditional agreement on a recommended all-cash public offer by the Offeror for all issued and outstanding shares in Accell Group N.V. at an offer price of  € 58.00 (cum dividend) in cash per share. Cum dividend means that dividends with a record date prior to the settlement of the public offer will be deducted from the offer price of € 58.00 per share. For this reason, Accell Group will not propose a dividend payment in respect of the 2021 financial year to the General Meeting.

16.2 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
  2021 2021 2021 2021 2020
  € x 1,000 € x 1,000 € x 1,000 € x 1,000 € x 1,000
Operational lease commitments 321 244 67 10 297
Marketing and merchandising commitments 4,343 2,236 2,106 - 5,779
Other off-balance sheet commitments 7,234 3,962 3,272 - 11,958
Total 11,898 6,443 5,445 10 18,033

 

Accell Group has commitments from operating lease agreements for buildings and land, IT software and maintenance, 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.

16.3 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 1 January 2021 till 31 December 2024. The earn-out for 2021 is nil.

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 1 January 2022 till 31 December 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 2021, 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).

16.4 Share-based payments

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

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

  • share plan for members of the Board of Management which is included in the Remuneration Policy Board of Management Accell Group NV 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).

For the former share plan for members of the Board of Management and directors of subsidiaries the granting ended in 2019 and therefore the last vesting took place in March 2021.

All 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 31-12-20 Number at 31-12-21 Granting date Expiry date Share price at granting date Fair value at granting date
          x € 1 x € 1
Conditional shares
Conditional shares granted in 2018 1) 950 - 08/03/2018 2-3 years 21.68 100,000
Conditional shares granted in 2019 2) 21,816 - 06/03/2019 2 years 19.58 178,000
Conditional shares granted in 2020 3) 14,458 10,078 01/01/2020 3 years 25.63 296,000
Conditional shares granted in 2020 4) 23,680 17,280 05/03/2020 2 years 25.00 247,000
Conditional shares granted in 2021 5) - 28,921 04/03/2021 3 years 31.05 688,000
Conditional shares granted in 2021 3) - 17,285 01/01/2021 3 years 25.97 358,000

1) Conditionally granted to directors of subsidiaries.

2) All conditional shares were granted to members of the Board of Management.

3) All conditional shares were granted to selected executive employees.

4) 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. Due to Mr. Both leaving the company partial vesting took place and the remaining number of his conditional shares were forfeited.

5) A total of 39,613 conditional shares were granted to the Board of Management. Due to Mr. Both leaving the company partial vesting took place and the remaining number of his conditional shares were forfeited.

 

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 16.5.

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:

 

  2021 2020
Expected volatility (weighted average) n.a. 28.11%
Expected life (weighted average) n.a. 3.8
Expected dividends n.a. 1.20%
Risk-free interest rate (based on government bonds) n.a. -0.50%

 

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:

 

  2021 2020
  € x 1,000 € x 1,000
Conditional shares Board of Management 2019 134 89
Conditional shares Board of Management 2020 224 122
Conditional shares Board of Management 2021 198 -
Options Board of Management - 29
Conditional shares management 2017 - 6
Conditional shares executives 2020 93 105
Conditional shares executives 2021 126 -
Total expense recognized in personnel expenses 775 351

 

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% (2020: 0.3%). 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 recognized as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognized 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 recognized is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

16.5 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 Termination benefit Bonus Pension contributions Share-based payments Total 2021 Total 2020
  in € in € in € in € in € in € in € in €
A.H. Anbeek 503,000 16,079 - 223,465 119,379 274,273 1,136,196 731,339
R.S. Baldew 395,000 16,520 - 175,484 59,986 166,624 813,615 548,429
J.J. Both 1) 332,000 30,500 332,000 - 70,224 115,363 880,088 482,304
Total 1,230,000 63,099 332,000 398,949 249,589 556,260 2,829,899 1,762,072

1) On 11 June 2021 Mr. Both stepped down as Chief Supply Chain Officer (CSCO) and member of the Board of Management but remained available as an advisor to the Company until 31 December 2021.

The stock option entitlements that have been granted comprise the following:

  Award date Number at 01-01-21 Issued in 2021 Exercised 2021 Number at 31-12-21 Exercise price Expiration date Liability at 31-12-21
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 -
J.J. Both 09/03/2017 6,850 - -6,850 - 22.05 09/03/2025 -
J.J. Both 24/02/2016 7,850 - -7,850 - 18.96 24/02/2024 -
    27,500 - -17,650 9,850     40,589

 

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 2021, the intrinsic value of the options was
 241,635, as the share price of Accell Group N.V. stood at € 48.00 which was higher than the exercise prices of the options. The exercise of the options took place on 12 March 2021 at a share price of € 33.88. 

