ACCELL GROUP N.V. 2021 Remuneration Report Board of Management
2021 REMUNERATION REPORT BOARD OF MANAGEMENT
INTRODUCTION
The Supervisory Board of Accell Group N.V., upon the recommendation of the Selection and Remuneration Committee, determines the remuneration of the members of the Board of Management.
This Remuneration Report describes the implementation of our Remuneration Policy for the members of the Board of Management in 2021 and gives an overview of their remuneration in 2021. This Remuneration Report will be presented to the General Meeting of 20 April 2022 for an advisory vote.
ACCELL GROUP'S PERFORMANCE IN 2021
2021 again was quite an unusual year for Accell Group. The COVID-19 pandemic continued to affect our business and thus our Company as well. Shortages in the supply chain, either due to mandatory closing of companies or as a result of the Suez canal incident, hampered production and supply, while demand for our products continued to show a strong growth.
Net sales increased with 6.2% to € 1,377 million due to higher sales (mainly in volume) of parts & accessories and higher bicycle sales resulting from improved pricing. Our underlying EBIT improved with 33.7% to € 106.6 million, including one- offs our EBIT increased with 47.3% to € 110.1 million. Accounting for the higher financing costs which includes the depreciation of the Turkish Lira, we recorded a net profit of € 70 million. Our Trade Working Capital increased to 33.1% per year end. Given the supply disruptions Accell invested additionally in component stock levels to optimize its intended production volumes which is reflected in the higher TWC percentage. The investment in inventory is also the main driver for the negative cash flow of € 127.4 million per year-end.
OVERVIEW 2021
In the beginning of 2021, the Board of Management consisted of three members: Mr A.H. Anbeek, Mr R.S. Baldew and Mr J.J. Both. On 10 June 2021 Mr Both stepped down as Chief Supply Chain Officer (CSCO) and member of the Board of Management. On 15 December 2021 Ms Francesca Gamboni was appointed as the new CSCO and member of the Board of Management as per 1 February 2022.
OUTLOOK 2022
Accell Group, as one of the main global bike manufacturers, is playing a strong role in driving Corporate Social Responsibility in the bicycle industry. Therefore, the long-term variable incentive (LTI) for members of the Board of Management has CSR-related performance criteria. As in 2021, the Supervisory Board has set challenging and suitable performance criteria for the LTI in 2022. These will be published in the 2022 Remuneration Report.
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2021 Remuneration Report Board of Management
REMUNERATION POLICY BOARD OF MANAGEMENT
The Remuneration Policyfor the Board of Management adopted by the General Meeting on 22 April 2020 and applicable as of 1 January 2020 onwards can be found on Accell Group's website under 'Corporate Governance' in the 'Remuneration' section.
The Remuneration Policy was discussed in the meeting of the Selection and Remuneration Committee's meeting, held on 27 September 2021. According to the Committee no changes were required at that moment in time. However, the Committee and the Supervisory Board as a whole keep an open mind for changes in society which might require future adjustments.
Every three years, the Supervisory Board conducts a remuneration benchmark review in order to evaluate the market competitiveness of the pay levels of the members of the Board of Management. In this benchmark review Accell Group's remuneration is compared with the remuneration levels at a group of companies, headquartered in the Netherlands and, comparable in terms of size, listed on Euronext Amsterdam and included in the Amsterdam Mid or Small Cap index or listed on the local market. Based on this approach, and with the exclusion of financial and real estate companies, the labour market reference group currently consists of: Arcadis, Be Semiconductor, Brunel Internat, Corbion, ForFarmers, Fugro, Heijmans, Kendrion, Neways Electronics, Ordina, Sligro Food Group, Stern Groep and TomTom.
Within this established labour market reference group, the Supervisory Board aims to position Accell Group on average at the median in terms of revenue, market capitalization, assets and number of employees. The Supervisory Board will regularly review the labor market reference group to ensure that its composition is still appropriate.
