2020
Annual Report

“ I have three kids that often make random appearances in video calls, so my colleagues have seen more of my personal life than we could have ever achieved when catching up in the office. ”

Aleksei, Head of API

Message from the CEO

Staying the course

Dear Shareholders,

In preparation for this note, I read last year’s message. It was a synopsis of the previous decade and what it meant for Adyen. Little did I realize at the time that we were on the precipice of great change to all of our lives. COVID-19 has dominated the last year, also for Adyen.

The week that the news of the pandemic broke through into the mainstream feels like a long time ago now. I remember we quickly pivoted from ‘wait and see’ to ‘this requires immediate attention and action’. Not a week went by between our first discussion on the topic and sending everyone home indefinitely.

It was a shock for everyone. We’ve built a culture over the years of using each other to sharpen our ideas — and we saw early on that it’s much easier to walk to someone’s desk than it is to give each other a call. It took us a while to find our groove, ensuring everyone had a comfortable working-from-home set-up, and helping each other prioritize between work and life commitments.

On a positive note, one of the most remarkable things we noticed quickly is that once everyone on the team was separated by screens, colleagues from around the world actually felt a lot closer. Replacing face-to-face interactions with Zoom meetings felt like an equalizer. It no longer really mattered whether you were in Amsterdam or in Singapore, which made discussions much more inclusive. Discussing a matter face-to-face in Amsterdam is limiting in that sense — in the current environment everyone can just ‘click in’ team members from around the world on Zoom.

The pandemic also made us realize how global our scale is at this stage. COVID-19 didn’t hit equally everywhere, we saw our China team return to the office, and to travel, as houseplants in European offices went weeks without water during the first wave in Europe. There is no single shared reality of what the pandemic has meant to our teams around the world.

The business didn’t lose much momentum, despite this drastic shift. We have a long-term horizon, we continued to recruit new team members, and our data centers run remotely. Business as usual for us is adapting to changing circumstances. Naturally, there were some initial delays in the rollout of projects, mostly on the merchant end, but nothing that significantly impacted the business. This is also why we chose to shift to quarterly reporting for the year, something that is not part of our long- term approach, to provide transparency around the resilience of the business during a crisis. We continued to win new business, and to grow, also in this new environment.

While our own business proved highly resilient during the pandemic, our merchants’ realities were often very different. The initial impact of COVID-19 resulted in many sobering conversations. For some sectors - e.g. in-store retail or airlines - the difference was night and day. We made sure to keep our focus on helping our merchants in these segments, as businesses took a nosedive there — with no end date in sight.

That’s a topic that we kept front of mind too: the lack of an end date to the pandemic’s impact. The danger in a situation like this is to focus on a set end date, only to be left disappointed when it inevitably shifts. During this crisis, we focus on our merchants’ problems, on our team’s mental health and getting out of this as a stronger team — no matter when that end date will come. This pragmatic approach allows us to keep our speed while the world around us is changing — we went online and operated as if we had always run the company that way, and will be able to for as long as we need.

Of course I miss being around the team too. Bumping into people, traveling to different Adyen offices around the world and meeting our merchants. It’s an important part of what made the job so much fun — that energy. That’s something I hear back from many people too, which makes me confident that we will succeed in coming out of this as a stronger team.

This past year, a year in which, paradoxically, words like new normal became ubiquitous, was decidedly abnormal. Now, with vaccine roll-outs across the globe, we are still approaching this as if the end is not yet near, but I am willing to say that I’m optimistic about the upcoming year and what it will bring for Adyen.

We’ll stay the course, as we did this past year, and continue to adapt to the world around us.

Pieter

Summary

Processed volume +27% YOY

€303.6 BN

Net revenue* +28% YOY

€684.2 MN

EBITDA* +27% YOY

€402.5 MN

Margin 59%

* Historical figures have been adjusted since prior publications of results. For a full reflection of restated figures since 2018, please refer to note 1.3 of the Consolidated Financial Statements.


Profitable growth amid global pandemic

  • Well-diversified merchant base contributing to business resilience
  • Acceleration of merchants opting for a unified commerce solution
  • Launched IdentityRisk, Network Token Optimization, and mobile Android POS devices

Staying connected as a global team

  • Scaling the team to 1,747 FTE in 24 offices in line with our long-term growth approach
  • Prioritizing work flexibility and mental health throughout the COVID-19 pandemic
  • Onboarding new hires while focusing on the Adyen Formula to safekeep the culture

Positively contributing to planet and society

  • Offsetting our CO2 emissions by supporting environmental sustainability projects
  • Volunteering globally to provide essential supplies to those in need
  • Our checkout product feature, Giving, processing donations globally

Navigating the global regulatory landscape

  • Helping our merchants accommodate to the ever-increasing complexity in the regulatory landscape
  • Scaling the compliance and integrity functions to support our growth in a complex regulatory space
  • Announced Alexander Matthey as CTO and Caoimhe Keogan to join the Supervisory Board

“ A big reason why I work for Adyen is because of the Formula which keeps us close, even with colleagues around the world. If all I cared about were projects, I could work for any other company, but I care a lot about the spontaneous ideation that happens in our offices, where everyone’s opinion is welcomed, no matter what team you’re on. ”

Jeroen, Designer

Description of business activities

Adyen operates a global payments platform, integrating the full payments stack — gateway, risk management, processing, issuing, acquiring, and settlement. Adyen Issuing was launched in 2019, and enables merchants to provide virtual and physical cards to their customers. Issuing meets various merchant needs, as it gives them the ability to issue cards for a variety of uses cases, either online, in-app, and in-store. The Adyen offering includes a common back-end infrastructure for authorizing payments across merchants’ sales channels, as well as feature-rich APIs.

The platform services a range of globally-operating merchants across different verticals, connecting them directly to Visa, Mastercard, and many other payment methods. Additionally, it provides a high level of reliability, performance, and data insights.

For this service of payments processing, Adyen earns processing and settlement fees — gateway and acquiring services, respectively — as well as some smaller fees related to products or functionalities aimed at reducing complexity and friction for merchants. For a full breakdown of fees, refer to Note 2 ‘Revenue and segment reporting’ of the attached Consolidated Financial Statements for more information.

Figure 1
The Adyen value chain

“ At Adyen, we’ve really been encouraged to make blocks in our calendar and take time for ourselves to breathe and recharge. This past year, my team especially got creative in scheduling activities just for the sake of collaborating on something fun that also keeps us productive. ”

Arielle, Business Controller

Strategy

Building with our merchants’ needs in mind is central to our business strategy. Most of our yearly growth (consistently over 80% from each half-year period since our IPO in 2018) comes from the growth of merchants already on our platform when the period began. As such, we measure success by how we grow together with our merchants.

We are always focused on solving problems for our merchants, especially as they expand to new geographies and channels. Organically, this has resulted in Adyen’s culture of incorporating bottom-up workstreams.

The Adyen organization is divided into workstreams, which are comprised of product, technical, and commercial staff. These workstreams work with our merchants in a co-creative manner and are thus able to efficiently prioritize their needs. Company-wide strategy is set on the basis of these workstreams’ annual objectives, which are almost always subject to change, ensuring our speed and agility are maintained as we grow.

These workstreams collaborate with our merchants to solve for their evolving needs. To better serve them, we have identified the following growth pillars, which help us to identify and categorize our merchants’ needs based on their size and sales channels.

Enterprise

The enterprise segment (e.g. large international businesses) is what the Adyen platform was built for from day one. The fact that our growth comes largely from existing enterprise merchants, paired with very low volume churn, illustrates our success in this space. The more recent evolution in this segment is the rise of platform-based business models, allowing us to reach the long tail of the market through enterprise-sized platforms who power tens of thousands of small businesses.

We see the following as key drivers of future growth in enterprise:

  1. Existing merchants: Our merchants' organic growth combined with expanding our relationships with them (i.e. adding new channels and/ or expanding across geographies) continues to drive a majority of our growth. This leads to a deepening of our product offering, as well as an increase in our proportion of transaction volume with our current merchants (i.e. growth of wallet share).
  2. New merchants: Adding new merchants to our enterprise portfolio is another avenue for growth. We have a direct sales approach focused on onboarding new merchants in all geographies where we are present and verticals we are targeting, both of which are constantly expanding.

  3. Capitalizing on evolution in the industry: Our strength is in our speed and ability to react to market developments that can help our merchants due to the way our technology and teams are structured. This ability to adapt to market shifts gives our merchants an advantage and therefore is an opportunity for us, especially in an ever-changing environment.

“ In every tragedy, it helps to focus on opportunities. This has been an opportunity to see and guide my
children's learning — it’s an opportunity for them to observe my spouse and me at work. An opportunity for Adyen colleagues to connect at a deeper, more personal level than we could at the office. ”

Sunil, VP of product

Unified Commerce

Shifting consumer behavior is driving merchants’ desires to present a single brand across all sales channels (i.e. offline and online). In industries such as retail, hospitality, and quick-service restaurants, merchants can no longer afford to have only one option. Our unified commerce offering is currently focused on providing merchants in verticals such as these the flexibility to shift seamlessly between sales channels and give their customers a unified experience.

We believe our success in this space is due to the following:

  1. Holistic view of payments: The idea of having a unified, single platform to process all payments, irrespective of channel, is foundational to how we have built our technology since the beginning. This approach allows the collection of data that can deliver unique shopper insights and simultaneously help to combat fraud. Our back-end infrastructure for processing and settling payments is the same across all channels, providing merchants with a holistic overview of all shopper transactions.
  2. Seamless shopper journeys across channels: The Adyen platform enables merchants to offer a uniform experience to shoppers across all sales channels. This allows merchants to significantly improve the quality of service to their shoppers — for example, through one-click payments online or on mobile for shoppers recognized from in-store visits, improved offer targeting, and through facilitation of home delivery. With these shifting shopper expectations, businesses are increasingly pushed to change their approach and meet market demand. We are very well-positioned to cater to these emerging needs now and in the future.
  3. Increased focus on point-of-sale (POS): Since the launch of our POS offering in 2015, we have seen steady growth mainly due to the outdated infrastructure in the POS landscape still in place all over the globe. Because of this, merchants see vast improvements in performance when implementing our technology. On top of this and of particular importance due to the COVID-19 pandemic, we have been well-equipped to service our merchants with safe operations as all of our POS devices facilitate contactless payments.

Mid-market

Historically, we built the Adyen platform focused on the needs of enterprise merchants. Now, we are broadening our reach and are ready to support the growth of businesses in the next adjacent segment to enterprise, mid-market.

Every merchant on our platform has access to the same performance and functionality as some of the world's largest businesses. This makes the platform attractive to both large domestic merchants and local merchants with international ambitions, allowing them to effectively future-proof their payments.

With 24 offices worldwide, our continuously expanding global footprint has been able to provide local presence, payment methods, and expertise in key markets. This allows us to partner with ambitious businesses at a relatively early stage of their growth. These businesses will avoid being hampered by the complexity in business operations that so often comes with growth — such as adding additional payments channels, or expanding into new regions.

“ Setting some rules for myself helps to maintain a healthy balance — for example, I don’t move my laptop off my desk, which makes its sole purpose to be my workspace. Then when I leave the desk, it’s easier to switch my mind to being at rest. I also developed a hobby of taking care of plants — it’s soothing for your eyes and is relaxing in these times. ”

Manavi, Software Developer

Discussion of financial results

The business has proven resilient in 2020. Despite the continued impact of COVID-19 on the world economy, we experienced substantial growth as online retail and digital goods volumes surged while stores closed, and airplanes were grounded. In the ever-shifting reality of a global pandemic, we focused on meeting our merchants’ needs.

Business resilience and strong volume contributions amid a challenging year

Due to strong volume contributions from across our well-diversified merchant base, the business has proven resilient in 2020. We saw processed volume for the full year grow at 27%, totaling €303.6 billion.

POS processed volume for the year was €32.2 billion and 11% of total processed volume, up from €29.2 billion and 12% of total processed volume in 2019. Lockdown restrictions impacted in-store volume throughout the year.

Figure 2
Adyen’s net revenue in key regions (by billing address in EUR millions) in 2019 and 2020

Solid net revenue growth continuing to diversify regionally

Net revenue was €684.2 million for the year, up 28% year-on-year. On net revenue growth, North America (66%) outpaced APAC (29%), Europe (22%), and LATAM (11%). The delta in growth rates between regions is mainly driven by the impact of COVID-19 on our merchant mix.

The business’ resilience was fueled by the continued diversification of our merchant base across regions. On regional net revenue contributions: Europe remained the largest contributor, representing 62% of net revenues – followed by North America (19%), APAC (9%), and LATAM (9%).

Take rate was 22.5 bps, up from 22.3 bps in 2019. Take rate continues to not be a driver for us, as the low cost of operating the Adyen platform allows for a focus on incremental net revenue.

Investing in long-term growth

Total operating expenses were €310.3 million in 2020, up 29% year-on-year, and representing 45% of net revenue. This increase is mainly driven by employee benefits as we continued to grow the Adyen team. Employee benefits were €180.0 million for the year, up 47% from €122.4 million in 2019.

Other operating expenses were €101.9 million in 2020, up 7% from €95.1 million in 2019. Of these, sales and marketing expenses were €39.6 million, up 23% from €32.3 million for 2019 as we continue to invest in brand awareness and lead generation across regions. When global lockdown restrictions went into effect, our focus shifted from physical events to hosting online marketing campaigns.

EBITDA displaying continued profitability while scaling Adyen

EBITDA for full year 2020 was €402.5 million, up 27% year-on-year from €316.9 million in 2019. EBITDA margin came in at the 59% in 2020, the same percentage as for full year 2019.

Net income impacted by other financial results

Net income was €261.0 million for 2020, up 11% from €234.3 million in 2019.

Full year net income was impacted by the movement in other financial results, largely caused by the increase in value of the derivative liabilities as a result of the increase in the Adyen share price.

Solid free cash flow conversion

Free cash flow conversion was €371.1 million in 2020, up 29% from €287.1 million in 2019. Free cash flow conversion ratio was 92% for the year, up from 91% in 2019.

Low CapEx due to the scalability of the Adyen platform

For 2020, CapEx were 3% of net revenue, 14% down from 2019, primarily due to the low cost of operating the single platform.

Financial objectives

We have set the following financial objectives1, wherein EBITDA margin guidance has been updated since prior publications. Other objectives remain unchanged since IPO.

Net revenue growth: We aim to continue to grow net revenue and achieve a CAGR between the mid-twenties and low-thirties in the medium term by executing our sales strategy.

EBITDA margin: We aim to improve EBITDA margin, and expect this margin to benefit from our operational leverage going forward and increase to levels above 65% in the long term.

Capital expenditure: We aim to maintain a sustainable capital expenditure level of up to 5% of our net revenue.

On EBITDA margin — given the substantial growth and operating leverage we have seen since IPO, combined with our continued focus on the scalability of the platform, we expect this upward trend to continue to levels over 65% in the long term. We are still at an early stage of building Adyen, and view the short-term flexibility to invest in longer-term opportunities key to reaching this objective.

1 Adyen has not defined, and does not intend to define, "medium term" or "long term”. Adyen's medium-term and long-term financial objectives should not be read as forecasts, projections or expected results and should not be read as indicating that Adyen is targeting such metrics for any particular year, but are merely objectives that result from Adyen's pursuit of its strategy. Adyen's ability to meet its medium-term and long-term objectives is based upon the assumption that Adyen will be successful in executing its strategy and, furthermore, depends on the accuracy of a number of assumptions involving factors that are significantly or entirely beyond Adyen 's control and are subject to known and unknown risks, uncertainties, and other factors that may result in Adyen being unable to achieve these objectives.

“ We have always built the team with a focus on hiring the sharpest minds — knowing that we get the best results if we challenge each other's ideas. This year, we became even more conscious of the fact that inclusion is not something that just happens, but something to actively design for. ”

Pieter, Co-founder and Chief Executive Officer

People & culture

Building the Adyen team for the long term

To us, winning is more important than ego — we value people for their skills and what they bring to the company. When building for long-term success, we need a team that comprises different perspectives to challenge groupthink.

The way we work with our merchants, and as a team, is guided by the Adyen Formula. Consisting of eight guiding principles, the Formula describes our culture and touches upon every aspect of the business. The Formula fosters speed, which is the foundation of our company. We think fast. We work fast. We launch fast. The eight principles that make up this Formula are not permanent — but are constantly evolving to keep pace with our merchants, our business, and the growth of the team.

