8.17
Other

8.17.1 Dividend

The dividend in respect of financial year 2018 was determined at € 0.50 per share or as stock dividend during the General Meeting of Shareholders of 24 April 2019. After the period in which shareholders could report their preference, 36% of the shareholders opted for the stock dividend. On 17 May 2019 € 8.5 million was distributed as cash dividend and 196,691 shares were issued as stock dividend and added to issued share capital.

The Board of Management proposes to make available to the shareholders a dividend with stock option of € 0.30 per share with respect to the current year. The dividend proposal is subject to approval by the General Meeting of Shareholders on 22 April 2020 and is not reflected as a liability in these financial statements.

8.17.2 Off-balance sheet commitments

The total off-balance sheet commitments, presented at nominal value, consist of:

  Total 2019 < 1 year 1-5 year > 5 year Total 2018
  € x 1,000 € x 1,000 € x 1,000 € x 1,000 € x 1,000
Operational lease commitments 711 374 330 7 35,036
Property, plant and equipment ordered 1,080 1,080 - - 50
Marketing and merchandising commitments 2,060 2,055 5 - 3,792
Other off-balance sheet commitments 10,382 3,169 7,213 - 11,594
Total 14,233 6,679 7,548 7 50,472

 

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 mainly include software licensing commitments and commitments related to e-commerce initiatives.

8.17.3 Contingent assets and liabilities

Accell Group’s most significant contingent assets and liabilities are described below.

Earn-outs

As at 31 December 2019, Accell Group holds a contingent liability for a conditional compensation for post combination services, with a maximum of € 1.5 million, which is payable to Velosophy management. The compensation is conditional on certain revenue and EBITDA targets for the start-ups Centaur Cargo and Carqon.

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.

Other contingent assets and liabilities

Per 31 December 2019 Accell Group holds a contingent claim of € 0.9 million in respect of custom duties and a contingent warranty claim of € 0.6 million. Furthermore there are a number of corporate/ parent guarantees, provided in the ordinary course of its business and a number of rental guarantees (€ 0.3 million).

8.17.4 Share-based payments

Accell Group has a restricted share plan and an option plan.

Restricted share plan
Accell Group has a restricted share plan whereby conditional shares can be granted to the members of the Board of Management and to directors of subsidiaries who contribute significantly to the result of Accell Group. Both share plans are share-based payments 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 have been incorporated into the fair value at grant date by applying a discount to the valuation obtained.

The shares that have been conditionally granted comprise the following:

 

  Number at 31-12-18 Number at 31-12-19 Granting date Expiry date Share price at granting date Fair value at granting date
Conditional shares
Conditional shares granted in 2016 1) 7,020 - 24-2-2016 3 jaar € 18.96 € 113,000
Conditional shares granted in 2017 2) 14,542 2,280 9-3-2017 2-3 jaar € 22.05 € 208,000
Conditional shares granted in 2018 3) 10,045 10,045 8-3-2018 2-3 jaar € 21.68 € 100,000
Conditional shares granted in 2019 4) - 21,816 6-3-2019 2-3 jaar € 19.58 € 178,000
1) All conditional shares of directors vested in 2019.
2) Due to the early departure of two directors 5,460 conditional shares vested early, 3,401 conditional shares were paid to a member of the Board of Management and 3,401 conditional shares were forfeited.
3) A total of 9,095 shares were conditionally granted to members of the Board of Management in 2018 and 950 to directors of a subsidiaries.
4) All conditional shares were granted to members of 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.

Option plan
The company has an option scheme for the Board of Management. The Supervisory Board bases awards pursuant to the option scheme on the realization of the targets agreed with the Board of Management. The outstanding and granted option rights are explained and specified in note 6.17.5.

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:

 

  2019 2018
Expected volatility (weighted-average) 27.73% 24.27%
Expected life (weighted-average) 3.9 3.9
Expected dividends 2.70% 2.10%
Risk-free interest rate (based on government bonds) 0.22% 0.71%

 

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 is as follows:

 

  2019 2018
  € x 1,000 € x 1,000
Conditional shares management 2015 - 38
Conditional shares management 2016 48 48
Conditional shares management 2017 6 6
Conditional shares Board of Management 2016 - 31
Conditional shares Board of Management 2017 41 41
Conditional shares Board of Management 2018 89 -
Options Board of Management 8 18
Total expense recognized in personnel expenses 192 182

 

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 0.2% (2018: 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, new shares are issued by the company 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.

8.17.5 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. For 2019 a bonus varying between 20% and 45% of the salary will be paid.

