Transparency andDisclosure Report
2020
Pillar III Report
Adyen N.V.

Adyen Transparency and Disclosure Report 2020|Page 1

Contents
Concise risk statement .......................................................................................... 3
Introduction.............................................................................................................. 4
Scope of consolidation .......................................................................................................................... 4

Risk management framework and strategy ....................................................... 8
Risk management objectives and policies ......................................................................................... 8Three lines of defense ..................................................................................................................... 8
Strategy and objective setting ....................................................................................................... 8
Risk appetite ..................................................................................................................................... 8
Risk assessment and control activities ........................................................................................ 8
Review and revision ......................................................................................................................... 9
Governance arrangements ................................................................................................................... 9
Board composition and directorships.......................................................................................... 9
Management Board......................................................................................................................... 9
Supervisory Board ......................................................................................................................... 10
Board recruitment and diversity policy ...................................................................................... 11
Risk management committees.................................................................................................... 11

Disclosures on Pillar I .......................................................................................... 12
Capital..................................................................................................................................................... 12
Capital requirements ........................................................................................................................... 13
Credit risk ........................................................................................................................................ 13
Market risk....................................................................................................................................... 17
Operational risk .............................................................................................................................. 17Countercyclical capital buffer............................................................................................................. 19
Leverage ................................................................................................................................................. 19
Leverage ratio ................................................................................................................................. 19

Disclosures on Pillar II ......................................................................................... 21
Internal capital adequacy assessment process .............................................................................. 21
Interest rate risk in the banking book ................................................................................................ 21

Remuneration ....................................................................................................... 22
Adyen’s remuneration policy .............................................................................................................. 22
Remuneration principles ..................................................................................................................... 22
Remuneration package................................................................................................................. 22
Variable remuneration ......................................................................................................................... 22
Identified staff........................................................................................................................................ 22
Remuneration for the Management Board ............................................................................... 23
Nomination and Remuneration Committee .............................................................................. 23
Remuneration for the Management Board ............................................................................... 23

Annexes ................................................................................................................. 24
Annex I Own funds................................................................................................................................ 25
Annex II Countercyclical capital buffer ............................................................................................. 27
Annex III Leverage................................................................................................................................. 28

2

Concise risk statement
The Adyen DNA
We are a technology company redefining payments. We work together with over 1,747 people spread across 24 offices
around the world. To us, “winning is more important than ego” – we value people for their skills and what they bring to
the company, not for their titles. We work with cross-functional teams and empower them to make their own decisions.
We call these workstreams. We think function beats form, and our effort toward our goal of helping our merchants growis singular.
Description of Business Activities
The Adyen platform integrates the full payments stack (gateway, risk management, processing and acquiring) with acommon back-end infrastructure for authorizing payments across its merchants' sales channels as well as offeringfeature-rich APIs. This integrated platform allows for the delivery of products and services on a global scale with local
capabilities, directly connecting merchants to Visa, Mastercard and many other payment methods, and across sales
channels, including its merchants' online, mobile and POS channels, while providing a high level of reliability, security,
performance and data insights. During 2020 Adyen maintained consolidation in the many payment processing options,and with the roll out of Sales Day Payout and introduction of new products such as Adyen Issuing, it keeps searching forways to improve services provided to its merchants.
Risk management
Adyen recognizes that there are risks associated with achieving its strategy and business objectives. Managing theserisks1 is an essential part of doing business. Adyen has adopted a uniform and systematic company-wide 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.
CapitalThe capital requirements comprise credit risk, operational risk and market risk. Adyen applies the standardized
approaches to determine how much capital it is required to hold for credit and market and applies the Basic Indicator
Approach for operational risk. Resulting from Adyen’s business model, operational risk is the largest risk category. The
total risk exposure amount at 31 December 2020 was EUR 2.44 billion.
The capital requirements need to be covered by sufficient own funds. Adyen’s own funds consist fully of CET1 capital,
which was EUR 800 million at 31 December 2020. This resulted in a CET1 capital ratio of 32.8%. Upon formal
confirmation, Adyen’s net profits for the year (EUR 261 million) may be included in its CET1 calculation. At that point,
Adyen’s CET1 capital becomes EUR 1,061 million, resulting in a CET1 capital ratio of 43.5%.
Leverage
Adyen’s leverage ratio is 19.7%, which is above the currently non-binding requirement of 3%. Once Adyen’s 2020 net
profits are included in its CET1 capital, the leverage ratio becomes 26.2%
Liquidity coverage ratio
The liquidity coverage ratio of Adyen was 4,344% at the end of 2020, well above the regulatory threshold of 100%.
Declaration Management Board
The Management Board of Adyen declares that the risk management arrangements of Adyen are adequate with regards
to Adyen’s risk profile and strategy. The development of Adyen’s risk profile is in line with the risk tolerances set by theManagement Board.