The Adyen Formula leads how we recruit, grow, and retain colleagues around the world. While building this business for the long term, we believe that maintaining our culture is critical to its continued success.

The Adyen Formula

We build to benefit all merchants (not just one)

We don’t hide behind email, instead we pick up the phone

We make good choices to build an ethical business and drive sustainable growth for our merchants

We talk straight without being rude

We launch fast and iterate

We include different people to sharpen our ideas

Winning is more important than ego; we work as a team — across cultures and time zones

We create our own path and won’t be slowed down by “stewards”

“ It’s because we’re all in this together, including our merchants, that we’re able to see more color in each others’ lives. Seeing how we’re all struggling to navigate this new normal has allowed us to get to know people in a different way, and has improved the quality of our relationships. ”

Wouter, Implementation Manager

How talent grows with us

We don’t do pre-set career paths at Adyen. You join, learn, and grow in the way that best fits you and the business. We look for the right learning opportunities on an individual level. At Adyen, everyone creates their own path.

Our rule of thumb is to promote internally. Our talent is key to our growth — and we want them to grow with us. The following initiatives help us to ensure we scale the Adyen culture as our company grows, while also sustaining our existing team:

  • The Adyen Way of Leading Teams training program provides team leads with board-led training sessions that teach the mechanics and philosophy of the Adyen leadership style.
  • We offer a wide range of trainings for all employees, including career development trainings, an international exchange program that actively encourages people to work across Adyen offices in order to gain experience and train across teams, geographies, and cultures, and the Adyen Sales Academy, which aims to further train sales staff across the regions wherein we are active.
  • We run a number of trainings that relate to running Adyen in a safe and secure way — including mandatory data privacy, security, and compliance trainings for all staff members.

Working as a team during COVID-19

When we had to move to a working-from-home setting quickly in March, we were able to move all our activities online after global lockdown restrictions went into effect. The onboarding and training of new joiners took place in a work-from-home setting for the majority of the year through virtual company introduction sessions and online onboarding programs.

In order to account for the lack of in-office interaction and inter-office travel, we offered a myriad of extracurricular programs, including weekly educational deep dives into topics led by experts in their fields, ranging from engineering to social sciences.

During a challenging year, the team has proven highly flexible towards our merchants and each other. This flexibility will remain invaluable, no matter what the upcoming years will bring. The shift towards an online environment also brought valuable learnings. We worked increasingly as a global team — with videoconferencing acting as an equalizer, it mattered less whether you were working from home in Singapore or Amsterdam. We are aware that the current situation is likely to persist for a longer period, and see the pandemic and its impact on business around the world, our business and the team as a marathon, not a sprint.

Diversity, Equity, and Inclusion

Key to our long-term success is cultivating an inclusive environment — one designed with equity in mind. This philosophy is also reflected in the Adyen Formula, wherein we stress the importance of involving others to sharpen our ideas. The broader the set of philosophies the team encompasses, the better we can foster innovation and avoid groupthink.

In 2020 we founded the Diversity, Equity, and Inclusion (DEI) working group — a team of global Adyen colleagues that help identify key areas to improve on from a DEI perspective. Ever since we founded Adyen, we focused on cultivating a culture of diversity and inclusion. In 2020, we added equity as a central cultural value to our approach of building the team. To us, equity means that there’s no one-size-fits-all approach to building a team - and that each team members’ professional and personal needs should be addressed on an individual level.

We view fostering a culture of Diversity, Equity, and Inclusion as a responsibility of the entire Adyen team, and for which we hold ourselves accountable. We need everyone at Adyen to contribute for us to be able to build a team with Diversity, Equity, and Inclusion at its core.

“What I truly see when I walk through our offices? That inclusion is in our DNA — it’s not a choice or option. There is no room for ignorance. The team consists of over 100 nationalities and the LGBTQ+ community is very open. We have 24 offices, but are united as one team. We are all people of Adyen and that is our shared pride.”

Roy, Office Manager

Figure 3
2020 FTE growth

“ I recently moved to Amsterdam to join Adyen, and there were some challenges to overcome at first — for example, I didn’t have Wi-Fi or a proper home office set-up yet. Thankfully, the virtual onboarding went super well and I've been fortunate to meet some of my teammates in person. I'm excited to meet many more in the future. ”

Juanma, Motion Designer

Designing for inclusion

Based on the DEI working group’s observations, we broadly assessed and improved several HR processes during the year. In recruitment, we ensured all job postings are written in gender-neutral language, and focused intently on increasing our accessibility for historically underrepresented groups, especially at the earliest stage of the recruitment process, and implemented company-wide unconscious bias trainings.

In the interviewing process, we focused on minimizing biases through balanced gender representation in interview panels, and by developing interview structures that hone in on skills and experience — consciously veering away from selecting team members based on subjective personality and/or character traits.

Gender balance is an area in which we actively work to do better, with current metrics at 34% female team members and 29% of team lead positions filled up by women, and 16% and 40% in our Management Board and Supervisory Board, respectively.

Grassroots

With a team consisting of over 100 nationalities and perspectives from all over the world, there is a lot to learn from each other. Over the course of building the company, we have seen many employee resource groups organically emerge. We actively support these bottom-up initiatives, as this is how most initiatives originate at Adyen — from the company-wide strategy on down. One example of these is the LGBTQ+ community, Adyen Pride.

“Diversity is one of the core values at Adyen and it is so crucial that everyone here can express themselves. Here at Adyen, we offer a safe, supportive environment. We hear all the different voices and embrace the openness. That is the community I need to do something for, that is Adyen Pride.”

Fan, Account Manager

“At Adyen, we are empowered and supported to make a difference within our company, and I feel lucky for being able to contribute to that difference in our pride communities. Adyen Pride is all of our pride. It is and definitely feels like one community without borders.”

Sergen, Internal Auditor

Inclusion policy

We treat each other fairly and acknowledge differences in individual needs — regardless of gender, age, race, nationality, beliefs, and/or sexual orientation. We value skills, regardless of where they have been honed. At Adyen, inclusion means more than just acceptance. Our approach to creating an inclusive environment is guided by three core principles that center around equity — Equal Pay, Equal Chance, and Normal course of life.

  • Equal Chance: We acknowledge that there is always the possibility of unconscious biases playing a role in how choices are made. Therefore, we train our colleagues to recognize and understand what these might be and how we can avoid them playing a role in the business decisions that we make. This ensures that everyone has the same opportunity to join Adyen and to grow with us as we continue to change the payments industry with the best talent out there.
  • Equal Pay: Same role, same pay — we value all perspectives, so we see no reason to reward one more than the other. We’re committed to ensuring equal pay, and make sure this is audited annually so that we know we’re always upholding this standard. This year’s results confirmed equal pay amongst genders, globally.
  • Normal course of life: There is no one-size-fits-all approach when dealing with life events such as starting a family or coping with challenging times that we all inevitably face. We don’t believe in strict and rigorous policies to guide these themes — we believe in helping people to navigate these moments. As everyone’s life situation is different, we maintain a tailor-made approach and strive for flexibility. Fostering equity, this tailor-made approach has proven highly important in dealing with the personal circumstances of all team members on the individual level during the COVID-19 pandemic.

“ My apartment used to be my refuge, but now that it’s also my place of work, I go for daily walks and make the streets and parks of Amsterdam my new refuge. I’ve grown to really love this routine, and have learned that whatever happens in the future, it’s better to focus on what I can control, rather than waiting for what’s to come. ”

Tatiana, Software Engineer

Social responsibility

At Adyen, we make good choices to build an ethical business and drive sustainable growth for our merchants. As such, sustainability has always been ingrained in everything we do.

We acknowledge that our business contributes to a negative impact on the environment. In recent years, we took on our responsibility when it comes to our impact on planet and society, and continue working towards becoming a more environmentally and socially conscious business, while also supporting our merchants who share these goals.

To accomplish this, we have established a two-pronged approach — we take responsibility for our own business operations and we leverage our existing technology to enable merchants and shoppers to contribute positively to society and the environment.

It starts with us. Internally, we have our Footprint and Local Initiatives programs, wherein we take responsibility for the negative impact that comes with being a globally operating business. In the Footprint program, we acknowledge that growing a company and supporting employees in offices around the world leaves behind a footprint. Consequently, proactively making decisions that compensate for and work towards reducing our negative impact on the environment has become our business as usual. In 2019, we have become a carbon neutral company by offsetting all CO2 emissions from our activities since foundation. Our strategy to offset emissions by investing in environmental sustainability projects has allowed us to maintain our carbon-neutral status, which we renew annually.

The three programs (Adyen Impact, Footprint, Local Initiatives) that together make up our social responsibility plan are strongly aligned with the United Nations’ Sustainable Development Goals (SDGs). We acknowledge the importance of the SDGs as key metrics in the long-term prosperity of people and planet.

In the Local Initiatives program, we enable and empower our employees to address locally relevant matters. Over the course of 2020, we expanded our local initiatives to strengthen our culture of giving back to our communities. This year, we organized more initiatives across regions to support a broad range of causes.

Externally, our Impact technology leverages the Adyen platform and helps our merchants make a positive social and environmental impact. This year we expanded our Impact product portfolio by building Offsets in Checkout, a feature of our Checkout product that allows shoppers to carbon compensate for their purchases. By working together with our merchants and partnering with charities, we can have a long-term, scalable, and multiplied impact.

Being a tech company in the payments space, we want to make responsible choices that contribute positively, one payment at a time. Take a deeper look at how our Footprint, Local Initiatives, and Impact programs help make that a reality in the following sections.

Footprint

We believe that limiting our environmental impact is part of our license to operate in today’s society. The more we grow at Adyen, the more we must consider our impact on the planet. This year, we grew from the solid groundwork we laid in 2019 and started helping our merchants take responsibility for the impact of their operations as well by building our Offsets in Checkout product.

Carbon Neutrality

We proactively work on expanding our sustainability efforts to ensure we take responsibility for our carbon footprint. We annually conduct a greenhouse gas (GHG) audit, which measures the amount of CO2e emissions for which we are accountable. Through our partnership with South Pole, we are able to offset these emissions by supporting environmental sustainability projects.

To precisely measure Adyen’s GHG emissions, we follow the three scopes identified by the Greenhouse Gas Protocol: Accounting and Reporting Standard2. Scope 1 and 2 emissions are calculated using data from our offices across the world, reflecting how we heat and cool our offices along with the electricity we use. Scope 3 emissions stem from mileage (air travel and ground transportation), data center energy use, hotel stay duration, spend on purchased goods, and outsourced activities. To go the extra mile, we decided to include energy usage derived from the use of our products: the transactions our merchants’ shoppers carry out on POS terminals, online and mobile payments.

2 South Pole has calculated Adyen's GHG footprint for 2019 and 2020 following the "The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard - Revised Edition' and the complementary 'Corporate Value Chain (Scope 3) Accounting and Reporting Standard' procedures and principles.

Figure 4
Adyen’s 2020 operational GHG emissions, measured in tCO2e3

Scope 1 — 223.62 tCO2e
Scope 1 emissions are emissions from sources owned or controlled by us — such as refrigerants used to heat or cool our offices.

Scope 2 — 2,341.30 tCO2e
Scope 2 emissions cover indirect emissions, such as purchased electricity for our buildings. To make it tangible: when charging a smartphone at one of our offices, these emissions tie into scope 2.

Scope 3 — 6,064.85 tCO2e
These emissions stem from activities that are not directly owned or controlled by Adyen — think of air travel, hotel stays, employees’ homes, and data center energy consumption.

3 The measure for our greenhouse gas emissions is tonnes of Carbon Dioxide Equivalents (tCO2e) — covering the six greenhouse gases defined in the Kyoto Protocol by the United Nations Framework Convention on Climate Change. These six gases are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perufluorocarbons (PFCs) and sulphur hexafluoride (SF6).

COVID-19 impacting our environmental footprint

Normally, the majority of our company’s emissions are due to travel from visiting each other in our 24 offices and keeping them running. However, due to the pandemic, we reduced our overall tCO2e as reflected in the
audit results above. In gathering these results, we decided to include an estimation of increased CO2 emissions coming from our employees’ homes. As such, we remain a carbon neutral company by offsetting all emissions from our business operations, including the impact of home offices.

Environmental sustainability projects

This year, the environmental sustainability projects we supported were focused on the SDGs of climate action, quality education, decent work and economic growth. Both projects are making significant strides in bringing lasting solutions to these crucial topics.

TIST Program Empowering subsistence farmers in Uganda

Farming for the survival of an individual or family, also known as subsistence farming, is commonplace throughout the majority of rural communities in Uganda. Via education-focused projects, the International Small Group and Tree Planting Program (TIST) aims to break the cycle of deforestation, drought, famine, and poverty by empowering populations reliant on subsistence farming via education-focused projects. These projects empower and train local farmers in their reforestation and agricultural efforts — for example, by educating on how to plant trees for maximum protection from runoff and erosion, and simultaneously conserve water and stabilise soil to increase crop yields. In terms of building sustainable livelihoods, participants in the TIST Program receive stipends from the sale of carbon credits based on the GHG benefits created by their efforts.

Kariba Reforestation and wildlife protection on the shores of Lake Kariba, Zimbabwe

In recent decades, more than a third of forests have been cleared in Zimbabwe to make space for subsistence farming and fuelwood, as the rocky political and economic climate has left many communities with no other option. The Kariba project protects around 785,000 hectares on the shores of Lake Kariba from deforestation and land degradation. This large biodiversity corridor is home to many vulnerable and endangered species, and prevents 3.5 million tonnes of CO2 from being released into the atmosphere annually. The project also supports regional sustainable development and promotes the independence of local communities by providing healthcare, clean drinking water and education on project-related activities such as agricultural practice, beekeeping and borehole maintenance.

“ We frequently remind the team to take time for themselves and make this situation work for them. That might mean something different for everyone, there’s no one-size-fits-all approach to dealing with this situation. For me, that means going outside, and taking regular bike rides — even when it's raining. ”

Ingo, Chief Financial Officer

Local Initiatives

Our teams live, work and thrive in their local communities, so we want to address locally relevant issues through employee-led initiatives. We enable our employees who want to set up grassroots initiatives, ranging from preparing backpacks for less privileged students to hosting hackathons for women in tech. Most of the initiatives brought to life started with an idea from a group of employees to give back. We introduced multiple local initiative teams around the world this year, fostering our team’s entrepreneurial spirit to support their communities.

With many people suffering from the COVID-19 pandemic, our teams around the world gathered to deliver essential goods and equipment to people in need. Our Berlin, New York, São Paulo, and San Francisco teams organized drives to collect clothes, toiletries and other supplies for economically challenged communities. In London, our team switched their office’s food provider to one that supports local vendors rather than chains, and gives a meal to a child in India for every meal Adyen orders through them. Our Paris team frequently volunteered with a local charity which prepares warm meals for disadvantaged communities.

Additionally, our teams continued to offer our technical expertise to those with limited access to the workforce. In a normal scenario, our Amsterdam team would have hosted free coding bootcamps for refugees in partnership with local NGO Hack Your Future. The curriculum was quickly adapted to online sessions due to the pandemic, which allowed Adyen employees from all over the world to participate in training the Hack Your Future students. In the São Paulo office, our team provided coding trainings to young students from disadvantaged backgrounds.

Impact Technology

We believe that building an ethical business isn’t optional, and in thinking of how we can improve our own social responsibility, we wondered how vast an impact we could have together with our merchants. In recent years, more and more shoppers are expecting businesses to be socially and environmentally responsible, and we’re ready to help our merchants meet that expectation and positively contribute the world through our impact technology.

The donation landscape faces significant friction due to structural problems in the industry infrastructure. We decided to focus on what we’re good at, creating seamless experiences for shoppers — now, with an impact perspective. All of our Impact products are built with Adyen’s core mission to help merchants meet their business, and now social and environmental, goals.

Giving

Leveraging our existing technology, we built Giving, a checkout product feature that enables shoppers to donate to the merchants’ charity of choice with one click online, in-app and in-person. To ensure that the full donation goes straight to the charity, Adyen absorbs the entire transaction cost of each donation. Through this feature, we are able to support our merchants’ sustainability goals, facilitate shoppers’ desires to do good, and create additional revenue streams for charities supporting at least one of the United Nations’ SDGs4.