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 2019 Total 2018
  in € in € in € in € in € in € in € in €
A.H. Anbeek 484,000 14,213 - 96,800 119,558 57,848 772,419 831,019
R.S. Baldew 1) 380,000 16,869 - 171,000 59,873 11,841 639,583 108,230
J. Both 320,000 17,661 - 64,000 68,983 65,627 536,271 510,657
R.J. Takens 2) - - - - - - - 295,892
H.H. Sybesma 3) - - - - - - - 1,310,957
J.M. Snijders Blok 4) - - - - - - - 452,422
Total 1,184,000 48,743 - 331,800 248,414 135,316 1,948,273 3,509,177
1) Mr. Baldew started on 1 November 2018.
2) Mr. Takens resigned on 25 April 2017.
3) Mr. Sybesma resigned on 25 April 2018.
4) Mr. Snijders Blok stepped down from the Board on 25 April 2018 while remaining his other duties until his resignation on 31 December 2018.

 

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

  Award date Number at 01-01-19 Issued in 2019 Exercised 2019 Forfeited in 2019 Number at 31-12-19 Exercise price Expiration date Liability at 31-12-19
A.H. Anbeek 8-3-2018 1,850 - - - 1,850 21.68 8-3-2026 6,697
R.S. Baldew 6-3-2019 - 1,650 - - 1,650 19.58 6-3-2027 5,247
J.J. Both 8-3-2018 2,950 - - - 2,950 21.68 8-3-2026 10,679
J.J. Both 9-3-2017 6,850 - - - 6,850 22.05 9-3-2025 18,564
J.J. Both 24-2-2016 7,850 - - - 7,850 18.96 24-2-2024 18,762
    19,500 1,650 - - 21,150     59,948

 

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 2019 the intrinsic value of the options is € 109,421 as the share price of Accell Group N.V. was € 25.80, which is higher than the exercise prices of the options.

The conditional shares that have been granted comprise the following:

  Award date Number at 01-01-19 Granted in 2019 Vested 2019 Forfeited in 2019 Number at 31-12-19 Vesting date Fair value at award date Liability at 31-12-19
A.H. Anbeek 6-3-2019 - 12,155 - - 12,155 6-3-2021 99,185 49,592
A.H. Anbeek 8-3-2018 1,830 - - - 1,830 8-3-2020 16,531 16,531
R.S. Baldew 6-3-2019 - 1,617 - - 1,617 6-3-2021 13,195 6,597
J.J. Both 6-3-2019 - 8,044 - - 8,044 6-3-2021 65,639 32,820
J.J. Both 8-3-2018 7,265 - - - 7,265 8-3-2020 65,627 65,627
J.J. Both 9-3-2017 6,802 - 3,401 3,401 - 9-3-2019 62,510 -
    15,897 21,816 3,401 3,401 30,911   322,687 171,167

 

After vesting there is a lock-up period for the shares of two years for the shares.

At the end of 2019 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 to the average employee compensation during 2019 is 15:1 (2018 adjusted: 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 to 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 6.7.4) and the average number of employees during the year (3,410 FTEs) minus 3.

Supervisory Board

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

  2019 2018
  in € in €
R. ter Haar 1) 64,000 -
J. van den Belt - 17,333
P.B. Ernsting 52,000 52,000
D. Jansen Heijtmajer 2) 52,000 37,500
A.J. Pasman 3) 57,437 68,000
G. van de Weerdhof 2) 52,000 37,500
Total 213,437 212,333
1) Assigned as chairman of the Supervisory Board on 24 April 2019.
2) Assigned as a member of the Supervisory Board on 25 April 2018.
3) Resigned as chairman on 24 April 2019 and remained as a member of the Supervisory Board until 31 December 2019.

 

8.17.6 Related parties

Identification of related parties

In addition to the Board of Management and the Supervisory Board (see note 6.17.5) Accell Group recognizes related party relationships with its associates and joint ventures (see note 6.20.3).

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
  2019 2018 2019 2018
  € x 1,000 € x 1,000 € x 1,000 € x 1,000
Sale of goods and services        
Atala SpA 4,284 5,146 261 201
Raleigh South Africa - 23 - -
         
Purchase of goods        
Atala SpA 3,916 3,989 158 9
         
Dividends received        
Atala SpA 343 174 - -

 

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 prices on an arm’s length basis. Transactions and balances between Accell Group and its non-consolidated companies have not been eliminated for consolidation purposes.

8.17.7 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
      2019     2018
  € x 1,000 € x 1,000 € x 1,000 € x 1,000 € x 1,000 € x 1,000
Audit of the financial statements 754 463 1,217 691 538 1,229
Other audit assignments 20 2 23 - 10 10
Tax services - 19 19 - 15 15
Other non-audit services - - - - - -
Total costs 775 484 1,259 691 563 1,254

 

 

8.17.8 Subsequent events

 

Corona virus outbreak

The full impact of the Corona virus outbreak on our business is unclear yet and we are monitoring the situation closely. Risk mitigating actions are being taken. Our current inventory levels provide for some buffer but we anticipate longer delivery times for certain components which may delay the introduction of several new innovative bike models.

New long term incentive plan

At 1 January 2020, 15,291 Accell Group N.V. shares were conditionally granted under a new long term incentive plan for a selected group of executives. The costs will be expensed in the income statement on a linear basis during the vesting period.