1 Art. 435(1)(e)(f) CRR.

Adyen Transparency and Disclosure Report 2020|Page 3

Introduction
This document presents the consolidated Transparency and Disclosure Report 2020 (Pillar III report) of Adyen N.V.
(Adyen) as per 31 December 2020.2
As a less significant institution3 based in the European Union, Adyen operates under the Capital Requirements Directive
IV (CRD IV) and Capital Requirements Regulation (CRR). This framework is based on a three-pillars concept:•
Pillar I – Minimum capital requirements•
Pillar II – Supervisory review•
Pillar III – Market disclosures
In Pillar I, the capital requirements are calculated on the basis of three categories of risk that an institution faces: credit
risk, market risk and operational risk. These capital requirements need to be covered by sufficient own funds. Adyen
uses the standardized approach for credit and market risk categories, and the Basic Indicator Approach for operationalrisk to determine its capital requirements.
In Pillar II, the supervisor reviews the viability of Adyen and its ability to meet the reporting requirements. This Supervisory
Review and Evaluation Process (SREP) comprises four components:•
Business Model Assessment (BMA)•
Internal Capital Adequacy Assessment Process (ICAAP)•
Internal Liquidity Adequacy Assessment Process (ILAAP)•
Internal governance and institution-wide control assessment
The Pillar III disclosure framework seeks to promote market discipline through regulatory disclosure requirements.
Pursuant to Part Eight of the CRR, Adyen is required to publicly disclose information regarding, amongst others, its risk
profile, risk management and capital adequacy. Adyen discloses this information by means of this Pillar III report. The
Pillar III disclosures are based on capital requirements in Pillar I with reference date 31 December 2020.
The content of this Pillar III report meets all the requirements laid down in CRR and corresponding delegated regulations
and guidelines.

Scope of consolidation
As an EU parent institution, Adyen N.V. is required to publish a consolidated Pillar III report. Adyen reports its prudential
requirements both on a consolidated as well as on a stand-alone basis. Its subsidiaries are only included in its
consolidated reporting. Adyen’s prudential scope of consolidation does not deviate from its IFRS scope of consolidation.
Adyen N.V. is a licensed Credit Institution by De Nederlandsche Bank (the Dutch Central Bank) and registered in the
Netherlands under the company number 34259528. The Credit Institution license includes the ability to provide crossborder services in the EEA. Adyen N.V. directly or indirectly owns 100% of the shares of, and therefore controls all entities
included in the consolidated financial statements. This means all branches and subsidiaries are fully consolidated.
Adyen has operations in the Netherlands, Brazil, Singapore, UK, Canada, Australia, South Korea, Hong Kong, Mexico,
China, New Zealand, Malaysia, India, Japan, the United Arab Emirates and the United States, with branches in Germany,
France and Sweden and representative offices in Belgium, Poland, Italy and Spain. The address of the Adyen N.V.
registered office is Simon Carmiggeltstraat 6 -50, 5th floor, 1011DJ Amsterdam, the Netherlands. Table 1 provides an
overview of all branches of Adyen N.V. and subsidiaries of Adyen International B.V.4

2 Art. 436(a) CRR.
3 Art. 441 CRR.
4 Art. 436(b) CRR.

Adyen Transparency and Disclosure Report 2020|Page 4

Table 1: Overview of Adyen’s branches and subsidiaries
Adyen N.V. - Subsidiaries
Name
Adyen International B.V.
Adyen Inc.

Branch location
Amsterdam, The Netherlands
San Francisco, CA, USA

Adyen N.V. - Branches
NameAdyen N.V., German branch
Adyen France
Adyen Nordic Bank Fillial

Branch location
Berlin, Germany
Paris, France
Stockholm, Sweden

Adyen N.V. – Representative offices
NameAdyen N.V., Belgian Representative Office
Adyen N.V., Italian Representative Office
Adyen N.V., Spain Representative Office
Adyen N.V., Polish Representative Office

Branch location
Brussels, Belgium
Rome, Italy
Madrid, Spain
Warsaw, Poland

Adyen International B.V. - Subsidiaries
Name

Legal Seat

Direct and indirectownership
percentage

Adyen Services Inc.

Dover, DE, USA

100%

Adyen Nevada Inc.

Las Vegas, NV, USA

100%

Adyen do Brasil Ltda

São Paulo, Brazil

100%

Adyen Singapore PTE. LTD.

Singapore, Singapore

100%

Adyen UK Limited

London, United Kingdom

100%

Adyen Hong Kong Limited

Hong Kong, Hong Kong SAR

100%

Adyen Australia PTY Limited

Sydney, Australia

100%

Adyen Canada Ltd.

Saint John, Canada

100%

Adyen Korea Chusik Hoesa

Seoul, Republic of Korea

100%

Adyen Mexico, S.A. de C.V.

Mexico City, Mexico

100%

Adyen (China) Software Technology Co. Ltd.