While checkout donations are not new, they typically include additional costs and complexity for merchants, making this seemingly easy choice to do good less enticing. We believe doing good shouldn’t come with barriers, so our solution ensures a completely individual donation following the purchase. This is beneficial to our merchants as it reduces operational hassle, creates a seamless user experience for shoppers, and provides a transparent overview of contributions to the charity.

4 Adyen’s social responsibility programs are aligned with the United Nations’ Sustainable Development Goals (SDGs). We acknowledge the importance of the SDGs as key metrics in the long-term prosperity of people and planet.

Offsets in Checkout

After offsetting our own carbon emissions in 2019, we began thinking about how we can help our merchants do the same. As a result, we built Offsets in Checkout. This product feature enables our merchants’ shoppers to carbon compensate for the purchase of goods at checkout, providing a simple way for shoppers to support sustainability projects. Partnering with South Pole, we have created a database which calculates the exact amount of GHG emissions used for the production and delivery of goods they are purchasing at that moment, sending that back to checkout via an easy to implement integration.

We are able to help support our merchants’ sustainability aspirations and allow them to choose which projects they want to support within South Pole’s network. Their shoppers’ contributions will be converted into carbon credits that funnel directly into the projects.

“ As a new father, I’ve been grateful for the opportunity to see more of my family throughout all hours of the day. The line between work and life has blurred over the past year — I can be fully involved in their lives without compromising on my work projects. ”

Ayomide, Java Software Engineer

Compliance

The Compliance opportunity

We are building for the long term based on a strong culture of integrous behavior. To this end, we ensure that compliance forms an integral part of everyday decision making by integrating a global compliance program into daily business activities and strategic planning. In light of our growth, the effectiveness of the compliance program depends on scalable compliance solutions. Consistent with our core business, this scalability is achieved primarily through the use of technology and data-driven solutions, in the pursuit of lasting and sustainable growth.

In addition to the technology-driven approach to compliance, each and every employee is encouraged to act as the “eyes and ears” of Adyen. This principle of joint responsibility is reflected in the three-lines-of-defense model employed as part of Adyen’s governance framework and promoted openly by both tiers of the Board — tone starts at the top.

The Compliance Handbook and its related policies and procedures additionally promotes integrous and ethical conduct throughout Adyen. The Handbook, and associated standards, are communicated initially through introductory sessions and subsequently promoted on an ongoing basis, including through annual refresher training sessions. The Compliance Handbook is applicable to all Adyen employees worldwide.

As a technology company operating within the financial services space, effectively managing compliance risk not only serves as Adyen’s license to operate, it also maximizes Adyen’s opportunities in the market and enhances Adyen’s competitive position by building trust.

We make good choices to build an ethical business and drive sustainable growth for our merchants

Adyen Formula

Compliance and integrity

Central to Adyen’s compliance framework is the identification, mitigation and monitoring of integrity risks, being the risk of inappropriate behavior of employees and board members or third parties (merchants, suppliers, advisers) posing a current or future threat to Adyen and/or the proper functioning of the financial system, that can be attributed to Adyen or in which Adyen acts imputable. Inappropriate behavior generally refers to insufficient compliance with relevant rules or regulations, internal policies and/or the Adyen Formula.5

To ensure Adyen proactively identifies and effectively mitigates integrity risks that may affect its business, including to account for evolution with respect to the product offering, the markets in which Adyen operates and the general growth as a business, a systematic integrity risk analysis (SIRA) is performed on an ongoing basis. The SIRA assists Adyen to identify, mitigate, measure and monitor potential integrity risk scenarios as described below.

5 Adyen’s definition of Integrity Risk also includes the related concept of conduct risk.

Integrity Risk identification

Adyen identifies a number of integrity-related topics as being core to maintaining control from a compliance perspective6:

  • Money laundering
  • Terrorist financing
  • Circumvention of sanctions legislation
  • Corruption (bribery) and conflicts of interest
  • Non-compliance with relevant laws and regulations
  • Socially unacceptable behavior and market manipulation
  • Data privacy

Considerations on how the identified integrity risks could manifest to impact compliance at Adyen, applicable laws, regulations, industry standards, and best practice related to payments or financial services are continually monitored to identify compliance obligations and standards. Once identified, the obligations and standards are mapped and translated into principle-based policies and procedures that act as the starting point for Adyen’s compliance program.

6 Other Integrity Risk topics such as cyber- security and fraud are referenced in the Risk section of this report.

Integrity Risk mitigation

Adyen’s policies and procedures set minimum standards for all employees, and give direction to business operations in accordance with business objectives and the Adyen Formula. In 2020, Adyen has continued to develop and refine principle-based policies, supported by globally applicable scalable procedures, to combat misuse of the financial system and build scalable compliance solutions to meet Adyen’s regulatory obligations as a financial institution. Particular focus continues to be given to anti-money laundering, counter-terrorist financing (AML, CFT) and sanctions regulations as further described in the Risk section of this report.

With specific reference to Integrity Risks associated with Adyen’s merchant base (and the industries in which such merchants operate), Adyen maintains a Prohibited and Restricted List in relation to merchant business models. The Prohibited and Restricted List acts as an articulation of Adyen’s risk appetite — specifying which merchants Adyen will do business with based on relevant scheme rules, regulations, industry standards and Adyen’s own long-term objectives. The Prohibited and Restricted List was continually updated throughout 2020 to align with developments in scheme rules, regulations and emerging trends/industries.

To ensure new products, features or markets are appropriately accounted for in Adyen’s compliance program, a Product Approval and Review Process (PARP) is undertaken as part of launch preparations. The purpose of the PARP is to ensure relevant stakeholders can identify and assess potential risks for both Adyen and its merchants, and ensures mitigating actions are taken when necessary. In 2020, numerous PARPs were undertaken in connection with new products or markets and expansion in existing markets, including by way of example, the launch of Issuing.

Integrity Risk monitoring

In accordance with the three-lines-of-defense model, teams within the second line of defense are mandated with an independent position from which to monitor and advise on the implementation of integrity risk controls within Adyen. This independent position is warranted by (without limitation), the power to investigate, challenge and escalate any concerns without influence from the business.

As part of the ongoing maturity of Adyen’s compliance program, an independent second line compliance monitoring team was established in 2020, and focused on the development and maintenance of data-driven monitoring tools to provide oversight on the implementation of integrity risk controls in a scalable and technology-led manner.

“ Earlier this year, Pieter sent out a message saying we should think of our offices like a café that provides us with a comfortable space to work and collaborate in, but are not essential to operate as a business. I do miss going to the office, but I still feel as much a part of Adyen as I did before the pandemic. ”

Sergen, Internal Auditor

Regulatory environment, AML/CTF and sanctions regulation

The global regulatory landscape for payment and financial services is varied and constantly changing. Still, Adyen continues to see alignment between the underlying principles and objectives of financial regulation around the globe and leverages this as the basis for its global compliance program. As a result, Adyen continues to embrace regulation in building for the long term. Regulation allows Adyen to continually improve the quality of processes, sharpen thinking and explore and develop new product opportunities.

Throughout 2020, key focus areas for Adyen to maintain control and leverage regulation as an opportunity included:

  • Utilizing the growing commonality in the purpose and objective of AML, CFT and Sanctions regulation to future proof the scalability of Adyen’s core integrity policies and procedures, including to ensure such policies and procedures can be applied irrespective of merchant type, merchant location, or the financial products and services provided to such merchants.
  • Supporting Adyen’s expanding global footprint from a regulatory perspective, including to identify new or changing obligations and implement appropriate controls, in relation to (without limitation):
    • North America and the United Kingdom in relation to preparations for proposed bank branch authorizations;
    • AsiaPacific—new payments/financial licenses or authorizations for Adyen’s locally operating subsidiaries, owing to both regulatory change and/or expansion in the activities of such subsidiaries;
    • LatinAmerica—increasing regulatory requirements relating to expansion in the activities of locally operating subsidiaries.
  • Investing in data-driven compliance technology to support scalable compliance efforts, with particular focus on the use of post-event transaction monitoring systems and machine learning to combat misuse of the financial system and meet Adyen’s regulatory obligations arising out of AML, CFT and Sanctions regulation.
  • Taking advantage of opportunities created by the Second Payment Services Directive (PSD2) with particular focus on new Strong Customer Authentication requirements to reduce fraud within the financial system.

Through the power of a unified platform, Adyen is well positioned to deal with increasing regulatory complexity. Adyen continues to take a proactive approach to building relationships with regulators and payment schemes, maintaining transparent and constructive interactions to build a sustainable business. Adyen is committed to maintaining and strengthening its global compliance program to support sustainable business and drive growth for merchants.

Data Privacy

At Adyen, we understand that the trust we have been given by our customers to process personal data is essential to our business. Building for the long run entails building a platform that has privacy engrained in its design.

Adyen continues to strive for a global privacy approach, thereby aiming to ensure a solid privacy governance throughout the world. This governance is mainly driven by the General Data Protection Regulation (the “GDPR”), which applies to most of the data processing activities by Adyen. However, our global presence requires us to take into account local privacy laws as well, such as the California Consumer Privacy Act (the “CCPA”) and the Lei Geral de Proteção de Dados (the “LGPD”) in Brazil.

Aside from Adyen’s expanding global footprint and product offering, the constant developing and changing privacy landscape increases complexity, requiring Adyen to steadily adapt, improve and strengthen its processes and procedures. Adyen is committed to further improve and develop its privacy compliance efforts to support its merchants.

Tax

To help our merchants grow, we focus on long-term, scalable solutions. As such, responsible tax behavior is an essential element of our sustainability strategy. The taxes that we pay are an important part of our contribution to local economies and support the development of the countries in which we operate.

We pay our taxes in the countries wherein we have a taxable nexus, dependent on the laws of the respective countries. In line with this approach and our values, we do not seek refuge in tax havens and when making decisions we consider the spirit of the law. We support the principles that are the fundamentals of the OECD’s work on Base Erosion and Profit Shifting (BEPS), including country-by-country reporting to tax authorities. We maintain an open relationship with all relevant tax authorities, which includes that we may conclude a tax agreement.

When it comes to tax, Adyen has a low risk appetite. We operate a global, scalable tax framework which aims to support the business in its growth, while simultaneously allowing us to be in control of our tax position. Our global tax framework covers Adyen’s total tax contribution, both the corporate income taxes paid and the taxes collected, such as: value added tax, withholding tax, and payroll tax. More details on the taxes paid and taxes collected can be found in the financial statements.

Tax governance, control, and risk management

Adyen utilizes a tax control framework to manage and control Adyen’s global tax risks, compliance requirements, and processes. Having a robust governance, control, and risk management system for
tax ensures Adyen’s tax strategy and approach to tax are properly embedded within the organization.

The tax control framework7 defines the roles and responsibilities within Adyen when it comes to managing tax risks and ensuring compliance requirements are met. Compliance with the tax control framework is effectuated through a set of internal controls for which evidence is documented and collected on a regular basis. Internal
Audit continuously monitors and tests compliance with the tax control framework. As part of our internal control processes, we perform an annual tax in-control statement. We continuously seek for ways to embed technology in all areas of our tax control framework, including tax processes and tax data management.

The tax strategy and compliance with the tax control framework are monitored by the CFO and ultimately the responsibility of the Management Board. Tax is also regularly discussed in the Audit Committee. We refer to our Whistleblowing Policy for the mechanism for anyone within Adyen to report its concerns about unethical or unlawful behavior in relation to tax.

7 Governed in accordance with the three-lines-of-defense model as defined in the ‘Risk management’ section of this Annual Report.

Stakeholder engagement and management of concerns related to tax

Adyen maintains an open relationship with all relevant tax authorities. We are open to participate in cooperative compliance agreements in order to seek an active real-time audit, whereby clearance is obtained for any significant transactions or tax risks. This may result in Adyen concluding a tax agreement with a tax authority to get upfront certainty on any tax implications that may arise.

Adyen typically refrains from public policy advocacy on tax, nor engages in any lobbying activities related to tax. There is no active involvement in the development of tax systems, legislation, and administration. Within Adyen, tax follows the business. Adyen’s tax team is well embedded in the organization to engage with (external) stakeholders and address any views and/or concerns.

“ I think the best thing about this situation is that it has made us more appreciative of time spent together. Seeing your colleagues every day in the office is great, and in future situations I will think back of the past year and remind myself how lucky we are. ”

Fernando, Head of Investor Relations

Risk management

Adyen recognizes that risks are associated with achieving its strategy and business objectives. Adyen aims to be risk aware without being unduly risk averse. Adyen therefore actively manages its risks to protect and grow the company. Adyen has adopted a uniform and systematic approach for managing risks. Adyen's integral risk management framework is based on the Enterprise Risk Management (ERM) model as issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2017.

Strategy, objective setting, and risk appetite

Risk management, strategy, and objective-setting work together. Operational objectives put strategy into practice while serving as a basis for identifying, assessing, and responding to risk.

Risk appetite defines the amounts and types of risk Adyen is willing to accept in pursuit of its objectives. A low risk appetite implies a low acceptable residual risk and therefore requires a stronger risk response and internal controls. A higher risk appetite may allow for additional activity and less strong internal controls. Adyen's risk appetite is aligned with its strategy. Changes in strategy and willingness to assume risks or external developments may result in an updated risk appetite, which is ultimately bound by Adyen’s risk capacity.

Adyen has translated its view on risk appetite into risk appetite statements, which set the overall tone for Adyen's approach to risk taking. In 2020, the Management Board performed its annual review and updated Adyen’s risk appetite statements and risk limits, which were approved by the Supervisory Board.

Risk governance

Adyen has established a risk governance that is consistent with the size and complexity of the organization and the risk profile of the Company. Adyen's governance identifies, establishes and reinforces the importance of oversight responsibilities for risk management. The Supervisory Board supervises and advises the Management Board. The Audit Committee is charged with supervising, monitoring, and advising the Management Board in relation to the functioning of the internal risk management and control systems.

The Management Board is responsible for maintaining an adequate system for risk management and internal control. The Management Board has instituted a Risk Committee to support them with risk management oversight. The CFO, CLCO, and CTO represent the Management Board in the Risk Committee. The Corporate Risk and Internal Control team regularly reports its findings from monitoring Adyen’s risk profile to the Risk Committee. The Risk Committee keeps the Management Board informed of the observations, recommendations, and deliberations on findings regarding risk management and internal control. The Risk Committee reports any material risk limit breach that would place Adyen at risk of exceeding its risk appetite, and in particular, of putting in danger the financial condition of Adyen promptly to the Management Board.

The Adyen Way of Being In Control

We always ask why and are critical, we don’t just tick the box

We all make mistakes, we seek help and share as soon as we find out

Your work impacts others, involve them

Always look for improvement, automate processes continually & challenge the status quo

We evidence our work at the source, we don’t replicate it

The formula guides our behavior, policies support it

If you see a problem, act on it

Three-lines-of-defense

Adyen has adopted the three-lines-of-defense model, which reflects the segregation between operations (first line management), the risk management and compliance functions (second line), and the independent internal audit function (third line). The first line owns and manages risks, the second line sets control standards and monitors adherence to them, and the third line—internal audit—provides assurance on the adequacy of the first two. The Corporate Risk and Internal Control team supports the Management Board and Risk Committee with its risk oversight, management of the risk framework, setting of the relevant risk management policies, risk appetite, and independent monitoring of key risks, limits, and controls.

Risk culture

Culture is a key aspect of risk management. People establish the mission, strategy, and business objectives, and put risk management practices in place. Adyen believes that a strong culture serves as a safety net to guide people in making good decisions. Therefore, Adyen promotes and safeguards the key elements of culture through the Adyen Formula and the Adyen Way of Being In Control.

Event identification and risk assessment

Adyen performs a top-down, company-wide risk assessment at least annually. The purpose is to assess principal and emerging risks in order to focus attention on the most significant threats and opportunities. The Management Board has updated its company-wide risk assessment in 2020. For a more detailed description of the principal risks, see the "Risk Factors" section. The top-down, company-wide risk assessment is complemented by bottom-up risk assessments. For example, at least once a year, Adyen performs a SIRA.

Adyen continues to expand the use of GRC (governance, risk management, and compliance) tooling to assess and document the key risks, risk appetite, key controls, and control test documentation to support the evaluation of the effectiveness of the control framework. The tooling also provides Internal Audit with (read-only) access to perform its independent audits and assign its recommendations to risks and controls.