The remuneration policy aims to position the Total Direct Compensation levels of Accell Group (the sum of fixed compensation, at target short-term variable remuneration and at target long-term variable remuneration) around the median (approached from below) of the labor market reference group.
The last remuneration benchmark review was conducted in 2019; it resulted in adjustments that were incorporated in the current Remuneration Policy. In 2022, a new remuneration benchmark review will be performed.
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TOTAL REMUNERATION OF MEMBERS OF THE BOARD OF MANAGEMENT
The Total Direct Compensation ('TDC') of the Board of Management consists of three components:
- Fixed remuneration (base salary).
- Short-termvariable incentive (STI or cash bonus); and
- Long-termvariable incentive (LTI or performance shares).
In addition to TDC, members of the Board of Management are entitled to other benefits such as a pension scheme. The three elements of the TDC are described in more detail below.
1. FIXED REMUNERATION
(BASE SALARY)
The fixed remuneration, i.e. the "base salary", is set at a market competitive level within the context of TDC, taking into account the individual responsibilities, relevant experience and the remuneration principles. Each year, the Supervisory Board reviews and determines the development of the fixed remuneration of the individual members of the Board of Management and decides whether circumstances justify any adjustments. Considerations in the review may for instance include (general) market developments, inflation figures (CPI), internal pay ratios, personal performance and the extent to which the current fixed remuneration deviates from the benchmark.
2. SHORT-TERM VARIABLE INCENTIVE
(STI)
The objective of the short-term incentive or cash bonus is to support Accell Group's strategy and incentivize Company performance targets in the shorter term. Each year, the Supervisory Board sets financial and non-financial target ranges reflecting Accell Group's strategic ambitions for that year. The targets are designed to avoid adverse incentives for board members to act in their own interest or to take unwanted risks. The characteristics of the STI are summarized in table A.
3. LONG-TERM VARIABLE INCENTIVE
(LTI)
The long-term variable incentive serves to align the interests of the members of the Board of Management with long-term interests of the Company and its stakeholders. Members of the Board of Management receive conditional performance shares each year. These will vest after three years, subject to the achievement of set performance criteria over three financial calendar years. The criteria are designed to avoid adverse incentives for board members to act in their own interest or to take unwanted risks. The performance targets are based on strategy alignment, long-term focus and societal impact. The characteristics of the LTI are summarized in table B.
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TABLE A: CHARACTERISTICS OF THE STI
VEHICLE
Cash
PERFORMANCE PERIOD
One year
PERFORMANCE CRITERIA
80% FINANCIAL MEASURES, SUCH AS:
Profit-related measures
Working capital improvement
Growth-related measure
20% NON-FINANCIAL MEASURES:
Individual targets (specific measures annually selected at the discretion of the Supervisory Board to ensure alignment between the STI, corporate strategy and short- to mid-term agenda)
CIRCUIT BREAKER
Circuit breakers are applicable as a minimum requirement for payout of the individual STI measures. If this minimum is not achieved, the parameters will not lead to a payout. Individual STI measures have a maximum stretch payout and total payout is based on the sum of the individual STI measures with the restriction that the total STI payout cannot exceed said maximum.
PERFORMANCE INCENTIVE ZONE
The maximum payout is equal to 65% of the annual fixed remuneration for the CEO and 50% for other members of the Board of Management. In case of at-target performance, the short-term incentive will be equal to 80% of the maximum payout. Performance below threshold level is not generating a payout.
The CEO, Mr Anbeek, noted during this Annual General Meeting held in 2020 that he decided to refrain from the increase of his short-term cash bonus (from 50% to 65%) in general; therefore it remains 50%.
TABLE B: CHARACTERISTICS OF THE LTI
VEHICLE
Performance shares
PERFORMANCE PERIOD (CONDITIONAL RIGHTS TO ACCELL GROUP N.V. SHARES).