Shanghai, China

100%

Adyen New Zealand Ltd.

Auckland, New Zealand

100%

Adyen Malaysia Sdn. Bhd

Kuala Lumpur, Malaysia

100%

Adyen GmbH

Berlin, Germany

100%

Adyen India Technology Services Private Limited

New Delhi, India

100%

Adyen Japan K.K.

Tokyo, Japan100%

Adyen Middle East Limited

Dubai, United Arab Emirates

100%

Adyen Transparency and Disclosure Report 2020|Page 5

In table 2, the disclosures within this Pillar III report are linked to the respective provisions of Part Eight of the CRR.
Table 2: Mapping of applicable CRR Articles to this document

Article Subject

Reference

Page

Article435

Risk
management
objectives andpolicies

Concise risk statement
Risk management framework andstrategy

p. 3
p. 8

Article436

Scope ofapplication

Scope of consolidation

p. 4

Article437

Own funds

Capitalp. 12

Article438

Capitalrequirements

Capital requirements
Internal capital adequacy assessment
process

p. 13
p. 21

Article439

Exposure tocounterparty
credit risk

Not applicable

Article440

Capital buffers

Capital buffers

Article441

Indicators ofglobal systemic
importanceNot applicable

Article442

Credit risk
adjustments

Credit risk adjustments

Article443

UnencumberedassetsNot applicable

Article444

Use of ECAI’s

Use of External Credit Assessment
Institutions

p. 14

Article445

Exposure tomarket risk

Market risk

p. 17

Article446

Operational risk

Operational risk

p. 17

Article447

Exposures inequities notincluded in the
trading book

Equities in the banking book

p. 15

p. 19

Annexes

Annex 1: Capital
instruments mainfeatures template

Annex 2: Geographicaldistribution of credit
exposures relevant forthe calculation of thecountercyclical capital
bufferp. 14

Adyen Transparency and Disclosure Report 2020|Page 6

Article
448

Exposure tointerest rate risk
on positions notincluded in the
trading bookInterest rate risk in the banking bookp. 21

Article449

Exposure tosecuritization
positionsNot applicable

Article450

Remuneration
policyRemuneration policyp. 22

Article451

Leverage

Leveragep. 19

Article452

Use of the IRB
approach tocredit risk

Not applicable

Article453

Use of credit risk
mitigation
techniques

Credit risk mitigation

Article454

Use of theadvancedmeasurement
approaches tooperational risk

Not applicable

Article455

Use of internalmarket risk
modelsNot applicable

Annex 3: CRR
Leverage ratio Disclosure Templates

p. 13

Adyen Transparency and Disclosure Report 2020|Page 7

Risk management frameworkand strategy
Adyen recognizes that risks are associated with achieving its strategy and business objectives. Managing these risks isan essential part of doing business. This chapter describes Adyen’s uniform and systematic company-wide approachfor managing risks. In addition, it lays down Adyen’s risk governance, which sets the tone for, reinforces the importanceof, and establishes oversight responsibilities for risk management.

Risk management objectives and policies
Adyen's integral risk management framework5 is based on the Enterprise Risk Management (ERM) model as issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2017. The integral risk
management framework structures the risk management activities within Adyen with a view of identifying, assessing,managing, monitoring and reporting risks in a uniform manner.

Three lines of defense
In line with the European Banking Authority (EBA) Guidelines on Internal Governance, Adyen has adopted the threelines-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 firstline management designs, implements, executes and monitors the control activities to manage performance and therisks taken to achieve Adyen's objectives. The second line risk and compliance functions provide guidance on risk
management requirements, and independently evaluate adherence to defined standards. The third line internal audit
function provides independent assurance on the effectiveness of risk management, including control activities, byperforming audits. The head of internal audit reports directly to the chairman of the Audit Committee, which provides anindirect line of reporting to the CEO. Adyen follows the EBA guidelines on internal governance and has implemented
structural measures and controls to realize the appropriate authority, independence and statute of its risk management
functions.
During 2020, the second and third-line functions have continued to add resources in line with the overall growth of theorganization. Adyen has further strengthened the second line by appointing a Chief Legal and Compliance Officer to theManagement Board per January 1, 2020.

Strategy and objective setting
Risk management, strategy and objective-setting work together in the strategic planning process. Operational
objectives put strategy into practice while serving as a basis for identifying, assessing, and responding to risk. Adyen's
risk appetite is established and aligned with its strategy.

Risk appetite
Adyen has translated its view on risk appetite into risk appetite statements. Risk appetite is the amount of risk Adyen iswilling to accept in pursuit of its objectives. It defines the level of risk at which appropriate actions are needed to reducerisk to an acceptable level. Risk appetite is therefore not static, nor are the risk types for which internal risk limits and riskstatements are set.
The risk appetite statements for 2020 were approved by the Management Board and Supervisory Board. Adyen’s overallrisk appetite is best reflected in the fact that it wants to build an ethical and sustainable business. Adyen accepts that inorder to achieve its strategic objectives it may consume some amounts of capital investing in new assets, people andprocesses. In pursuance of its strategic objectives Adyen values a solid financial and capital outlook. Both capital andleverage should therefore be at a comfortable level above the regulatory requirements.