Control activities

Adyen uses COSO's Internal Control – Integrated Framework (2013) as a reference for its design, implementation, and evaluation of control activities as part of a system of internal control. Adyen has implemented internal risk management and control systems to manage the risks effectively and efficiently and to provide reasonable assurance that objectives can be met. Policies and procedures ensure that employees understand their role in Adyen's risk and control systems.

Important elements of Adyen’s antifraud measures include oversight by the Management Board, Internal Audit, Compliance and the Audit Committee. Prevention of fraud starts with the SIRA to identify potential fraud risk scenarios. Controls that aim to prevent these scenarios from occurring, include an anti-fraud policy, employee background screening, and process-specific fraud risk controls. Controls aimed at the detection of fraud include system monitoring, auditing, process-specific fraud risk controls, and a whistleblower policy. Whenever fraud is suspected or reported, an internal investigation and/or external investigation is conducted and corrective actions are taken.

Resilience

In 2020, Adyen has merged its business continuity management and recovery frameworks into one resilience framework, in which Adyen plans for its course of business under various operational and financial conditions. During the COVID-19 pandemic, the business continuity protocols allowed employees to continue their day-to-day activities while adjusting to the new normal. Adyen staff was fully equipped to work remotely, and have been doing so without impact to Adyen’s ability to process payments. The business continuity response and recovery plans have been updated in 2020 with, amongst others, the lessons learned from the COVID-19 lockdowns. Should there be an abrupt end to the pandemic, it is deemed not to have an impact on resuming business as usual.

Throughout the pandemic, Adyen’s fee-based business model proved to be resilient due to the diversification of its merchant base across verticals and geographies. Illustrative to this resilience is how online retail and digital goods volumes accelerated, while travel and in-store volumes slowed down due to global lockdown restrictions. Adyen found its products to be particularly suited to rapid adaptations during challenging times. When stores shut down, Adyen was able to help merchants move volumes online quickly, and in reopening scenarios Adyen has facilitated several contactless in-store set-ups. Adyen continued to onboard volume at scale and was able to add merchants to the platform with timelines largely unaffected by COVID-19. The full effect of the pandemic however, has not yet trickled down to the real economy and will manifest itself over the upcoming years. Governmental support and monetary programs have cushioned some of the impact for a portion of Adyen’s merchants up to now, but for some of them the end of the survival horizon may come in view. Adyen will continue to execute its strategy to diversify the product and customer portfolio across verticals and geographies to mitigate the impact from the pandemic.

Stress testing

Adyen uses stress testing to understand the potential impact of stress events on its business model, capital, and liquidity ratios. The stress scenarios are based on exceptional but plausible events with an adequate degree of severity. Adyen also performs stress testing to evaluate the reliability of capital and liquidity plans under stressed conditions using scenarios and risk factors prescribed by the regulator. Adyen performs these tests in accordance with EBA guidelines on stress testing. In 2020, Adyen’s Internal Capital and Liquidity Adequacy Assessment Process (ICLAAP) showed that it has a high financial shock absorption capacity and high capital and liquidity ratios. The COVID-19 pandemic could be considered a real-life stress test. As discussed earlier, in 2020 the fee-based business model proved its resilience and continued to generate revenues and cash, further improving Adyen’s strong capital and cash ratios. More information on Adyen’s capital and liquidity ratios can be found in the 2020 Transparency and Disclosure Report (Pillar 3) at www.adyen.com/ir.

Effectiveness of risk management and internal control systems

In compliance with principle 1.2 of the Dutch Corporate Governance Code, the Management Board is responsible for establishing and maintaining an adequate system for risk management and internal control. Adyen has implemented internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with financial reporting standards. In compliance with principle 1.4 of the Dutch Corporate Governance Code, the Management Board annually evaluates the effectiveness of the design and operating of its risk management and control systems. In the third quarter trading update, Adyen reported that its controls identified a duplicate recording of certain scheme fees that resulted in an understatement of net revenue, EBITDA, and EBITDA margin figures with related impact on tax and net income since 2018. These duplicate bookings were solely accounting related and did not affect any cash positions, payouts from financial institutions, or payouts and reporting to merchants. Adyen took remedial actions to avoid these errors in the future. Per December 31, 2020, no major failings in the effectiveness of the internal risk management and control systems were observed, nor were significant changes to these systems made or major improvements planned. The Management Board has discussed the evaluation of its risk management and control systems with the Audit Committee and Supervisory Board.

Risk factors

In compliance with principle 1.4 of the Dutch Corporate Governance Code, the Management Board has updated its company-wide risk assessment in 2020. This section describes the principal risks that could potentially affect Adyen. While Adyen believes that the risks described below are the material risks concerning Adyen's business, they are not the only risks relating to Adyen. Other risks, facts, or circumstances not presently known to Adyen or that Adyen currently deem to be immaterial, could individually or cumulatively prove to be significant and could have a material adverse effect on Adyen's business, results of operations, financial condition, and prospects.

Strategic and business risk

Adyen accepts strategic and business risk knowing that in order to achieve its strategic objectives it may consume some amounts of capital investing in new assets, people, and processes. In pursuance of its strategic objectives Adyen values a solid financial and capital outlook.

Reputational risk

Adyen has low appetite for reputational risk and aims to avoid actions that trigger negative international media attention and/or significant reputational damage. Any negative publicity about Adyen, the quality and reliability of its products and services, changes to its products and services, its ability to effectively manage and resolve complaints, its privacy and security practices, litigation, regulatory activity, and the experience of merchants and shoppers with its products or services, could adversely affect its reputation and the confidence in and use of its products and services. Harm to Adyen's brand can arise from many sources, including failure by Adyen or its partners to satisfy expectations of service and quality, inadequate protection of sensitive information, compliance failures and claims, litigation and other claims, employee misconduct, rumors or false stories, and misconduct by its partners, service providers, or other counterparties. Adyen wants to build an ethical and sustainable business and therefore actively mitigates risks that could negatively affect the Adyen reputation or brand. Failure to meet carbon- reducing policy goals, for example, could cause reputational damage and result in low ratings in sustainable investment indexes, affecting the share price. Adyen prides its commitment to goals that improve the business and footprint. Refer to the ‘Social Responsibility’ section for an overview of Adyen’s sustainability efforts.

Competition

Adyen competes against a wide range of businesses, many of which are larger than Adyen, have a dominant position, or offer other products and services to shoppers and merchants that Adyen does not offer. Some competitors have greater merchant bases, volume, scale, resources, and market share than Adyen, which may provide significant competitive advantages. Furthermore, Adyen is facing competitive pressure from non-traditional payments processors and other parties entering the digital payments industry, which may compete in one or more of the functions performed in processing merchant transactions. Adyen accepts that competition could increase as it seeks to increase market share, thereby potentially reducing profit margins, but not at all cost — if pricing is not sustainable, then it will not pursue a deal. In general, Adyen is able to react quickly to market developments due to how its technology and workstreams are structured.

Disruptive innovation

Adyen expects that rapid and significant advancements in technology will continue. These changes may be more superior, cheaper, and impair or render obsolete the products and services Adyen offers. If Adyen is unable to provide enhancements and new features that achieve market acceptance or keep pace with rapid technological developments and evolving industry standards, its business could be materially and adversely affected. Adyen accepts disruption and innovation as standard market practices. As such, Adyen continues to build and actively invest in its single platform solution. Adyen has established workstreams that continuously work on improving its service offering based on merchants’ needs. Through the setup of the workstreams with product, technical, and commercial staff, Adyen can work closely with its customers and respond quickly to their evolving needs. In 2020, Adyen has found its products to be particularly suited to rapid adaptations during the pandemic.

Access to card networks

The majority of transactions processed on the Adyen platform go through international credit and debit card networks. In order to access these card networks to provide acquiring, processing, and issuing services, Adyen must have the relevant geographically based operating licenses or memberships. In some markets where it is not feasible or possible for Adyen to have a direct license with a card network, Adyen has a relationship with a local financial institution to act as a local sponsor for the license. Adyen has low appetite for failure to comply with the card network rules or the deterioration in its relationships with the card networks for any other reason, which could result in the restriction, suspension, or termination of Adyen's own licenses, or use of sponsoring banks’ licenses.

Concentration of sales

Some of Adyen's largest merchants provide significant contributions to its net revenue. Large merchants typically have arrangements with multiple payment service providers (primarily in order to mitigate against single- point-of-failure risk). Large merchants could terminate their contracts or shift business away, leading to lower processed volumes and net revenues. Adyen has low to moderate appetite for commercial dependency and therefore continues to execute its growth strategy to board new merchants from different verticals on its platform. Adyen believes that it is well-positioned to grow the business through unified commerce and mid-market merchants, which it views as adjacent segments to large enterprise merchants.

Macroeconomic conditions

Adyen accepts that entering and operating in markets with some macroeconomic volatility could lead to financial losses. Uncertainty about global and regional economic events and conditions, including the economic impact from an uncontrolled spread of infectious diseases, may result in shoppers and merchants postponing spending, which could have a material adverse impact on the demand for Adyen's products and services, including a reduction in the volume and size of transactions on its payments platform.

In March, Adyen observed a dip in volume driven by the pandemic’s impact on the travel and in-store retail verticals. The decline in these volumes stabilized quickly, while online retail and digital goods volumes accelerated after global lockdown restrictions went into effect. The travel vertical saw a minor rebound between June and August, primarily due to the easing of lockdown restrictions across Europe. Simultaneously, in the retail vertical, in-store volumes rebounded to pre-COVID-19 levels in the third quarter. The uptick in online volume that followed initial brick-and-mortar store closures persisted, with e-commerce growing unabated despite recovering in-store volume. The pandemic has shown how resilient Adyen’s business model is to instant macroeconomic shocks. However, the pandemic has not ended yet and it is uncertain how the consequences of prolonged lockdowns will manifest itself over the upcoming years.

Adyen will lose its ability to automatically passport into the UK market through the banking license of Adyen due to the United Kingdom leaving the European Union. In 2020, Adyen formally applied for providing regulated services through a UK branch license. Until formal authorization in 2021, Adyen makes use of the Temporary Permission Regime to continue servicing UK merchants on a cross-border basis without disruption.

Intellectual property rights

As substantially all of Adyen's intellectual property is developed in-house, the protection of such intellectual property, including Adyen's platforms, trademarks, copyrights, domain names, trade dress, and trade secrets is important to the success of its business. Adyen seeks to protect its intellectual property rights by relying on applicable laws and regulations, as well as a variety of administrative procedures. Adyen's intellectual property rights may be contested, circumvented, or found unenforceable or invalid, and Adyen may not be able to prevent third-parties from infringing, diluting, or otherwise violating them. Any failure to adequately protect or enforce Adyen's intellectual property rights or significant costs incurred in doing so could diminish the value of its intangible assets.

As the number of products in the technology and payments industries increases and the functionality of these products further overlaps, Adyen may become subject to intellectual property infringement and other claims. The ultimate outcome of any allegation is often uncertain and, regardless of the outcome, any such claim, with or without merit, may be time-consuming, result in costly litigation, divert management's time and attention, and require Adyen to, among others, stop providing transaction processing and other payment-related services or redesign, stop selling its products or services, pay substantial amounts to satisfy judgments or settle claims or lawsuits, pay substantial royalty or licensing fees, or satisfy indemnification obligations that Adyen has with certain parties with whom Adyen has commercial relationships.

Operational risk

Adyen recognizes that operational risks are associated with achieving its business objectives. Operational risk concerns the risk of losses resulting from inadequate or failed internal processes, people, and systems or from external events, including legal risk. Adyen has moderate appetite for operational losses.

Merchants’ potential liability for shopper chargebacks

When shoppers claim that a merchant has not delivered goods or services as agreed, issuing banks can file chargebacks. Adyen seeks to offset such chargebacks with the payouts to the merchant, but may not be able to succeed in full. While Adyen has implemented risk mitigation, including withholding funds from the payouts to its merchants based on assumptions and estimates that Adyen believes are reasonable to cover such eventualities, the measures, including the withheld funds, may not be sufficient.

The uncertainties associated with the COVID-19 pandemic have led to financial and economic volatility, especially in certain industries. Adyen’s MPL team has closely followed the development of the pandemic and increased its monitoring efforts in early 2020. The team frequently discussed its observations and recommendations with the Merchant Risk Committee, Management and Supervisory Board throughout the year. Although Adyen has observed some administrations in its customer portfolio due to the persisted lockdown measures, it has not incurred any material MPL losses due to chargebacks in 2020. The cumulative MPL losses were well within the set risk appetite.

Availability, connectivity, and performance of products and services

Adyen has a low appetite for issues in the availability, connectivity, and performance of the platform. Adyen's systems and those of its third-party service providers, including data center facilities and communication networks, have experienced service interruptions in the past and may experience significant service interruptions in the future. Frequent or persistent availability, connectivity, or performance issues could cause current or potential merchants to believe that its systems are unreliable, leading them to switch to a competitor or to avoid Adyen's products and services, potentially harming Adyen's reputation and brand permanently. Moreover, to the extent that any platform failure or similar event results in damages to Adyen's merchants or their business partners, the merchants or partners could seek significant compensation or contractual penalties from Adyen for their losses, which, even if unsuccessful, could likely be time-consuming and costly for Adyen to address and divert management attention. Furthermore, frequent or persistent interruptions could lead to regulatory scrutiny, significant fines and penalties, and/or mandatory and costly changes to its business practices and could ultimately cause Adyen to lose existing regulatory licenses or prevent or delay Adyen from obtaining additional regulatory licenses that Adyen needs to expand its business.

Adyen has built its platform and services to avoid the presence of single points of failure, and to ensure that sufficient capability exists to continue normal operations for critical processes despite the loss or unavailability of corporate resources, from information technology, physical locations or even personnel and whole departmental structures. The highly available platform is designed to withstand individual telecommunications, systems and datacenter instance failures.

During 2020, a cross-functional team closely monitored operations, including third parties, for potential impact of the COVID-19 pandemic and operated business continuity plans. Adyen staff was fully equipped to work remotely, and have been doing so without impact to our payment processing ability. We have not observed a specific impact on the availability, connectivity or performance of our platform that can specifically be contributed to COVID-19.

Information security risk

Adyen and its merchants, partners, and others who use its services, obtain and process a large amount of sensitive data. Adyen's and its partners' IT systems may be vulnerable to physical and electronic breaches, computer viruses and other attacks by cyber-criminals, internet fraudsters, employees or others. This could lead to, amongst other things, a leakage of merchants' data, damage related to incursions, destruction of documents, inability or delays in processing transactions, and unauthorized transactions. Adyen has a low appetite for information security risk. Any real or perceived privacy breaches or improper use of, disclosure of, or access to such data could harm Adyen's reputation as a trusted brand in the handling and protection of this data. Although Adyen carries cyber liability insurance that it believes to be reasonable to cover such eventualities, such insurance may not be sufficient to cover all potential losses. Adyen’s Security Officer is responsible for managing the Information Security Program. The goal of the Information Security Program is to ensure the ongoing confidentiality, integrity, and availability of data, systems, and processes at Adyen, and to ensure that specific information security compliance programs are maintained and externally assessed as appropriate. Adyen undertakes background checks for new hires. Training is undertaken on IT security on the first day at Adyen. A follow-up general security introduction, which addresses privacy and confidentiality policies, must be completed within two months of start date. Annual refresher training on topics as privacy and security is mandatory for all employees.

Information security will always remain a structural risk for Adyen, but it was not necessarily higher in 2020 compared to previous years. Adyen’s risk-based approach has resulted in an efficient and flexible IT infrastructure, which enabled an almost seamless transition to the work-from-home environment following the outbreak of the COVID-19 pandemic. However, embedding security awareness in the mind of employees, especially new joiners, was more challenging then before when everybody was working in the office. In combination with a more prominent company profile, this could make Adyen more prone to infiltration risk. The security onboarding and training sessions moved to online. The Security team maintained an internal webpage to provide additional guidance to stay vigilant and omit websites, e-mails, or applications related to COVID-19. Furthermore, Security adapted its monitoring efforts in response to the changed circumstances and further improved its responsiveness to incidents. Adyen has not observed major security incidents during 2020.

