33 Related-party disclosures
The significant related parties of the Haniel Group are associates including their subsidiaries. The disclosures in this section also contain the values of the Celesio division up to the disposal date.
Revenue attributable to business with associates in the financial year totalled EUR 12 million (previous year: EUR 21 million). Expenses in connection with transactions with associates amounted to EUR 1 million (previous year: EUR 2 million). As at the reporting date, trade receivables from and payables to associates amounted to EUR 3 million and EUR 0 million, respectively (previous year: EUR 5 million and EUR 0 million, respectively). All business relations with associates are governed by contracts and conducted at prices and conditions that would equally have been agreed with third parties.
Related persons of the Haniel Group are key management personnel. This includes the members of the Supervisory Board of Franz Haniel & Cie. GmbH and the members of the top-tier executive group. The top-tier executive group comprises the members of the Management Board of the Haniel Holding Company as well as the Management Board members or Managing Directors of the holding companies of the fully consolidated divisions.
As in the previous year, a portion of the item liabilities to shareholders is attributable to members of the Supervisory Board of Franz Haniel & Cie. GmbH. Some of the bonds, commercial paper and other securitised debt that are likewise indicated under note 13 are held by key management personnel.
In recent years, Franz Haniel & Cie. GmbH offered the executives of the Haniel Group the opportunity to subscribe to registered debt securities (Haniel Performance Bonds). The bonds bear interest corresponding to the return on total capital of the Haniel Group before taxes, plus a subordination premium of 3 percentage points. The original maturities ranged from 5 to 10 years. As at the reporting date, a liability in the amount of EUR 5 million (previous year: EUR 5 million) from the bonds subscribed to by members of the top-tier executive group is recognised.
The companies of the Haniel Group have not otherwise entered into reportable transactions with key management personnel. This also applies to close relatives of this group of persons.
In some cases, key management personnel are members of executive or supervisory bodies of other companies with which the Haniel Group engages in regular business relations. All transactions with these companies are conducted at arm’s length.
In the current financial year, the members of the top-tier executive group received compensation amounting to EUR 16 million (previous year: EUR 27 million). Of this total, an amount of EUR 12 million (previous year: EUR 13 million) was attributable to short-term employee benefits, EUR 2 million (previous year: EUR 2 million) to post-employment benefits, and EUR 1 million (previous year: EUR 4 million) to termination benefits. Additionally, this group of persons were granted share-based payments of EUR 1 million (previous year: EUR 7 million) and other long-term benefits of EUR 0 million (previous year: EUR 1 million). The two latter compensation components are described in greater detail in the following section. As at the reporting date, the present value of defined benefit obligations of members of the top-tier executive group amounted to EUR 14 million (previous year: EUR 15 million). The members of the Supervisory Board of Franz Haniel & Cie. GmbH received the same total remuneration as in the previous year. In addition, employee representatives to the Supervisory Board who work for the Haniel Group received salaries from their employment, which are in line with the market.
COMPENSATION SERVING AS LONG-TERM INCENTIVE
For members of the top-tier executive group, the performance compensation comprises performance cash plans as a variable component. These plans are oriented on the value growth of Haniel or of the respective fully consolidated divisions and therefore on the sustainability of the Haniel Group’s success.
The performance cash plans granted during the financial year have a term of four years. The actual payment from these plans is limited in amount and is made in cash depending on target achievement and the fulfilment of stipulated requirements at the end of the term.
Target attainment in the CWS-boco and ELG divisions is essentially measured on the development of value-based performance indicators. These performance cash plans are therefore presented as other long-term benefits.
In contrast, target attainment in the performance cash plans for the Management Board of TAKKT AG and Franz Haniel & Cie. GmbH is based primarily on the development of the share price or market value in the period under consideration. Accordingly, the performance cash plans are classified as cash-settled share-based payments as defined in IFRS 2. The future payment amount is measured at the fair value of the liability taking into account the contractual terms and conditions. At TAKKT, a binomial option pricing model is used to determine the share price-based component. Material measurement assumptions here concern the risk-free interest rate and the applied volatilities based on historical observable data. The liability is remeasured at each reporting date and at the date of settlement. Any changes in fair value are recognised in profit or loss. The performance cash plans for the Management Board of the disposed-of Celesio division are also classified as cash-settled share-based payments as defined in IFRS 2. The total expense from all cash-settled share-based payments was EUR 1 million (previous year: EUR 7 million). The liability recognised in this respect amounted to EUR 7 million as at the reporting date (previous year: EUR 13 million).