Risk assessment and control activities
Adyen performs a top-down company-wide risk assessment on an annual basis or in more frequent intervals, which
includes the identification of key risks that could potentially affect its strategy and business objectives. The purpose
hereof is to assess how big the risks are, both individually and collectively, in order to focus attention on the mostimportant threats and opportunities. Based on EBA guidelines, the key risks are categorized as follows:•
Strategic and business risk
5 Art. 435(1) CRR.

Adyen Transparency and Disclosure Report 2020|Page 8••Operational risk (including technology and integrity risks)
Financial risk (including credit risk, market risk, liquidity and funding risk)

For a more detailed description of the company-wide risks as identified and assessed by Adyen, refer to the Section"Risk Factors" within the Annual Report 2020. During the year Adyen undertakes a multitude of specific, local and/or
focused risk analyses and assessments that complement the company-wide risk assessments. An example of a focusedrisk analysis is the systematic integrity risk analysis (SIRA) which is performed at least annually.
Adyen continues to strive towards a strong commitment to risk management. Therefore, it has established a control
environment that provides an appropriate foundation for achieving the company’s objectives and effectively mitigating
risks. Control activities are the policies and procedures that help ensure risks are mitigated and Adyen's objectives areachieved. Adyen uses COSO’s internal control model as a reference for its design, implementation and evaluation ofcontrol activities as part of a system of internal control.

Review and revision
By reviewing its performance, Adyen evaluates how well the risk management components are functioning over time.
The Risk Committee plays a key role in supporting the Management Board with overseeing the effectiveness of Adyen’s
risk management. It carries out this role by monitoring Adyen's risk profile against the risk appetite, which is an ongoingand iterative process. Any material risk limit breach that places Adyen at risk of exceeding its risk appetite and, inparticular, of putting at risk Adyen's financial health, is escalated promptly to the Management Board. Combinations ofongoing and separate evaluations are used to determine if the components of internal control are present andfunctioning effectively. The ongoing evaluations are built into Adyen's business processes and provide timely
information. The separate evaluations, including independent management testing, are conducted periodically and mayvary in scope and frequency depending on the risks and effectiveness of these ongoing evaluations. Any identified
deficiencies are discussed within the Risk Committee and reported to the Management Board along with relevant
findings, recommendations and remediation plans.6

Governance arrangements
Adyen's governance sets the tone, reinforces the importance of, and establishes oversight responsibilities for risk
management. Adyen has established a governance which is consistent with the size, complexity and risk profile of thecompany. Adyen’s governance7 is reflected in certain internal rules and regulations, including the Articles of Association(Statuten), the Management Board By-Laws, the Supervisory Board By-Laws and the Terms of reference of our
Supervisory Board committees.

Board composition and directorships
Adyen maintains a two-tier board structure consisting of a Management Board and a Supervisory Board. The
Management Board is responsible for the day-to-day management, which includes, among other things, formulating
Adyen’s strategy and policies and setting and achieving Adyen’s objectives. The Supervisory Board supervises andadvises the Management Board. Each board is accountable to the General Meeting for the performance of its duties.

Management Board
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 anduntil April 2021, Ingo Uytdehaage (CFO) has assumed the responsibilities for risk management, while Mariëtte Swart(CLCO) has assumed the responsibilities for security. 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 theExtraordinary General Meeting held on February 12, 2021.
Adyen’s current Management Board is composed of the following six members.
Pieter Willem van der Does is the CEO of Adyen and has been a member of the Management Board since 2007. Hespent over 15 years working in the payments industry. Before co-founding Adyen in 2006, Mr. van der Does was CCO
at Bibit (a pioneering international payment service provider, acquired by the Royal Bank of Scotland in 2004). Mr. Van
der Does also serves as a Supervisory Board member of Écart Invest B.V.
Roelant Prins is the CCO of Adyen and has been a member of the Management Board since 2009. Mr. Prins is
responsible for the commercial activities of Adyen. After starting his career as a consultant, he moved to the online
6 Art. 435(2)(e) CRR.
7 Art. 435(2) CRR.