Third party risk

Vendors and supply chain dependencies could negatively impact Adyen’s operations and security of data, systems, and services. Adyen has a low appetite for dependency on third parties in its critical processes. Adyen strives to minimize outsourcing of activities directly related to its core processes or platform to avoid dependency on suppliers. Adyen believes that not being limited by third-party software in its core operations is a key factor in its ability to rapidly increase the number of transactions that the platform can process. Adyen has established a Third Parties Policy, which defines a framework, including clear ownership, for assessing third-party risk. In 2020, Adyen implemented a centralized contract management tool to improve visibility into who the company is globally doing business with and monitor compliance with the policy. Adyen has not observed major data breaches, operational interruptions, or financial stress at its third parties due to the COVID-19 pandemic.

Data privacy

Adyen is subject to several privacy and data protection laws and regulations, such as the GDPR, CCPA and LGPD (referred to as "privacy laws") relating to the collection, use, retention, security, processing, and transfer of personal data about its merchants, their shoppers, third parties and others, and their transactions in the countries wherein Adyen operates. Throughout the world these privacy laws are evolving and continuously changing. Adyen is closely monitoring any changes to new and existing privacy laws. These changes may affect our current agreements, products, and/or processing activities. For example, data transfers outside of the European Economic Area have become more complex and this resulted in additional requirements for these data transfers. Any failure, or perceived failure, by Adyen to comply with its privacy policies or with any applicable privacy laws in one or more jurisdictions could result in proceedings or actions against Adyen by governmental entities or others, including class action privacy litigation in certain jurisdictions, significant fines, penalties, judgments, and reputational damage. Adyen has a low appetite for data privacy risks and promotes a culture of diligence and high ethical standards with regards to the collection of information.

Entrepreneurial culture

Adyen is committed to maintaining its entrepreneurial company culture, which fosters innovation, diversity, and talent, and therefore has a low appetite for elements threatening this culture. Adyen's entrepreneurial culture has been one of the primary drivers of its historical growth. As Adyen continues to grow, it may not be able to maintain its entrepreneurial culture. If Adyen does not successfully manage its growth, and is not able to differentiate its business from those of its competitors, drive value for and retain merchants, or effectively align its resources with its goals and objectives, Adyen may not be able to compete effectively against its competitors, leading to declining growth and net revenues. Adyen promotes and safeguards the key elements of its culture through the Adyen Formula.

Absorbing new hires into the Adyen culture was naturally more difficult in a working-from-home environment. The onboarding process and the company introduction sessions moved online in March. Senior management spent significant time on the online company introductions by hosting Adyen Formula chats and continued to meet every new hire before they joined the team. Although the current situation could be likely to persist for a longer time, Adyen is comfortable growing the company in this environment going forward with the online efforts to safeguard the unique culture.

Talent

Adyen's future performance substantially depends on the continued services of key talent and its ability to attract, retain, and motivate such talent. The loss of services of any of Adyen's key talent or Adyen's inability to attract highly qualified key talent may adversely affect its operations. Adyen has low appetite for the loss of key talent and actively manages the composition and quality of its talent pool.

The pandemic affected Adyen’s employees in different ways. Management operated business continuity plans along with travel restrictions and social distancing guidelines, including working from home for employees. The Management Board frequently reiterated that working from home could be the new normal for a longer timespan, to ensure that employees would create a sustainable situation for themselves. HR maintained an internal webpage “COVID-19 — Staying connected from home” and established “Guiding Principles for Working from Home.” The regularly updated principles followed guidance from the World Health Organization and local authorities. The Management Board introduced “The Adyen Work-From-Home Formula” and organized weekly calls with team leads to monitor employee wellbeing. Our HR department raised awareness with managers for employees feeling overwhelmed or worried in any way. When local authorities (temporarily) allowed employees to return to the office, Management implemented social distancing measures to maintain a safe working environment. Despite the pandemic forcing the shift to a work-from-home environment, Adyen has been able to grow the team at higher pace in 2020 than before.

Adyen strives to hire, promote, and enable underrepresented groups, while challenging the status quo in the communities in which it operates. In 2020, Adyen established a Diversity, Equity & Inclusion (DEI) working group that focuses on improving Adyen’s DEI efforts across the company. This working group advises and supports Adyen’s broader leadership team to ensure that we follow up on the DEI initiatives and that we work towards substantial improvements. This working group is composed of Adyen employees from across all offices and represents a broad range of backgrounds. For more information please refer to the People section of this Annual Report.

Integrity risk

Integrity risk is the risk of inappropriate behavior of employees and board members or third parties (merchants, suppliers, advisers) posing a current or future threat to Adyen and/or the proper functioning of the financial system that can be attributed to Adyen or in which Adyen acts imputable. Inappropriate behavior generally refers to insufficient compliance with relevant rules or regulations, internal policies, and/or the Adyen Formula. If Adyen (or a third party it does business with) fails to comply with laws and regulations, or expectations by the market or society of ethical business conduct, supervisory authorities may initiate legal and regulatory proceedings against Adyen. Adyen has a low risk appetite for non-ethical behavior of its management, employees, and third parties that could negatively affect Adyen’s reputation or brand, lead to compliance breaches of laws or regulations or endanger its future existence.

Adyen has no risk appetite for facilitating money laundering or terrorist financing and therefore sets limits on acceptance of prospective customers as well as the nature of services offered to accepted customers. Although Adyen has policies and procedures that it believes are sufficient to comply with currently applicable anti-money laundering, anti- corruption, bribery and sanctions rules and regulations, it cannot guarantee that such policies and procedures completely prevent situations of money laundering, terrorism financing or corruption, including actions by Adyen's employees, merchants, third parties, or other related persons for which Adyen might be held responsible. Such events may have severe consequences, including litigation, sanctions, administrative measures, fines, criminal penalties, and reputational consequences.

In 2020, various regulators issued warnings that organized crime groups could seize the opportunity to exploit the COVID-19 pandemic by engaging in new criminal activities to generate, conceal, and launder illicit proceeds. Companies in industries that were more adversely affected by negative economic conditions could be more vulnerable to infiltration or takeovers by criminals. Adyen has continued its efforts to improve the integrity risk framework including monitoring controls. Adyen has not experienced any issues to maintain its AML/CFT obligations due to, amongst others, social distancing measures, reallocation, or re- prioritization of resources away from AML/CFT activities to other areas.

Tax

Adyen has a low appetite for risk forthcoming from its tax obligations. Adyen wants to meet its obligation to pay the amount of tax legally due in any territory, in accordance with rules set by governments. The determination of Adyen's worldwide provision for income taxes, value- added taxes, and other tax liabilities requires estimation and significant judgment. Like many other multinational corporations, Adyen is subject to tax in multiple tax jurisdictions. Adyen's determination of its tax liability is always subject to audit and review by applicable domestic and foreign tax authorities. Any adverse outcome of any such audit or review could have a negative effect on Adyen's business and the ultimate tax outcome may differ from the amounts recorded in its financial statements. Adyen has not observed adverse impact from the COVID-19 pandemic on its ability to report taxes in a timely and accurate manner. For more information, please refer to ‘Tax’ as part of the ‘Compliance’ section in this Annual Report.

Financial reporting

Gaps in internal controls could negatively impact the accuracy of our financial and management reporting. Adyen has a low appetite for errors in financial reporting and does not accept material misstatements in the financial statements. Adyen has implemented internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with financial reporting standards. Due to its inherent limitations, internal control over financial reporting can’t provide absolute assurance that a misstatement in our financial statements would be prevented or detected. Also, projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Adyen has not observed adverse impact from the COVID-19 pandemic on its ability to report to management and regulators in a timely and accurate manner.

Financial risks

Adyen has a limited appetite to incur losses from financial risks.

Credit risk in respect of counterparties, including other financial institutions.

Credit risk can originate from the risk that a counterparty will not settle the full value of an obligation — neither when it becomes due, nor thereafter (default risk), or the risk of losses stemming from on- and off-balance sheet positions arising from concentrations in exposures to a counterparty or a group of connected counterparties (concentration risk). Adyen has a low to moderate credit risk appetite. We make good choices in our financial counterparties and actively monitor them. Adyen did not see a material increase in counterparty credit risk due to the COVID-19 pandemic. Adyen has no appetite for exceeding the regulatory requirements for large exposures. For markets or jurisdictions that are considered key to successful operations, Adyen seeks to work with at least two different banks.

Fluctuations in foreign currency exchange rates

The strengthening or weakening of the euro impacts the translation of Adyen's net revenues generated from its international operations that are denominated in foreign currencies into the euro. Additionally, in connection with providing its services in multiple currencies, Adyen generally sets its foreign exchange rates once per day. Adyen may face financial exposure if Adyen incorrectly sets its foreign exchange rates or as a result of fluctuations in foreign exchange rates between the times that Adyen sets them. Given that Adyen also holds some merchants' and own funds in non-euro currencies, its financial results are affected by the translation of these non-euro currencies into euro. While Adyen has measures in place intended to manage its foreign exchange risk, namely natural hedges and spot trades for any net open positions, no assurance can be given that fluctuations in foreign exchange rates will nevertheless have a significant impact on Adyen's results of operations. Adyen does not accept sizeable losses related to foreign currency spot trading activities and closely monitors its foreign currencies positions. Adyen is exposed to foreign exchange risk on its assets and liabilities denominated in currencies other than the functional currency, including certain contract assets, its holding of Visa Inc. shares and the assets and liabilities of its subsidiaries. The majority of these assets to which Adyen is exposed to foreign currency risk are denominated in US dollars.

Price risk of financial instruments

Adyen's exposure to price risk of financial instruments at fair value arises from a holding of Visa Inc. shares and a derivative financial liability. Any movements in the underlying share prices could have a significant impact on Adyen's financial condition and results of operations. Adyen obtained the Visa Inc. shares as the result of its previous holding in Visa Europe, which subsequently was acquired by Visa Inc., which resulted in amongst others Adyen being issued shares of Visa Inc. as consideration for the acquisition. Adyen has no appetite to take on additional equity positions and resulting price risk.

Interest rate risk of cash and cash equivalents

Adyen’s customer centric business model is fee-based and doesn’t depend on the transformation of assets. Therefore, the low interest rates do not impact Adyen’s revenues. However, Adyen is exposed to interest rate risk in the banking book in relation to its high-quality liquid assets: cash held at central banks and government bonds held to maturity.

Liquidity and funding risk

Liquidity risk is the risk that Adyen could not meet its short- to medium- term payment and collateral obligations without affecting daily operations. Adyen has no appetite for not being able to meet its payment and collateral obligations without affecting daily operations. Funding risk is the risk that Adyen will not have stable sources of funding in the medium and long term, resulting in the current or prospective risk that it cannot meet its financial obligations, such as payments and collateral needs, as they fall due in the medium to long term, either at all or without increasing funding costs unacceptably. Adyen aims for a simple, stable, and solid funding position and monitors its Net Stable Funding ratio.

Secure financing on favorable terms

Adyen has funded its operations since inception primarily through equity financings. Adyen is currently able to generate sufficient cash to fund its ongoing operations, but there is no guarantee that Adyen will be able to continue doing so in the future. Going forward, Adyen may require additional funding to respond to business opportunities or unforeseen circumstances and may decide to engage in equity or debt financings or enter into credit facilities for other reasons, and may not be able to secure any such debt or equity financing or refinancing on favorable terms in a timely manner, or at all. If Adyen is unable to obtain adequate financing or financing on terms satisfactory when it requires it, its ability to continue to grow or support its business and to respond to business challenges could be significantly limited.

Refer to Note 12 ‘Financial Risk Management’ of the attached Consolidated Financial Statements for more information.

Emerging risks

Climate change

Climate and environment-related risks are commonly understood to comprise two main risk drivers: physical and transition risks. Physical risk refers to the financial impact of a changing climate. Physical risk is categorized as “acute” when it arises from extreme events, such as droughts, floods, and storms, and “chronic” when it arises from progressive shifts, such as increasing temperatures, sea-level rises, water stress, biodiversity loss, land use change, habitat destruction, and resource scarcity. This can directly result in, for example, damage to property or reduced productivity, or indirectly lead to subsequent events, such as the disruption of supply chains. Transition risk refers to a financial loss that can result, directly or indirectly, from the process of adjustment towards a lower-carbon and more environmentally sustainable economy. This could be triggered, for example, by a relatively abrupt adoption of climate and environmental policies, technological progress or changes in market sentiment and preferences.

It is a challenge to estimate the impact of transition risk on Adyen’s business model. As a result, climate and environment-related risks may be underestimated. Physical risk could have an adverse impact on Adyen’s ability to provide services to its customers. Prolonged power outages due to natural disasters could have a devastating impact on critical infrastructure used by Adyen and its service providers. Our headquarters are located in Amsterdam, making the city vulnerable to flood due to the gradual rise of sea levels. Physical risk could also occur in other locations where our offices or vendors are located. Adyen’s offices are typically close to its customers in metropolitan areas, which could make Adyen vulnerable to the adverse impact from pandemics. Adyen has designed the one single platform to create redundancy in its critical infrastructure and operations. Adyen continues to diversify its global customer portfolio to mitigate any reliance on sectors and markets, which could be more vulnerable to climate-related and environmental risks. Changing sentiment regarding climate issues, in the communities in which we operate, could lead to reputational risk. Refer to the ‘Social Responsibility’ section for more information on our sustainability efforts. Adyen is planning to further improve risk management, by including relevant climate-related risks in its risk assessments and stress testing, fortifying a risk culture to prepare for climate change-related events.

Regulatory environment

Adyen does not only need to comply with laws and regulations in the jurisdictions in which it operates, but also with laws and regulations with worldwide application. The laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity or unclear application to the business of non-traditional market participants.

interpretation of requirements by supervisory authorities and courts may be further clarified over time. If Adyen's efforts to comply with laws, regulations, and standards differ from the activities intended by regulatory bodies or supervisory authorities, they may initiate legal and regulatory proceedings against Adyen. To ensure that applicable laws and regulations are identified and mapped to the activities and services Adyen offers in local markets, Adyen performs ongoing regulatory scanning by regulatory compliance specialists with validation from external legal counsel.

Although the regulatory environment could lead to more complexity, Adyen sees this as a business challenge. Adyen believes that the use of a single platform is best overlaid with a global compliance framework, whereby Adyen strives for global application of best practices while being cognizant of the need to implement local deviations where required. As a result, Adyen is well placed to handle regulatory complexity in a scalable and sustainable manner. Adyen continues to take a proactive approach to building relationships with regulators and payment schemes, maintaining transparent and constructive interactions to build a sustainable business. Solving the regulatory challenge ahead of competitors could give Adyen a competitive edge in the market place.

Protectionism

Adyen’s growth strategy is focused on its single platform approach. Changes in foreign policies and trade laws in certain key markets, including tariffs and sanctions, could lead to negative impact on the trade levels and flows of our customers. The changes could also create boundaries to us. For example, if the use of certain (foreign) payment methods would not be allowed in a market, or if (foreign) payment service providers would not be allowed to charge fees for their services under a policy that payments should be free of charge.

Statement by the Management Board

The Management Board of Adyen is responsible for establishing and maintaining an adequate system for risk management and internal control. This system is designed to manage risks effectively and efficiently, to provide reasonable assurance that objectives can be met, that financial and non-financial reporting is reliable and that laws and regulations are complied with.

Internal control over financial reporting is an integral part of the risk management and control systems of Adyen. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with IFRS and IFRIC interpretations as endorsed by the European Union and in accordance with sub article 8 of article 362, Book 2 of the Dutch Civil Code. Internal control over financial reporting includes:

  • Maintaining records that, in reasonable detail, accurately, and fairly reflect our transactions;
  • Providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements.

Due to its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected. Also, projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Management Board has performed a company-wide risk assessment and described the principal risks facing the Company in relation to its risk appetite in the section ‘Risk factors’ of this Annual Report.

The Management Board has assessed the effectiveness of the design and operation of the risk management and control systems as of December 31, 2020. The results were shared with the Audit Committee and the Supervisory Board and discussed with the external auditor.

Based on the assessment and with reference to best practice provision 1.4.3 of the Dutch Corporate Governance Code, the Management Board confirms that to the best of its knowledge and belief:

  • This Annual Report provides sufficient insights into any failings in the effectiveness of the internal risk management and control systems (see section ‘Risk management’);
  • The aforementioned systems provide reasonable assurance that the financial reporting does not contain any material inaccuracies (see section ‘Risk management’);
  • Based on the current state of affairs, it is justified that the financial reporting is prepared on a going concern basis (see ‘Financial statements’); and
  • This Annual Report states those material risks and uncertainties that are relevant to the expectation of the company’s continuity for the period of twelve months after the preparation of this report (see section ‘Risk Factors’ and ‘Financial statements’).