The conditional shares that have been granted comprise the following:

  Award date Number at 01-01-21 Granted in 2021 Vested 2021 Forfeited in 2021 Number at 31-12-21 Vesting date Fair value at award date Liability at 31-12-21
A.H. Anbeek 04/03/2021 - 16,200 -   16,200 04/03/2024 281,491 93,831
A.H. Anbeek 05/03/2020 9,680 - - - 9,680 05/03/2022 100,833 100,833
A.H. Anbeek 06/03/2019 12,155 - -9,116 -3,039 - 06/03/2021 - -
R.S. Baldew 04/03/2021 - 12,721 - - 12,721 04/03/2024 221,040 73,680
R.S. Baldew 05/03/2020 7,600 - - - 7,600 05/03/2022 79,167 79,167
R.S. Baldew 06/03/2019 1,617 - -1,213 -404 - 06/03/2021 - -
J.J. Both 04/03/2021 - 10,692 -1,782 -8,910 - 04/03/2024 185,784 -
J.J. Both 05/03/2020 6,400 - -3,200 -3,200 - 05/03/2022 66,667 -
J.J. Both 06/03/2019 8,044 - -6,033 -2,011 - 06/03/2021 - -
    45,496 39,613 -21,344 -17,564 46,201   934,982 347,511

 

The conditional shares that were granted in 2019 were partly forfeited due to the fact that the set performance criteria were not fully met. Due to Mr. Both leaving the company a pro-rata accelerated vesting took place for his outstanding granted conditional shares and the lock-up period for all vested shares was set to 1 January 2022.

After vesting, the shares are subject to a lock-up period of two years.

At the end of 2021 Mr. Anbeek held 7,000 freely available shares and 4,604 shares subject to lock-up in Accell Group N.V. and Mr. Baldew held 613 shares subject to lock-up in Accell Group N.V.

Internal pay ratio

The pay ratio of the Board of Management compared with the average employee compensation in 2021 was 17:1 (2020: 13:1). 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 7.4) and the average number of employees during the year (3,495 FTEs) minus 3 FTEs.

Supervisory Board

The remuneration of the individual members of the Supervisory Board was as follows:

  2021 2020
  in € in €
R. ter Haar (chairman as of 24 April 2019) 96,000 96,000
D. Jansen Heijtmajer 52,000 52,000
L. Volatier (appointed on 21 April 2021) 36,851 -
G. van de Weerdhof 52,000 52,000
E. van Wiechen (appointed on 21 April 2021) 36,242 -
P.B. Ernsting (until 21 April 2021) 17,333 52,000
A.J. Pasman (until 31 December 2019. Payment 2020 for advisory services until 22 April 2020) - 16,098
Total 290,426 268,098

 

16.6 Related parties

Identification of related parties

In addition to the Board of Management and the Supervisory Board (see note 16.5) Accell Group recognizes related party relationships with its associates and joint ventures (see note 19.3).

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
  2021 2020 2021 2020
  € x 1,000 € x 1,000 € x 1,000 € x 1,000
Sale of goods and services        
Atala SpA 814 1,142 701 727
         
Purchase of goods        
Atala SpA 16,989 9,769 2,815 1,391
         
Dividends received        
Atala SpA 886 - - -

 

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 recognized 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.

16.7 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
  2021 2021 2021 2020 2020 2020
  € x 1,000 € x 1,000 € x 1,000 € x 1,000 € x 1,000 € x 1,000
Audit of the financial statements 704 526 1,230 873 479 1,352
Other audit assignments 5 2 6 - - -
Tax services - 21 21 - 18 18
Other non-audit services - 4 4 - - -
Total costs 709 552 1,261 873 496 1,370

 

 

16.8 Subsequent events

In November 2021, Accell Group received an initial unsolicited proposal for all the shares of Accell Group from a consortium led by KKR. The Accell Group Board of Management subsequently followed a thorough process which led to the announcement of a recommended cash offer for Accell Group at an offer price of € 58.00 per share on 24 January 2022. It is expected that we will discuss the offer with our shareholders at the Extraordinary General Meeting of shareholders (EGM) in Q2 2022.