Adyen Transparency and Disclosure Report 2020|Page 9

payments industry early 2000. Throughout the years, Mr. Prins has held various international management roles in sales
and business development for companies providing payment solutions to international e-commerce businesses.
Ingo Jeroen Uytdehaage is the CFO of Adyen and has been a member of the Management Board since 2011. He has
earned his MBA in accounting and finance from Maastricht University and studied supply chain management andorganizational behavior at the Aarhus Business School in Denmark. Additionally, Mr. Uytdehaage obtained his CPA at
the Vrije Universiteit in Amsterdam. Prior to joining Adyen, Mr. Uytdehaage was a Finance Director at KPN. Currently, healso serves as non-executive director on the board of TransferWise Ltd. and as chairman on the board of photography
museum Foam in Amsterdam.
Kamran Zaki was appointed as the COO of Adyen and a member of the Management Board per January 1, 2020. Mr.
Zaki is responsible for the operations to customers that make use of Adyen’s platform. Previously, Mr. Zaki was the
President of Adyen North America since 2014, and in this capacity, Kamran oversaw all North American operations,
including sales, marketing, product development and customer support. Prior to Adyen, Kamran was the Head of Global
Payments at Netflix where he helped expanding the Netflix streaming service. Previously, Kamran spent seven years at
PayPal. During his tenure there, he headed up payments teams across Europe, North America and Emerging Markets(i.e. LatAm, Middle East and Africa).
Mariëtte Swart was appointed as the CLCO of Adyen and a member of the Management Board per January 1, 2020.
Before joining the board, Mrs. Swart served as Adyen’s General Counsel and Company Secretary since 2015. She has
built the legal team from the ground up, ensuring that the legal function effectively supports the business at a strategicand operational level. Prior to Adyen, Mariëtte worked at an international law firm where she gained a vast experience inglobal financial services, helping companies with products in payments, debt and equity solutions, M&A and financial
markets.
Alexander Matthey is the CTO of Adyen and has recently been appointed as a member of the Management Board asof 1 January 2021. Since 2019, Mr. Matthey has been fulfilling the position of EVP Technology at Adyen, leading
multiple technical teams. In this capacity, as well as his position in the engineering leadership team, he gained
knowledge in scaling and building teams. Before joining Adyen in 2015, Alexander was Vice-President and CTO of
Glossybox, where he gained experience in managing and leading the technology department.

Supervisory Board
The Supervisory Board supervises the conduct and policies of the Management Board and the general course of affairsof Adyen and its business. The Supervisory Board also provides advice to the Management Board. In performing theirduties, the members of the Supervisory Board are required to be guided by the interests of Adyen which includes theinterests of the business connected with it. These interests are driven by Adyen’s focus on long-term value creation andthe way in which this is implemented in Adyen’s strategy and culture.
Adyen’s Supervisory Board is composed of the following five members.
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 theSupervisory 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, andis 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 theAdvisory Board of PlantLab. Previously, he served as CEO of CSR Plc. (UK) and NexWave Inc. (France), following a careerat Royal Dutch Shell, McKinsey, Philips and Canesta Inc. Joep van Beurden holds a degree in Applied Physics from
Twente University of Technology.
Pamela Ann Joseph is CEO and member of the Management Board of Clearent, holds a position as Chair of the Boardof 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 Bankand VISA International. She holds a degree in Business Administration from the University of Illinois (USA).
Adyen Transparency and Disclosure Report 2020|Page 10

Caoimhe Keagon was appointed as a Supervisory Director at the Extraordinary General Meeting of shareholders held
on February 12, 2021. Following her appointment, she also became a member of the Nomination and Remuneration
Committee. She 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).

Board recruitment and diversity policy
The Articles of Association provide that the Management Board shall consist of two or more members and that theSupervisory Board determines the exact number (more than two) of Managing Directors after consultation with theManagement Board.
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 aManaging Director is to be appointed.
In the event that the Supervisory Board has made a nomination, the resolution of the General Meeting to appoint suchnominee shall be adopted by an absolute majority of the votes cast. A resolution of the General Meeting to appoint aManaging Director other than in accordance with a nomination of the Supervisory Board, but in accordance with theagenda 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. 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.
Adyen is a licensed credit institution, which means that any appointment of a Managing Director must be approved by
DNB. In connection with its approval procedure, DNB will test the proposed new Managing Director on integrity(betrouwbaarheid) and suitability (geschiktheid).
The Supervisory Board aims for a balance in its composition with respect to age, experience and affinity with the natureand culture of the business of Adyen in all countries where it is active. In line with the Company’s Inclusion Policy andthe Dutch Parliament’s adoption of 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.

Risk management committees
The Management Board has instituted three committees to support with its risk management oversight: the Compliance
Committee, the Disclosure Committee, the Merchant Risk Committee, and the Risk Committee. The Compliance
Committee monitors Adyen’s integrity and compliance risks, the Disclosure Committee is responsible for reviewing
Adyen's financial information for compliance with legal and regulatory requirements prior to publication, the Merchant
Risk Committee monitors the merchants’ potential liability (MPL) risk and the Risk Committee monitors the overall risk
profile.
The Risk Committee and the Compliance Committee report their observations, recommendations and deliberations on
findings regarding compliance, risk management and internal control at least quarterly to the Management Board. The
Risk Committee held six meetings during 2020. The Management Board reviews reports from control assessments
made on the operating effectiveness of systems and controls, acts on recommendations from the Risk and Compliance
Committees and decides on corrective actions. The Management Board reports to the Audit Committee on theeffectiveness of Adyen's risk management and internal control systems during the quarterly Audit Committee meetings.