However, the risk management and internal control systems cannot provide absolute assurance that missing of objectives, misstatements, fraud or non-compliance with laws and regulations will not occur.

In accordance with Article 5:25c of the Financial Supervision Act, the Management Board confirms that to the best of its knowledge and belief:

  • The financial statements of 2020 give a true and fair view of the assets, liabilities, financial position and profit or loss of the company; and
  • The Annual Report 2020 gives a true and fair view of the position as at 31 December 2020, the development and performance during 2020 of Adyen, together with a description of the principal risks that Adyen faces.

Amsterdam, the Netherlands, March 9, 2021

P.W. van der Does
CEO

R. Prins
CCO

I.J. Uytdehaage
CFO

K. Zaki
COO

M.B. Swart
CLCO

A. Matthey
CTO

“ As we continue to grow the team, we prioritize global events and communication. Virtual tools have made it so much easier to involve and engage with the team across all corners of the world. We’ve been amazed by how the team kept the same focus and commitment throughout the year, and how global the team felt in a time without any travel. ”

Mariëtte, Chief Legal & Compliance Officer

“ It’s unique how Adyen has kept us together. Our team always sends small gifts and plans events. These gestures mean a lot, and I don’t feel like we’ve lost connection with each other. We even schedule meetings specifically to talk about life and personal problems, which helps when working together as you understand each other on a personal level as well. ”

Pedro, Team Lead, Data Infrastructure

Corporate Governance

A solid, transparent, and seamless corporate governance structure is key to Adyen. It is consistent with the Adyen Formula and allows us to focus on growing our business. In setting up and maintaining our governance structure we are guided by Dutch statutory requirements, the Dutch Corporate Governance Code (the Code), European Banking Association (EBA) Guidelines on Internal Governance and international best practices. As Adyen is operating globally, international developments are closely monitored.

Adyen’s governance is reflected in its Articles of Association, the Management Board By-Laws, the Supervisory Board By-Laws, the Terms of Reference of our Supervisory Board committees and certain other internal policies and procedures. These documents are available on Adyen’s website (www.adyen.com/investor-relations/governance).

Management structure

Adyen maintains a two-tier board structure consisting of a Management Board and a Supervisory Board, each of which have specific responsibilities. The Management Board is collectively responsible for the overall management, which includes, among others, developing and executing Adyen’s strategy and risk management policy, and setting and achieving Adyen’s objectives. The Supervisory Board oversees and advises the Management Board, and can give guidance to its general development. Each board is accountable to the General Meeting for the performance of its duties.

Management Board

Composition, powers and function

Per December 31, 2020, Adyen’s Management Board is composed of the following members (the Managing Directors):

Each Managing Director has duties related to their specific area of responsibilities and expertise. In performing their duties, the Managing Directors are required to be guided by the best interests of the Company and the business connected thereto, taking into consideration the interests of the Company’s stakeholders. The Management Board By-Laws set out rules regarding the composition, responsibilities and objectives of the Management Board.
 

Name

Year of birth

Nationality

Gender

Position

Member since

Term

Pieter Willem van der Does

1969

NL

Male

CEO

July 6, 2007

June 2022

Arnout Diederik Schuijff 8

1967

NL

Male

CTO

July 6, 2007

June 2022 

Roelant Prins

1975

NL

Male

CCO

September 9, 2009

June 2022

Ingo Jeroen Uytdehaage

1973

NL

Male

CFO

June 1, 2011

June 2022

Kamran Zaki

1973

US

Male

COO

January 1, 2020

January 2024

Mariëtte Bianca Swart

1980

NL

Female

CLCO

January 1, 2020

January 2024

 

8 Arnout Schuijff decided to step down from the Management Board per January 1, 2021. See further details (including information about Alexander Matthey, CTO) below.

Two new Managing Directors have been appointed per January 1, 2020. Mariëtte Swart took on the position of CLCO (Chief Legal and Compliance Officer), and Kamran Zaki has taken over the position of COO (Chief Operating Officer) from Samuel Halse, who left the Company on March 1, 2020.

As per May 31, 2020, Joop Wijn stepped down as Chief Strategy and Risk Officer (CSRO). Joop has been granted gardening leave as per February 27, 2020. Since then and until April 2021, Ingo Uytdehaage (CFO) has assumed the responsibilities for risk management, while Mariëtte Swart (CLCO) has assumed the responsibilities for security. As per April 1, 2021, all formal responsibilities of the risk management function will be handed over to Mariëtte Swart via Adyen Management Board approval as well as Supervisory Board approval.

Arnout Schuijff stepped down as Chief Technology Officer (CTO) as per January 1, 2021. Alexander Matthey has taken over the position of CTO after approval of shareholders during the Extraordinary General Meeting held on February 12, 2021.

More information on the Management Board can be found at www.adyen.com/about.

Subject to certain statutory exceptions, the Management Board as a whole is authorized to represent the Company. Two Managing Directors acting jointly are also authorized to represent the Company. This reflects the four-eyes principle that Adyen operates across the organization: (at least) two Adyen Managing Directors must sign off on significant business decisions.

Appointment and dismissal

The Articles of Association provide that the Management Board shall consist of two or more members and that the Supervisory Board determines the exact number of Managing Directors after consultation with the Management Board.

Managing Directors will be appointed for a maximum term of four years, after which they may be reappointed for another four years. The General Meeting appoints Managing Directors upon a nomination by the Supervisory Board in accordance with the Articles of Association. The Supervisory Board shall make one or more nominations to the General Meeting in case a Managing Director is to be appointed.

In the event that the Supervisory Board has made a nomination, the resolution of the General Meeting to appoint such nominee shall be adopted by an absolute majority of the votes cast. However, the General Meeting may at its discretion appoint a Managing Director other than upon the nomination of the Supervisory Board, provided that a proposal to appoint such other person has been put on the agenda of the relevant General Meeting. A resolution of the General Meeting to appoint a Managing Director other than in accordance with a nomination of the Supervisory Board, but in accordance with the agenda for such General Meeting, shall require a majority of two thirds of the votes cast representing more than half of the Company's issued share capital.

Adyen is a licensed credit institution, which means that any appointment of a Managing Director must be approved by the Dutch Central Bank (the DNB). In connection with its approval procedure, DNB will test the proposed new Managing Director on integrity and suitability.

The General Meeting may at any time, at the proposal of the Supervisory Board, suspend or remove a Managing Director with a resolution adopted by an absolute majority of votes cast. Should the General Meeting wish to suspend or remove a Managing Director other than in accordance with a proposal of the Supervisory Board, such suspension or dismissal needs to be adopted by a majority of two thirds of the votes cast representing more than half of the Company's issued capital. The Supervisory Board may at any time suspend but not dismiss a Managing Director. A General Meeting must be held within three months after a suspension of a Managing Director has taken effect, in which meeting a resolution must be adopted to either terminate or extend the suspension, provided that in the case that such suspension is not terminated, the suspension does not last longer than three months in aggregate. The suspended Managing Director must be given the opportunity to account for his or her actions at that meeting. If neither such resolution is adopted nor the General Meeting has resolved to dismiss the Managing Director, the suspension will cease after the period of suspension has expired.

Supervisory Board

Composition, powers and function

Adyen’s Supervisory Board is composed of the following members (the Supervisory Directors) as of December 31, 2020:
 

Name

Year of birth

Nationality

Gender

Position

Member since

Term

Piero Overmars

1964

NL

Male

Chairman

January 20, 2017

January 2025

Delfin Rueda Arroyo

1964

ES

Male

Member

January 20, 2017

January 2022

Joep van Beurden

1960

NL

Male

Member

January 20, 2017

January 2024

Pamela Joseph

1959

US

Female

Member

May 21, 2019

May 2023

 

The Supervisory Board supervises the conduct and policies of the Management Board and the general course of affairs of the Company and its business. The Supervisory Board also provides advice to the Management Board. In performing their duties, the Supervisory Directors are required to be guided by the interests of Adyen which includes the interests of the business connected with it, taking into consideration the interests of the Company’s stakeholders. These interests are driven by Adyen’s focus on long-term value creation and its implementation in Adyen’s strategy and culture. The Supervisory Board also has due regard for corporate social responsibility issues that are relevant to the Company. The Supervisory Board By-Laws set out rules regarding the composition, responsibilities and objectives of the Supervisory Board.

On February 12, 2021, Caoimhe Keogan was appointed as Supervisory Director during the Extraordinary General Meeting of shareholders. Following her appointment, she also became a member of the Nomination and Remuneration Committee. More information on her background can be found in the ‘Supervisory Board Report’ below.

Appointment and dismissal

The Articles of Association provide that the Supervisory Board must consist of three or more individuals, with a maximum of five persons. The exact number of Supervisory Directors is to be determined by the Supervisory Board. Only natural persons may be appointed as Supervisory Director.

Supervisory Directors will be appointed for a maximum term of four years, after which they may be reappointed for another four years. Reappointment after eight years shall be motivated in the Supervisory Board Report. After this term, a Supervisory Director may once again be reappointed for a term of two years, which can be extended for another two years. Supervisory Directors are appointed by the General Meeting upon a nomination of the Supervisory Board in accordance with the Articles of Association. The Supervisory Board shall make one or more nominations in case a Supervisory Director is to be appointed.

In the event that the Supervisory Board has made a nomination, the resolution of the General Meeting to appoint such nominee shall be adopted by an absolute majority of the votes cast. However, the General Meeting may at its discretion appoint a Supervisory Director other than upon the nomination of the Supervisory Board, provided that a proposal to appoint such other person has been put on the agenda of the relevant General Meeting. A resolution of the General Meeting to appoint a Supervisory Director other than in accordance with a nomination of the Supervisory Board, but in accordance with the agenda for such General Meeting, shall require a majority of two thirds of the votes cast representing more than half of the Company's issued share capital. The Supervisory Board shall appoint one of its members as chairman and shall appoint one of its members as vice-chairman.

Any appointment of a Supervisory Director must be approved by DNB. In connection with its approval procedure, DNB will test the proposed new Supervisory Director on integrity and suitability.

The General Meeting may at any time, at the proposal of the Supervisory Board, suspend or remove a Supervisory Director with a resolution adopted by an absolute majority of votes cast. Should the General Meeting wish to suspend or remove a Supervisory Director other than in accordance with a proposal of the Supervisory Board, such suspension or dismissal needs to be adopted by a majority of two thirds of the votes cast representing more than half of the Company's issued capital.

Supervisory Board committees

The Supervisory Board has appointed from among its members two permanent committees: a 'Nomination and Remuneration Committee' and an 'Audit Committee' (the Committees). Each of these Committees has a preparatory and/or advisory role to the Supervisory Board. The Committees report their findings to the Supervisory Board, which is ultimately responsible for all decision making. Terms of Reference apply for each Committee, which can be found at www.adyen.com/investor-relations/governance. All Supervisory Directors have a standing invitation to attend meetings of Committees of which they are not a member — these Supervisory Directors attend the meetings of which there are not a member on a regular basis.

Nomination and Remuneration Committee

The Supervisory Board has assigned certain tasks to the Nomination and Remuneration Committee. This Committee drafts proposals for Adyen’s remuneration policy, and it proposes the remuneration of the individual Managing Directors and Supervisory Directors. It analyses developments of the Code and other applicable laws and regulations, and prepares proposals for the Supervisory Board on these subjects. It further advises the Supervisory Board on its duties regarding the selection and appointment of Managing Directors and Supervisory Directors. The Committee is also responsible for carrying out annual assessments of the individual Managing Directors and Supervisory Directors.

Where necessary, the Nomination and Remuneration Committee prepares proposals for (re)appointments and drafts the selection criteria for the (re)appointment of Managing Directors and Supervisory Directors.

The Nomination and Remuneration Committee meets as often as required for a proper functioning of the Committee. The meetings are scheduled semi-annually. The Committee consists of at least three Supervisory Directors. The Committee members are Joep van Beurden (Chairman), Piero Overmars, and Caoimhe Keogan, who became a member of the Nomination and Remuneration Committee as of her appointment on February 12, 2021. The composition and number of members of the Committee provide for sufficient capacity to carry out the supervisory functions. The members of the Committee have the specific skills and experience required to properly carry out their duties.

Adyen’s CEO, CFO and CLCO have a standing invitation for each Committee meeting. The Company’s HR Director also attends the meetings of the Committee.

Audit Committee

The Supervisory Board has assigned certain tasks to the Audit Committee. This Committee supervises the provision of the Company’s financial information. The Committee issues preliminary advice to the Supervisory Board regarding the approval of Adyen’s interim and annual accounts.

It also advises the Supervisory Board on the nomination of the external auditor, who is appointed by the General Meeting. It is in regular contact with the internal audit function and the external auditor, and monitors the auditor’s independence. In addition to advising the Management Board on tax and finance matters, it is also responsible for supervising compliance with relevant legislation and regulations.

The Audit Committee meets as often as required for a proper functioning of the Committee. The meetings are held at least four times a year. The Committee consists of at least three Supervisory Directors. The Committee members are Delfin Rueda Arroyo (Chairman), Piero Overmars and Pamela Joseph. The composition and number of members of the Committee provide for sufficient capacity to carry out the supervisory functions. The members of the Audit Committee have the specific skills and experience required to properly carry out their duties.

Adyen’s CEO, CFO and CLCO have a standing invitation for each Committee meeting. The Company’s internal auditor and external auditor also attend meetings of the Committee.

General Meeting, shares and shareholders

Extraordinary General Meeting

On January 20, 2020, an Extraordinary General Meeting was held to reappoint Joep van Beurden as Supervisory Director. He was reappointed for a period of 4 years, ending January 2024.

General Meetings

Adyen holds a General Meeting of shareholders within six months of the end of the financial year. The agenda for this meeting includes (i) the adoption of the annual accounts, (ii) the content of the Annual Report, (iii) the remuneration policy and remuneration of the Supervisory Board, (iv) the release from liability of the members of the Management Board and the Supervisory Board for their performance during the financial year, (v) the policy of the Company on additions to reserves and on distributions of profits, (vi) any proposal to distribute profits, (vii) the auditor’s report, and (viii) any other proposals placed on the agenda by the Management Board.

General Meetings can be held as often as the Management Board or the Supervisory Board deem necessary. A General Meeting is also convened in case of a decision entailing a significant change in the identity or character of the Company or its business. One or more shareholders representing at least the statutory threshold of 3% of the voting rights may request that the Management Board places items on the agenda of a General Meeting. Such a request must be honored by the Management Board provided that the request is received in writing at least 60 days before the date of such a meeting.

The Annual General Meeting of 2020 was held on May 26, 2020. Aside from the topics of this meeting as listed above, Piero Overmars was re-appointed as Chairman and member of the Supervisory Board for a period of four years, effective January 20, 2021.

Our next annual General Meeting will be held on June 3, 2021.

Voting rights

Each share reflects one vote in the General Meeting. Subject to certain exceptions provided by Dutch law or the Articles of Association, resolutions of the General Meeting are passed by an absolute majority of votes cast. Votes can be cast at the General Meeting either in person or by proxy.

Amendment to the Articles of Association

The General Meeting may pass a resolution to amend the Articles of Association with an absolute majority of the votes cast. A proposal to amend the Articles must be made by the Management Board and must be approved by the Supervisory Board. When a proposal to amend the Articles of Association is made to the General Meeting, the intention to propose such resolution must be stated in the relevant notice convening the General Meeting.

Issue of shares

Shares can only be issued pursuant to a resolution of the General Meeting, unless the General Meeting has designated this authority to the Management Board. During the Annual General Meeting held on May 26, 2020, the General Meeting granted the Management Board – subject to the Supervisory Board’s approval – the authority to issue ordinary shares or to grant rights to subscribe for ordinary shares for a term of 18 months as of May 26, 2020 for up to 10% of the total number of shares issued at the time of the General Meeting for any purpose. Hence, within the aforementioned limit shares can be issued by a decision of the Management Board, which allows the Management Board to react promptly when for example a business opportunity arises which requires such issuance. This decision must be approved by the Supervisory Board. Any issuance exceeding the aforementioned limit needs approval by the General Meeting.

In addition, the General Meeting granted the Management Board – subject to the Supervisory Board’s approval – the authority to restrict or exclude applicable pre-emptive rights when issuing ordinary shares or granting rights to subscribe for ordinary shares for a term of 18 months as of May 26, 2020.