Three years
HOLDING PERIOD
Two years
PERFORMANCE CRITERIA
70%: FINANCIAL VALUE CREATION MEASURES
30%: SOCIETAL VALUE CREATION MEASURES
CIRCUIT BREAKER
Circuit breakers are applicable as a minimum requirement for payout of the individual LTI measures. If this minimum is not achieved, the parameters will not lead to a payout. Individual LTI measures have a maximum stretch payout and total payout is based on the sum of the individual LTI measures with the restriction that the total LTI payout cannot exceed said maximum.
PERFORMANCE INCENTIVE ZONE
The initial conditional grant is equal to 100% of the annual fixed remuneration.
The maximum opportunity for the LTI (i.e. final and unconditional grant) is 125% of the number of initially granted conditional shares.
In case of at-target performance, the LTI will be equal to 80% of the initial conditional grant.
Performance below threshold level is not generating any LTI (i.e. the initial grant is not becoming vested, but will lapse).
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PENSION AND OTHER BENEFITS
The members of the Board of Management participate in the Accell Group pension scheme (insured via a third party pension insurance company) up to the maximum set by the tax authorities (in 2021: € 112.189). Accell Group pays the pension premium. In addition, they participate in a net pension or available contribution scheme. Accell Group has agreed to a specific amount per year with each of the members of the Board of Management as a contribution to the net pension scheme.
Additional benefits awarded by Accell Group to members of the Board of Management are the same as those for other employees. These include an expense allowance, a health insurance premium reduction, accident insurance, disability schemes and a company car.
In addition, the company has a directors' and officers' liability insurance for the Board of Management in place. Accell Group has not provided the members of the Board of Management with any loans or guarantees.
REMUNERATION OF THE MEMBERS OF THE BOARD OF MANAGEMENT IN 2021
The remuneration of the Board of Management for the financial year 2021 is based upon and complies with the Remuneration Policy, as explained above. As such, the remuneration of the Board of Management in 2021 contributed to the objectives of the Remuneration Policy, including Accell's focus on long-term value creation and its aim in driving Corporate Social Responsibility in the bicycle industry. The Supervisory Board conducted scenario analyses of the possible outcomes of the variable remuneration components and their effect on the remuneration of the Board of Management.
The total remuneration of the members of the Board of Management in 2021 is shown in table 1 below.
TABLE 1: TOTAL REMUNERATION OF THE MEMBERS OF THE BOARD OF MANAGEMENT IN 2021
5 Proportion | |||||||||||
3 Termination | Total | 4 Total | of fixed | ||||||||
1 Fixed Remuneration | 2 Variable remuneration | benefit | Total fixed | variable | Remuneration | remuneration | |||||
Fringe | Pension | One-year | Multi-year | ||||||||
variable 1) | |||||||||||
Name of Director, position | Year | Base Salary | Benefits | expense | variable | ||||||
€ x 1 | € x 1 | € x 1 | € x 1 | € x 1 | € x 1 | € x 1 | € x 1 | € x 1 | |||
A.H. Anbeek, CEO | 2021 | 503,000 | 16,079 | 119,379 | 223,465 | 274,273 | - | 638,458 | 497,738 | 1,136,196 | 56.2% |
2020 | 497,000 | 15,936 | 118,404 | - | 99,999 | - | 631,340 | 99,999 | 731,339 | 86.3% | |
R.S. Baldew, CFO | 2021 | 395,000 | 16,520 | 59,986 | 175,484 | 166,624 | - | 471,506 | 342,108 | 813,615 | 58.0% |
2020 | 390,000 | 24,116 | 59,488 | - | 74,825 | - | 473,604 | 74,825 | 548,429 | 86.4% | |
J.J. Both, CSCO | 2021 | 332,000 | 30,500 | 70,224 | - | 115,363 | 332,000 | 432,725 | 115,363 | 880,088 | 64.5% |
2020 | 328,000 | 17,423 | 70,734 | - | 66,147 | - | 416,157 | 66,147 | 482,304 | 86.3% | |
1) these multi-year variable bonus amounts represent the cost allocation (services rendered) for the share-based payment plans.
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Accell Groep NV published this content on 09 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 March 2022 11:21:11 UTC.