Adyen Transparency and Disclosure Report 2020|Page 11

Disclosures on Pillar I
Within the CRR and CRD IV framework, Pillar I lays down the minimum capital requirements for three major componentsof risk that a traditional bank faces. These risks are credit, market and operational risk. This chapter describes the capitalrequirements of Adyen, based on these three major risk categories.

CapitalFor regulatory purposes, capital8 is defined as own funds, which can be subdivided in Common Equity Tier 1, Additional
Tier 1 and Tier 2. Adyen only holds Common Equity Tier 1 capital.
Common Equity Tier 1 capital comprises IFRS equity after considering prudential filters and deductions. Table 3
provides a reconciliation of Adyen’s own funds with Adyen’s IFRS capital.9 Annex I, describes the main features of thisCommon Equity Tier 1 capital.
Table 3 Reconciliation between IFRS equity and own funds (in EUR ‘000)
31-Dec-20
IFRS equity

1,218,134

Of which: common shares

194,608

Of which: paid up capital304

Of which: retained earnings

873,291

Of which: other reserves

149,931

Adjustments due to prudential filters and deductions(418,267)

Net profit not included in CET1 Capital (not yet eligible)(261,019)

10

Intangible assets
DTA that rely on future profitability and do not arise from temporary
differences(9,970)(93,788)

Warrant reserve(53,401)

Prudent valuation
Total Common Equity Tier 1 Capital11(89)799,867

Prudential filters and deductions
Prudential filters and deductions remove or reduce certain elements from Adyen’s own funds that are considered not tobe eligible to absorb losses. The amounts related to these prudential filters and deductions are shown in table 3. Adyen
applies the following prudential filter to its Common Equity Tier 1 capital:
Additional value adjustments due to the requirements for prudent valuation
Institutions are required to calculate an additional value adjustment in order to adjust the fair value to a prudent value for
all assets measured at fair value.12 The additional value adjustment must be deducted from Common Equity Tier 1
capital. Adyen has two financial instruments on the balance sheet that are measured at fair value, and subject to an
additional value adjustment, which are VISA shares and a derivative financial liability. As previously disclosed in the 2018
report, part of the derivative financial liability was prospectively de-recognized and the new equity instruments
recognized at fair value in equity as warrant reserve. The first two tranches of the derivative liability resulting from amerchant contract are reclassified from derivative liability to warrant reserve in equity for the amount of EUR 53.4 million.
Adyen applies the following deductions to its Common Equity Tier 1 capital:
Intangible assets other than goodwill
Deferred tax assets that rely on future profitability and do not arise from temporary differences
Warrant reserve
8 Art. 437(1) CRR.
9 Annex I contains the relevant rows of the ‘Own funds disclosure template’ as laid down in ITS (EU) 1423/2013.
10 Art. 26(2) CRR.
11 No restrictions ex. Art. 437(e) CRR were applied to the calculation of own funds.
12 Art. 34 and 105 CRR.

Adyen Transparency and Disclosure Report 2020|Page 12

-Net profit not included in CET1 Capital (not yet eligible)

As of 31 December 2020, Adyen’s total Common Equity Tier 1 Capital amounted to EUR 800 million when excluding net
profits for the year. Once Adyen’s net profits are formally confirmed, they may be included in CET1 capital, which would
result in a CET1 Capital position of EUR 1,061 million.

Capital requirements
Adyen applies the standardized approaches to determine how much capital it is required to hold for credit and market
and applies the Basic Indicator Approach for operational risk. Resulting from Adyen’s business model, capitalrequirements for operational risk are the highest.

Credit risk
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. Adyen is and will continue to be subject to the risk of actual or perceived deterioration of
the commercial and financial soundness, or perceived soundness, of merchants and other financial institutions, inparticular in relation to receivables from financial institutions regarding settled payment transactions, and cash andcash- equivalents held at financial institutions. In addition, Adyen has credit risk on certain contract assets and fromoffering merchants a pre-financing service, which it refers to as Sales Day Payout. Adyen has no derivatives or securities
financing transactions, nor positions in securitizations.
At 31 December 2020, Adyen’s total credit exposures amounted to EUR 4.1 billion resulting in total risk-weighted
exposures of EUR 926.2 million and an own funds requirement of EUR 74.1 million.13. The majority of Adyen’s exposures
have a short-term duration, with residual maturities of days. For this reason, Adyen does not disclose a break-down of
exposures by residual maturity14. Additionally, Adyen does not disclose on its concentration risk15 as Adyen does not havea loan portfolio. Adyen is aware of the concentration of its exposures, most notably on partner banks, which is reflected
in its Pillar 2 add-on for concentration risk.
Table 4 provides an overview of Adyen’s credit risk exposures, showing the average over 2020, the exposure as per 31
December 2020 and the total amount of risk-weighted exposures broken down by exposure class.16
Table 4 Exposures by exposure class (in EUR ‘000)
Average exposures