Repurchase of shares

Shares can only be repurchased by Adyen pursuant to a resolution of the General Meeting and subject to any required regulatory approvals. The General Meeting may designate the authority to repurchase shares to the Management Board. During the General Meeting held on May 26, 2020, the shareholders granted the Management Board – subject to the Supervisory Board’s approval – the authority to acquire shares in the capital of the Company, either through purchase on a stock exchange or otherwise. The authority applies for a term of 18 months as of May 26, 2020, under the following conditions: the repurchase (i) may constitute up to 10% of the total number of shares issued at the time of the General Meeting; (ii) provided that the Company will not hold more shares in stock than 10% of the issued share capital; and (iii) at a price not less than the nominal value of the shares and not higher than 110% of the opening price at Euronext Amsterdam at the date of the acquisition. Any repurchases exceeding these limits need approval by the General Meeting.

Issued capital and shareholdings

Adyen’s issued capital and voting rights are notified to the AFM from time to time. This reporting can be found in the register issued capital on www. afm.nl. Shareholders owning 3% or more of the issued capital and/or voting rights of a listed company must report this to the Dutch Authority for the Financial Markets (AFM) as soon as the threshold is reached or exceeded. This reporting by shareholders can be found in the ‘Register of substantial holdings and gross short positions' at www.afm.nl.

Report of the Supervisory Board

The Supervisory Board is pleased to present its report for 2020 — a challenging year for society and many businesses due to the COVID-19 pandemic. In 2020, the Adyen platform processed €303.6 billion, growing 27% year-on-year. Adyen has proven resilient due to the further diversification of its merchant base across geographies and verticals, despite the difficult macroeconomic environment continuing to be a disrupting factor to many of its merchants. In 2020, Adyen was able to grow and onboard the team from a distance, totaling 1,747 FTE as of December 31, 2020.

This report includes a more specific description of the Supervisory Board’s activities during the financial year 2020 and other relevant information on its functioning.

Composition 

Adyen has established a two-tier board structure consisting of the Management Board and the Supervisory Board, as explained in the section ‘Governance’ of this Annual Report. The Supervisory Board functions as a separate corporate body and is fully independent from the Management Board. The composition of the Supervisory Board is such that members are able to act independently of one another, the Management Board and any particular interest and allows for properly carrying out all Supervisory Board tasks, including staffing of committees. The Supervisory Board is capable of assessing the broad outline of the overall policy of the Company and of the most important risks incurred. The background, knowledge and expertise of each Supervisory Director adds to the Board’s effectiveness, enabling it to fulfil its duties in the Company’s best interest.

As of December 31, 2020, the Supervisory Board is composed of four members — Piero Overmars (Chairman), Delfin Rueda Arroyo, Joep van Beurden and Pamela Joseph. On February 12, 2021, Caoimhe Keogan was appointed as Adyen’s fifth Supervisory Director.

Piero Overmars serves as a member of the Supervisory Boards of Amsterdam UMC and Dura Vermeer Groep NV. Previously, he served as a member of the Management Board of Randstad Beheer B.V. and was Chairman of the Supervisory Boards of Nutreco and SNS Reaal. He also served as President of the Nyenrode Foundation, following an extensive career at ABN Amro that culminated in a Board Member position. Piero Overmars holds an MBA from Nyenrode Business University.

Delfin Rueda Arroyo serves as CFO and Vice-Chair of the Executive Board and Management Board of NN Group, and is a member of the Supervisory Board of Allfunds Bank S.A.U. Previously, he was CFO and member of the Management Board of ING Insurance, following an extensive career at Andersen Consulting, UBS, JP Morgan and Atradius. Delfin Rueda Arroyo holds a master degree in Economic Analysis and Quantitative Economics from the Complutense University of Madrid (Spain). He also holds an MBA from the Wharton School, University of Pennsylvania (USA).

Joep van Beurden is CEO and member of the Executive Board of Kendrion and member of the Supervisory Board of the Twente University of Technology (the Netherlands). In additions to these positions, Joep serves as a member of the Advisory Board of PlantLab. Previously, he served as CEO of CSR Plc. (UK) and NexWave Inc. (France), following a career at Royal Dutch Shell, McKinsey, Philips and Canesta Inc. Joep van Beurden holds a degree in Applied Physics from Twente University of Technology.

Pamela Joseph is CEO and member of the Management Board of Clearent, holds a position as Chair of the Board of Directors of TransUnion and is a non-executive member in the Board of Directors of Paychex. In addition to these positions, Pamela serves as Operating Partner at Advent International. Previously, she served U.S. Bank corp. Payment Services as a Vice-Chairman, and prior to that Elavon as President and COO. She started her career at Wells Fargo Bank and VISA International. She holds a degree in Business Administration from the University of Illinois (USA).

Caoimhe Keogan serves as CPO (Chief People Officer) for Aveva Group plc. Previously, she served as Chief People Officer for Moneysupermarket Group plc, and as SVP People, Places & Community at SoundCloud. Prior to these roles, she was Senior HR Business Partner at Google. Caoimhe Keogan holds a degree in Occupational Psychology from Queen’s University Belfast (UK).

Supervisory Board meetings 

The Supervisory Board convened for eight meetings, of which two were held at the offices of Adyen, and six were held via videoconferencing due to the COVID-19 pandemic. The meetings were held in the months February, March, April, May, October and December. Members of the Management Board also attended these Supervisory Board meetings.

In 2020, Pamela Joseph was absent at one Supervisory Board meeting. Her attendance rate was therefore 83%. The attendance rate of the other Supervisory Directors was 100%.

The Supervisory Board meets at a minimum each half year before the publication of the half-yearly results, and discusses these results with the Management Board, as well as the draft press release and auditor’s report on the procedures performed. These documents are first discussed in the Audit Committee meeting prior to the Supervisory Board meeting.

In addition to the regular agenda for the Supervisory Board meeting – which includes topics such as risk management, business performance, strategic updates and the development of the financials – the Supervisory Board discussed diversity, culture, social responsibility and sustainability, the accounting error as published in the Q3 Trading Update, compliance with relevant legislations, relations with regulators, brand positioning and the preparation and evaluation of the Annual General Meeting of Shareholders. Furthermore, deep dive session on specific topics relevant to Adyen’s business were held, such as Issuing, Customer Relations and Operational Excellence.

The Supervisory Board also discussed Adyen’s strategy including its workstreams and reviewed proposed annual and other financial reporting. In 2020, the Supervisory Directors completed trainings on data privacy, security and compliance.

The Company Secretary attended all Supervisory Board meetings and Committee meetings, and acted as the secretary of the Supervisory Board and its committees. The Chairman of the Supervisory Board met regularly during the year with the CEO and other Managing Directors to discuss the performance of the company and projects as part of executing the strategy. The Supervisory Directors also interacted individually and collectively with Managing Directors outside the formal Supervisory Board meetings.

In 2020, there were no conflicts of interest between Adyen and Managing Directors or Supervisory Directors.

Committee reporting

The Supervisory Board has established two Committees, as further explained in the chapter ‘Governance’: The Nomination and Remuneration Committee and the Audit Committee. The main considerations and conclusions of each Committee were shared with the full Supervisory Board.

Nomination and Remuneration Committee 

The duties and composition of the Nomination and Remuneration Committee are described in the section ‘Governance’ of this Annual Report.

The Nomination and Remuneration Committee convened twice in 2020. All Committee members attended all meetings. The Committee has reviewed the composition of the Supervisory Board and Management Board. The Committee monitored and analyzed developments of the Code and applicable laws and regulations in relation to remuneration policies, reviewed Adyen’s Remuneration Policy and its execution for compliance with the Code and the Dutch Act on Remuneration Policies Financial Undertakings (Wet beloningsbeleid financiële ondernemingen) as implemented in the Dutch Financial Supervision Act (Wet op het financieel toezicht). For more information on the Remuneration Policy, please refer to the section ‘Remuneration Report’ of this Annual Report.

The Nomination and Remuneration Committee leads the evaluation of the performance of the individual Managing Directors and Supervisory Directors. During the evaluation the Committee took note of the Managing Directors’ views on their own remuneration. The Committee drafted proposals to the Supervisory Board for the remuneration of the individual Managing Directors and Supervisory Directors. The Nomination and Remuneration Committee has drawn up a plan for the succession of the Managing Directors and the Supervisory Directors.

In 2020, the remuneration policy for the Management Board and Supervisory Board was reviewed to ensure compliance with the EU’s revised Shareholders Rights Directive (SRD2) following its implementation in Dutch law on December 1, 2019. No substantive changes were included in the revised remuneration policy — the changes included adding an explanation to the level of support in society and the external environment the Company operates in, internal remuneration ratios and the wages and employment conditions of the employees of the Company. The revised remuneration policy considers the relevant statutory provisions and competitive market practices. The remuneration policy was adopted by the Annual General Meeting of Shareholders on May 26, 2020.

Audit Committee 

The duties and composition of the Audit Committee are described in the section ‘Governance’ of this Annual Report.

In 2020, the Audit Committee convened for four regular meetings. The Committee discussed the quarterly results and the financial statements. Furthermore, the Committee discussed reports from internal and external auditors, reviewed the Annual Report, the H1 and H2 Shareholder Letter including the relevant press releases and the Q1 2020 and Q3 2020 Trading Updates, and discussed the overall internal control environment. The Committee also discussed other topics including the accounting adjustment as published in the Q3 2020 Trading Update, compliance, governance, ICLAAP, SREP, tax, information security, legal, risk, merchants’ potential liability, and treasury. The members of the Committee met with the internal and external auditors outside the Committee meetings to ensure all relevant information was discussed. The Committee evaluated the performance and remuneration of the external auditor. All Committee members, the internal auditor and the external auditor attended all meetings held in 2020.

Diversity

The Supervisory Board values and promotes diversity, both within the Supervisory Board and the Management Board, as within Adyen in general. Differences in amongst others educational background, nationality, age, race, gender, experiences and beliefs are vital to the business, enabling the Boards and the Company to look at issues and opportunities differently and to respond to challenges in new ways. Diversity is a key driver for innovation and allows Adyen to attract and retain the most talented and smart people. This standpoint has also been embedded in the Adyen Inclusion Policy — please refer to the ‘People and culture’ section of this Annual Report.

The Supervisory Board aims for a balance in its composition with respect to gender, nationality, age, experience and affinity with the nature and culture of the business of Adyen in all countries where it is active. In line with the Company’s Inclusion Policy and the adoption of the legislative proposal introducing stricter gender diversity measures for Dutch listed (in line with the SER’s guideline on Supervisory Board composition), Caoimhe Keogan has been appointed as Supervisory Director in the Extraordinary General Meeting which was held on February 12, 2021. The Supervisory Board now consists of 40% women.

Independence 

Throughout the year, three Supervisory Directors – Piero Overmars (Chairman), Delfin Rueda, and Pamela Joseph – were independent from the Company within the meaning of Best Practice Provision 2.1.7, 2.1.8 and 2.1.9 of the Code. One Supervisory Board Director, Joep van Beurden, has acted as an advisor to the Company in the years preceding his appointment in 2017, and is therefore considered not to be independent within the meaning of Best Practice Provision 2.1.8 (iii) of the Code. The Supervisory Board is, as a body, independent as defined in the Code.

Performance assessment

In 2020, the Supervisory Board has assessed its performance and composition and that of its committees. This assessment was facilitated by Focus Orange, an external advisory firm, and focused on organizational learning. In preparation, Focus Orange conducted interviews with each member of the Supervisory Board, the CEO, the CFO and the CLCO, as well as the Company Secretary. Focus Orange included the (anonymized) individual observations with regards to the functioning of the Supervisory Board and its relationship with the Management Board in its evaluation report. The outcomes of the assessment have been discussed with the Supervisory Board and the Management Board. The evaluation concludes, among others, that the relationship between the Supervisory Board and the Management Board can be described as transparent and cooperative, and the mix between formal and informal Supervisory Board relations and interactions is balanced and as such has proven to be instrumental to effective functioning of the Supervisory Board. The functioning of the Supervisory Board fully complies with the relevant principles and best practices as set out in the Dutch Corporate Governance Code. Following the positive assessment of the Supervisory Board and as part of continuous improvement, points for follow up are proposed, and include:

  • The Supervisory Board aims to maintain the balance between the Supervisory Board’s formal and informal processes.
  • The Supervisory Board would like to convene in additional bilateral discussions and meetings with fellow Supervisory Directors and the Supervisory Board as a body, aside from the regular Supervisory Board meetings.

Financial statements

The Financial Statements for the year ended December 31, 2020, were prepared by the Management Board and approved by the Supervisory Board. The Report of the Independent Auditor, PricewaterhouseCoopers Accountants N.V. (PwC) is included in the Independent Auditor’s Report in the ‘Other Information’ section of the Financial Statements. The Supervisory Board recommends that the General Meeting adopts these Financial Statements.

Appreciation

Looking back at 2020, the Supervisory Board would like to thank all Adyen employees for their contribution during a challenging year in many aspects. The Supervisory Board is proud to see the team was able to shift towards a working-from-home environment — proving highly flexible during the global pandemic, while continuing to serve the interests of merchants, shareholders and other stakeholders of Adyen.

Compliance with the Dutch Corporate Governance Code

Adyen acknowledges the importance of good corporate governance. The Company agrees with the general approach and with the majority of the provisions of the Code9. As such, it fully complies with the Code with the exception of:

Best practice provision 2.1.5 of the Code, which provides that the Supervisory Board should draw up a diversity policy for the composition of the Management Board and Supervisory Board, addressing concrete targets relating to diversity, and best practice provision 2.1.6 of the Code, which provides that the corporate governance statement should explain the diversity policy and the way it is implemented in practice. Adyen deviates from best practices 2.1.5 and 2.1.6 as no concrete targets were set on diversity for 2020. Concrete goals and targets will be set in 2021 to build a team with Diversity, Equity and Inclusion at its core — Adyen values and promotes diversity within its Management and Supervisory Board, and its wider organization, as reflected in this Annual Report. In 2020, the Diversity, Equity, and Inclusion (DEI) committee was founded, which helps with identifying key areas to improve from a DEI perspective. With several initiatives aimed at HR processes and unconscious bias trainings, Adyen actively steers on a balanced workforce in relation to Diversity, Equity and Inclusion, with current metrics at 34% female team members and 29% of team lead positions filled up by women, and 16% in the Management Board, respectively. In line with the Company’s Inclusion Policy and the adoption of the legislative proposal introducing stricter gender diversity measures for Dutch listed (in line with the SER’s guideline on Supervisory Board composition), Caoimhe Keogan is appointed as Supervisory Director on February 12, 2021. The Supervisory Board now consists of 40% women.

Best practice provision 4.3.3 of the Code, which provides that the general meeting of shareholders of a company not having statutory two-tier status (structuurregime) may pass a resolution to cancel the binding nature of a nomination for the appointment of a member of the Management Board or of the Supervisory Board and/or a resolution to dismiss a member of the Management Board or of the Supervisory Board by an absolute majority of the votes cast. It may be provided that this majority should represent a given proportion of the issued capital, which proportion may not exceed one-third. However, Adyen applies a higher proportion of one-half, which follows from a previous arrangement with Adyen’s shareholders before its IPO in 2018..

9 For the full version of the Dutch Corporate Governance Code 2016 please refer to www.mccg.nl

Remuneration Report

This remuneration report explains how the remuneration policy for the Management Board and Supervisory Board as approved by the General Meeting in 2020 was put into practice in 2020. Part of this is an overview of the remuneration awarded or due to individual Managing Directors.

Adyen remuneration policy 

The objective of our remuneration policy is to recruit and retain the best talent worldwide by offering competitive payment structures that take account of our strategy to focus on our merchants’ growth, changing the payment landscape and having fun while doing so.

Our remuneration policies are consistent with, and promote, sound and effective risk management and are always aligned with our strategy and the Adyen Formula to create long-term value for our company and our merchants. As such, our remuneration policy does not contain incentives that exclusively benefit staff members themselves or encourage improper risk-taking.

The remuneration policy of Adyen is published on the Company’s website.

There have been no deviations from the remuneration policy or the procedure for its implementation in the financial year 2020.

Equal pay

We value all perspectives, so we see no reason to reward one more than the other — same role, same pay. We are committed to ensuring equal pay, therefore this is included in our annual equal pay audit, to safeguard and uphold this standard.

Remuneration package

The size of an individual remuneration package is based on the scope of responsibilities, the employee’s experience and performance, and the local market circumstances, which varies depending on country. The total remuneration of individual staff members, including the Managing and Supervisory Directors, is determined by considering the long-term strategy of Adyen and aimed at ensuring a sustainable and durable company for stakeholders.

The remuneration of the Management Board is reviewed annually and any adjustment of the remuneration will be in accordance with the remuneration policy. Remuneration decisions such as pay increases will take account of the individual Managing Directors delivering on specific areas of focus, including sustainability and the Adyen Formula, as well as company performance.

A remuneration package may consist of a base salary, share-related remuneration, pension entitlements and other emoluments. For certain employees a remuneration package may also include variable remuneration.

Adyen has the right pay mix in place to mitigate short-term orientation and contribute to the long-term performance of the company. This is specifically achieved by awarding staff members, including the Management Board, with (long-term) share-related remuneration. The purpose of the share-based payments is to put staff members in a financial ownership-like position where shares are concerned and for them to obtain an economic interest in the pursuit of Adyen’s long-term objectives such as sustainable growth, development, profitability, and financial success of Adyen. 

Variable remuneration

Adyen observes the laws and regulations applicable to the company, which includes the remuneration regulations as provided in the Act on Remuneration policy Financial Undertakings (Wet beloningsbeleid financiële ondernemingen) and the EBA Guidelines on Sound Remuneration Policies (EBA Guidelines) (the Remuneration Regulations). Adyen's remuneration policy is in line with the Remuneration Regulations.

Certain employees may be rewarded with variable remuneration. Variable remuneration, if awarded, will at all times not exceed the fixed to variable remuneration ratios as provided in the Remuneration Regulations.

In the financial year 2020, Adyen has not rewarded any variable remuneration to the members of the Management Board or any other staff identified as “Identified Staff” (staff that is considered to have a material impact on the risk profile of Adyen). Adyen does not award variable remuneration to the Supervisory Directors. In accordance with the Remuneration Regulations, variable remuneration will be subject to hold back and claw back instruments. As no variable remuneration has been awarded to the members of the Management Board or the Supervisory Board in the financial year 2020, no variable remuneration has been adjusted or clawed back in accordance with these instruments.

The total global company-wide amount of variable remuneration awarded over 2020 was EUR 17,092,364 (2019: EUR 16,661,986) compared to total staff expenses of EUR 180,013,967 (2019: EUR 122,446,852).

Identified staff

In 2020 there were 21 employees (2019: 21) identified as “Identified Staff”. None of these employees was entitled to a performance related bonus in 2020. As such Adyen avoids short-term focus and incentives for all staff that is considered to have a material impact on our business, including the Managing Directors, thereby contributing to the long-term performance and value creation of the company.

Total annual remuneration

In 2020 there were no employees to whom total annual remuneration (including employer pension contributions and any severance payments made) of EUR 1 million or more was awarded.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee consists of three (3) Supervisory Directors as determined by the Supervisory Board. The duties of the Nomination and Remuneration Committee are described in the ‘Governance’ section of this Annual Report.

The current remuneration policy for the Management Board and the Supervisory Board and remuneration of the Managing Directors and fees for the members of the Supervisory Board was adopted at the shareholders meeting on May 26, 2020.

Remuneration for the Management Board

The remuneration policy that applies to the Managing Directors is in line with the remuneration policy that applies to all staff. Adyen’s Management Board remuneration is consistent with and promotes a sound and effective risk management and has always been aligned with Adyen’s strategy to create long-term value for its merchants. It is thus set up with the aim to contribute to Adyen's long-term goals. As such, the remuneration policy does not contain incentives that exclusively benefit Managing Directors themselves.

The remuneration of the Managing Directors is determined by the Supervisory Board with due observance of the remuneration policy as adopted by the General Meeting.

The Managing Directors provide the Nomination and Remuneration Committee with their individual views with regard to the amount and structure of their own remuneration. In 2020 base salaries of the Managing Directors were increased with 8%, in line with the average salary increase of an Adyen employee in 2019.

The Management Board’s remuneration is compared to AEX companies. The Management Board remuneration is below the median of the benchmark. This discrepancy is accepted for the current Managing Directors. To attract future Managing Directors, the remuneration package for new Managing Directors may be adjusted to the market.

In line with the revised Dutch Corporate Governance Code, Adyen performed a scenario analysis and back-test on Management Board remuneration. All scenarios resulted in the same outcome as the remuneration of the Managing Directors is not linked to variable remuneration elements. The internal ratio of the Managing Directors’ remuneration and that of a representative reference group was determined. For this ratio, Adyen deems most relevant the total direct compensation of the CEO compared to the average total direct compensation of all Adyen employees worldwide. For the CEO a ratio of 7:1 applies (2019: [7:1]). For the other Managing Directors, a ratio of 6:1 applies (2019: [5:1]).

Remuneration Management Board

The total remuneration received by the Management Board in 2020 amounted to EUR 3,546,977.


 

2020

2019

2018

Salaries and short-term employee benefits

3,252,768

2,773,786

2,962,042 

Share-based payments

104,166

209,069

214,101 

Post-employment benefits

96,278

82,335

32,661 

Total

3,546,977

3,065,190

3,208,804 

 

As Adyen N.V. became a listed company in June 2018, management remuneration related to years 2018, 2019 and 2020 are disclosed in this report instead of five years required by Dutch Civil Code.

The table below provides an overview of the remuneration of each individual Managing Director for the financial year 2020, 2019 and 2018:


2020 (in EUR)

Base salary 12

Pension and social security contributions

Share-based compensation

Variable income

Total Remuneration 2020 

Pieter van der Does

596,796

15,968

-

-

612,764

Arnout Schuijff 10

291,589

15,968

-

-

307,557

Roelant Prins

484,822

15,968

-

-

500,790

Ingo Uytdehaage

561,804

15,968

-

-

577,772

Sam Halse

65,234

821

-

-

66,055

Joop Wijn

248,777

6,653

87,112 13

-

342,542

Kamran Zaki

656,000

15,617

-

-

671,617

Mariëtte Swart 11

347,746

15,968

104,166 14

-

467,880

Total

3,252,768

102,931

191,278

-

3,546,977

Sam Halse left Adyen per February 29, 2020. Joop Wijn left Adyen per May 31, 2020.


2019 (in EUR)

Base salary 12

Pension and social security contributions

Share-based compensation 13 

Variable income 

Total Remuneration 2019 

Pieter van der Does

 553,310 

 16,467 

 - 

 - 

569,777

Arnout Schuijff 10

 270,474 

 16,467 

 - 

 - 

286,941

Roelant Prins

 449,630 

16,467

 - 

 - 

466,097

Ingo Uytdehaage

 520,910 

 16,467

 - 

 - 

537,377

Sam Halse

 426,152 

 - 

 - 

 - 

426,152

Joop Wijn

553,310 

 16,467

 209,069 

 - 

778,846

Total

2,773,786

82,335

209,069

 - 

3,065,190

10 Part-time percentage 60%

11 Part-time percentage 90%

12 This amount includes allowances.

13 This amount equals the total expenses recognized by Adyen during the financial year in relation to share-based compensation, based on the vesting schedule for options granted and the fair value of the option at grant date, as further detailed in the Financial Statements.

14 Share-based fixed remuneration awarded in depository receipts

15 Variable income in cash relates to performance in the preceding calendar year.

Due to an administrative mistake, both the 2020 pension contribution and 8% increase of the Management Board remuneration over 2019 were not included and thus reported incorrectly in the 2019 Annual Report. The correct amounts are shown in the table above.


2018 (in EUR)

Base salary 12

Pension and social security contributions

Share-based compensation 13

Variable income in cash 15

Total Remuneration 2018 

Pieter van der Does

512,305 

 7,426 

85,000 

604,731 

Arnout Schuijff 10

250,602 

 3,229 

 41,400 

295,231 

Roelant Prins

416,305 

 6,815 

69,000 

492,120 

Ingo Uytdehaage

482,510 

 6,974 

80,000 

569,484 

Sam Halse

403,252 

 5,032 

52,491 

460,775 

Joop Wijn

512,510 

 8,216 

209,069 

56,667 

786,462 

Total

2,577,484 

 32,661 

214,101 

384,558 

3,208,804 

Variable remuneration

As of 2018, Adyen does not award variable remuneration to the Managing Directors.

Employee stock options awarded in previous years

The table below provides an overview of the options per December 31, 2020 that have been granted to Managing Directors as part of their share-based compensation:


 2020

Grant date

Number of Options Vested

Number of Options Non-Vested

Number of Options expected to Vest

Pieter van der Does

-

-

-

-

Arnout Schuijff

 

Roelant Prins

2014

24,133

Ingo Uytdehaage

2014

40,633

Kamran Zaki

2014

80,391

Mariëtte Swart

2015

4,000


2019

Grant date

Number of Options Vested

Number of Options Non-Vested

Number of Options expected to Vest

Pieter van der Does

-

-

-

-

Arnout Schuijff

 

Roelant Prins

2014

48,266

Ingo Uytdehaage

2014

80,632

Sam Halse

2015

17,829

Joop Wijn 

2017

20,154

6,719

6,719


2018

Grant date

Number of Options Vested

Number of Options Non-Vested

Number of Options expected to Vest

Pieter van der Does

-

-

-

-

Arnout Schuijff

 

Roelant Prins

2014

72,378

  -   

  -   

Ingo Uytdehaage

2014

120,632

  -   

  -   

Sam Halse

2014

24,072

  -   

  -   

 

2015

24,727

  -   

  -   

Joop Wijn 

2017

26,875

37,625

37,625

The stock options held by Ingo Uytdehaage and Roelant Prins are due to expire December 1, 2021. Ingo Uytdehaage and Roelant Prins have instructed ABN Amro to gradually sell the remaining stock options in the period running from July 1, 2019 (i.e. after expiry of the Post-IPO Shareholders’ lock-up period) until December 1, 2021. The stock options shall be sold on a monthly basis, in portions equally divided over the 3 (three) calendar years, with due observation of a 15% daily trading-cap. The stock options held by Kamran Zaki are due to expire January 1, 2022. Kamran has instructed ABN Amro to sell to cover in order to exercise and hold the remainder of his stock option portfolio. As per the instruction, the stock options shall be sold at any given market-price. Upon each sale, appropriate notifications shall be made via the AFM register.

Share and Depositary Receipt holdings

The table below reflects the equity position directly or indirectly held by the Managing Directors as per December 31, 2020, 2019 and 2018:


 

Shareholdings (aggregate number of Shares and/or Depositary Receipts

 

2020

2019

2018

Pieter van der Does

1,022,539

1,202,987

1,415,278

Arnout Schuijff

1,371,655

1,613,589

1,898,339

Roelant Prins

287,309

 338,011

 338,011

Ingo Uytdehaage

195,182

229,570

229,570

Sam Halse

N/A

-

-

Joop Wijn 16

8,061

2,156

2,156

Kamran Zaki

21,440

 

 

Mariëtte Swart

52

 

 

16 2020 vesting until May 31, 2020 (termination date)

Pension

As from January 2017, all Dutch Managing Directors participate in the Collective Defined Contribution (CDC) pension plan, with respect to their salary up to EUR 110,111 gross per year for 2020 (2019: EUR 107,593). On behalf of each Managing Director, Adyen pays a contribution of 4% of the pensionable salary – being 12 times the monthly fixed salary plus holiday pay up to the fiscally allowed maximum minus a deductible – for the accrual of old age pension benefits as well as the administration costs. If and as far as fiscally allowed, each Managing Director has the possibility to make additional contributions in order to accrue additional pension capital.

Kamran Zaki participates in a 401k retirement plan in the US, for which Adyen provides an employer match of up to 2%.

Insurance

All Managing Directors are insured under an insurance policy taken out by Adyen against damages resulting from their conduct when acting in their capacities as directors.

All Dutch Managing Directors are insured for the risk of death and disability, for which Adyen pays the insurance premiums.

Service and Severance Agreements

All Managing Directors have entered into a service agreement (overeenkomst van opdracht) with Adyen N.V. effective as of the date of the listing of Adyen, whereby Kamran Zaki is currently assigned to Adyen Inc. The terms and conditions of these service agreements have been aligned with the Dutch Corporate Governance Code. The service agreements will be entered into for a term of 4 years. The service agreements provide for a severance of one annual base salary if the Managing Director is not re-appointed or otherwise terminated by Adyen (for any reason other than urgent cause within the meaning of article 7:678 of the Dutch Civil Code (dringende reden)), in accordance with the Dutch Corporate Governance Code. In the financial year 2020, no severance payment has been paid to any Managing Director.

Loans

No loans, advance payments and guarantees have been granted to or on behalf of the Managing Directors.

The below table shows the comparative remuneration and company performance over the last two reported financial years:


Annual change

Director's remuneration

2020 vs 2019

2019 vs 2018

Remark

 

Pieter van der Does

42,987

(34,954)

 

Arnout Schuijff

20,616

(8,290)

 

Roelant Prins

34,693

(26,023)

 

Ingo Uytdehaage

40,395

(32,107)

 

Kamran Zaki

671,617

-

17

Mariëtte Swart

467,880

-

17

 

 

 

 

Company Performance (in EUR ‘000)

 

 

 

Net revenues

149,900

160,855

 

EBITDA

82,245

110,464

 

 

 

 

 

Average remuneration comparative on FTE basis (in EUR)

 

 

 

Wages and Salaries / FTE

1,702.66

1,688.69

 

17 Became Managing Directors as per 2020

Remuneration Supervisory Board

The total remuneration received by the Supervisory Board in 2020 amounted to EUR 292,705 (2019: EUR 240,000). The table below provides an overview of the remuneration of the Supervisory Board for the financial year 2018, 2019 and 2020. In addition to the remuneration, expenses incurred by the Supervisory Directors in the performance of their duties are reimbursed in full:


 

2020

2019

2018

Salaries and short-term employee benefits

292,705

 240,000 

176,000 

Share-based payments

-

-

5,000

Total

292,705

240,000

 181,000

The table below provides an overview of the remuneration of each Supervisory Director for the financial year 2019 and 2020. In addition to the remuneration, expenses incurred by the members of the Supervisory Board in the performance of their duties are reimbursed in full.


 

2020

2019

(in EUR)

Remuner-
ation
in cash

Share-
based compen-sation

Total
Remune-ration 

Remune-ration
in cash

Share-
based compen-sation

Total
Remune-ration 

Piero Overmars

90,200

90,200

80,000 

80,000 

Delfin Rueda Arroyo

69,000

69,000

60,000 

60,000 

Joep van Beurden

66,000

 - 

66,000

60,000 

 - 

60,000 

Pamela Joseph

67,505

67,505

40,000 

40,000 

Total

292,705

292,705

240,000 

240,000 

 

Share-based compensation

The table below provides an overview of the aggregate number of Shares and/or Depositary Receipts as per December 31, 2020, 2019 and 2018. These have been granted to Supervisory Directors as part of their share-based compensation before Adyen became a listed company.


 

Shareholdings (aggregate number of Shares and/or Depositary Receipts)

 

2020

2019

2018

Piero Overmars

 1,094 

 1,094 

 1,094 

Delfin Rueda Arroyo

Joep van Beurden*

1,719 

1,719 

1,719 

Pamela Joseph

-

-

-

As the Supervisory Directors are not allowed to be remunerated via share-based compensation after the listing of Adyen in 2018, the annual remuneration per Supervisory Directors with unvested Options that expired as per June 1, 2018 was increased by €30,000 to €80,000 for Piero Overmars and to €60,000 for Joep van Beurden per year starting at that date.

Additionally, Piero Overmars and Joep van Beurden committed not to sell, transfer or otherwise dispose of any Shares and/or Depositary Receipts, during the term of their appointment.

Insurance

The Supervisory Directors of Adyen are insured under an insurance policy taken out by Adyen against damages resulting from their conduct when acting in their capacities as supervisory directors.

Loans

No loans, advance payments and guarantees have been granted to or on behalf of the Supervisory Directors

“ I work in my daughter’s old bedroom where I’ve hung frames with positive affirmations that remind us good things never come from comfort zones. Even though this year had its difficulties, it is great to work at a company where people share that mind set and make the best out of it, as a team. ”

Tess, VP of Account Management

Financial Statements & Other Information

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