Total exposures

Total risk-weighted
exposuresStandardized Approach- Central governments or central banks- Corporates- Institutions- Equities- Other

1,433,477
270,316
1,467,504
37,252214,846

1,606,682
318,422
1,965,975
20,883
236,529

3,744
253,558
411,492
20,883
236,529

Total

3,423,394

4,148,490

926,205

Exposure Class

Credit risk mitigation
Credit risk mitigation techniques are used to reduce the credit risk associated with its credit exposures. As a credit risk
mitigation technique, Adyen employs off-balance sheet netting with one of its foreign counterparties. This regards anenforceable master netting arrangement that allows offsetting in the even to default, collateralized by a debt security
issued by a central government that has a credit assessment of an external credit rating agency17. The collateral is valued
at market value and risk weighted at 10% as an exposure to central governments. As of 31 December 2020, the total
exposure to this counterparty was EUR 73.0 million, of which 37.4 million is secured by collateral. Table 5 shows the split
between secured and unsecured exposures, broken down by exposure class.

13 Art. 438(c) CRR.
14 Art. 442(f) CRR.
15 Art. 442(e,g) CRR.
16 Art. 442(c) CRR.
17 Art. 453 CRR.

Adyen Transparency and Disclosure Report 2020|Page 13

Table 5 Unsecured and secured exposures by exposure class (in EUR ‘000)
Unsecured exposures

Exposures secured bycollateralStandardized Approach- Central governments or central banks- Corporates- Institutions- Equities- Other

1,606,682
318,422
1,965,975
20,883
236,529

37,436-

Total

4,148,490

37,436

Exposure Class

Credit risk adjustments
Adyen considers an exposure to be past due if it has been due for more than one day and considers an exposure indefault and impaired when either or both of the following have taken place:18
The counterparty is past due more than 90 days
The counterparty is considered unlikely to pay, for example due to bankruptcy or other factors
Adyen assesses on a forward-looking basis the expected credit loss associated with its debt instruments carried atamortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit
risk. For trade receivables and contract assets, Adyen applies the simplified approach, which requires expected lifetime
losses to be recognized from initial recognition of the assets.19
At reference date, Adyen had EUR 20.0 million exposures in default20, for which it has provisioned EUR 4.8 million as a
general credit risk adjustment. It should be noted these defaulted exposures are now recognized due to the publicationof the new guidelines on the definition of default (EBA/GL/2016/07), which entered into force as of 1 January, 2021.
Table 6 reports the exposure amounts that are past due for 90 days or more, broken down by country of the defaulted
counterparty21. Most of these non-performing exposures are due from Corporates22 and represent invoices for payment
services that were not collected via transaction flows (i.e. Trade receivables).
Table 6 Exposures past due for 90 days or more by country of exposure (in EUR ‘000)
Exposures pastdue >90 days
8,146

Country of counterparty(NL) the Netherlands(US) United States of America

6,921(SG) Singapore

1,377(DE) Germany

854(FR) France

659(CH) Switzerland

357(CN) People's Republic of China

332(GB) United Kingdom

217

Other

1,126

Total exposure value

19,989Use of External Credit Assessment Institutions
Adyen applies ratings from External Credit Assessment Institutions23 (ECAIs) to determine the risk weight of an exposure.
With respect to its rated exposures, Adyen by default uses Moody’s whenever it has a rating available. Only in the casethat no rating of Moody’s is available, Adyen uses a rating provided by Fitch. Adyen therefore does not cherry-pick its
ratings. In order to determine the risk weight of an exposure, a rating is converted into the corresponding credit quality
18 Art. 442(a) CRR. Definition is in line with Art. 178 CRR.
19 Art. 442(b) CRR.
20 As of 1 January, 2021, the new guidelines on the definition of default (EBA/GL/2016/07) entered into force, which specify thresholds for
institutions to recognize defaulted exposures. As a result, Adyen’s defaulted exposures are now recognized under the credit risk framework.
Thus, the recognition of defaulted exposures is purely due to a regulatory change rather than a change to Adyen’s non-performing exposures.
21 Art. 442(h) CRR.
22 Art. 442(g) CRR.
23 Art. 444 CRR.

Adyen Transparency and Disclosure Report 2020|Page 14

step based on the standard association as published by the EBA.24 Adyen uses ECAIs in order to determine the riskweight of exposures belonging to the following three exposure classes:
Central governments or central banks
Institutions
Corporates
Exposures to unrated counterparties are by default 100% risk weighted, in line with CRR Art. 122(2). Unrated institutions
are risk weighted in accordance with CRR Art. 121.
Equities in the banking bookAdyen’s exposure to equities in the banking book25 arises from a holding of convertible preferred Visa shares. Adyen
obtained these shares as the result of its previous holding in Visa Europe, which subsequently was acquired by Visa Inc.,and resulted, amongst others, in Adyen being issued shares of Visa Inc. as consideration for the acquisition.
During the current year, Visa Inc. effected a partial conversion of 50% of the Series C preferred stock into Series A
preferred stock. As the Series A preferred stock are convertible into Visa Inc. common stock and are freely tradeable
upon conversion, Adyen converted and sold all Series A preferred stock at fair market value (EUR 23.1 million).
The remaining Visa shares are stated at fair value for EUR 20.9 million, which is based on the fair value of Visa Inc. Series
C common stock, adjusted for lack of marketability, multiplied by an initial conversion rate of preferred stock into
common stock. These shares have no stated maturity and carry the right to receive discretionary dividend payments.
Due to a restriction on transfer, the remaining Visa shares cannot be freely traded.
Furthermore, Adyen gained EUR 1.005 million on non-trading financial assets mandatorily at fair value through profit orloss, which were recognized in the income statement. Due to an exchange loss of EUR 1.064 million, the net effect onother financial results is a loss of EUR 59 thousand.
As per 31 December 2020, the total exposure value of equities in the banking book amounted to EUR 20.9 million,
resulting in an own funds requirement of EUR 1.7 million. Exposures relating to equities are perpetual.26

24 ITS (EU) 2018/634.
25 Art. 447 CRR.
26 Art. 442(f) CRR.

Adyen Transparency and Disclosure Report 2020|Page 15

Credit portfolio
In table 7, the distribution of exposures across different risk weights is shown.
Table 7 Exposures by risk weight (in EUR ‘000)
Risk weight
Exposure value0%1,606,682

10%
37,43620%
1,918,15650%
114,761100%
451,466

150%
19,9891250%
0Additionally, table 8 provides a geographical breakdown of Adyen’s total exposures to credit risk separately for each exposure class.27
Table 8 Exposure by country (in EUR ‘000)
Exposure Class

NL

US

GB

DE

BR

FR

ES

BE

Other

Total

%

Standardized Approach
Central governments or central banks

1,499,826

92,089

7,951

-

6,088

-

-

-

729

1,606,682

38.7%

Institutions

217,131869,774

438,576

125,331

98,03051,26649,89023,03092,947

1,965,975

47.4%

Corporates

127,621

109,553

44,254

1,408

125

1,303

458

24,325

9,374

318,4227.7%-

20,883

-

-

-

-

-

-

-

20,8830.5%

76,455

-

-

-

-

-

-

-

160,074

236,5295.7%

1,921,033

1,092,299

490,780

126,739104,243

52,56950,34947,355

263,124

4,148,490

100.0%

46.3%

26.3%

11.8%

3.1%

2.5%

1.3%

1.2%

1.1%

6.3%

100.0%

Equities
Other
Total exposure value
Total %

27 Art. 442(c-d) CRR.

16

Market risk
Market risk28 comprises price risk from financial instruments, interest rate risk, foreign-exchange risk and commodities
risk. Adyen does not hold trading book items and has no commodity positions. The interest rate risk is minor as all
liabilities are non-interest bearing and interest rate effects on assets (own cash balances) are limited. Adyen has noappetite to add new equity positions to its balance sheet next to the current VISA shares that have been described in thesection ‘Equities in the banking book. Therefore, the main market risk to Adyen is the foreign-exchange risk resulting
from its international operations.
Adyen applies the standardized approach in order to calculate its own funds requirements for market risk. Adyen’s total
risk exposure amount for market risk is EUR 526.6 million resulting in an own funds requirement of EUR 42.1 million.29
Foreign-exchange risk
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 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 (i.e. natural hedges and spot trades for any net open positions), no assurance can be given thatfluctuations in foreign-exchange rates will nevertheless have a significant impact on Adyen's results of operations. 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 shares and the assets and liabilities of its subsidiaries. The
majority of these assets through which Adyen is exposed to foreign currency risk are denominated in US dollar.

Operational risk
Adyen recognizes that operational risks 30 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. Adyen has therefore implemented an internal control framework that is designed to manage the risks effectively
and efficiently and to provide reasonable assurance that objectives can be met. The operational risks that are mostmaterial to Adyen are outlined below.
Merchants’ potential liability for shopper chargebacks
When shoppers claim that a merchant has not performed, the issuing banks can file chargebacks. Adyen seeks to offset
such chargebacks with the payouts to the merchants, 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 andestimates that Adyen believes are reasonable to cover such eventualities, the measures, including the withheld funds,
may not be sufficient to cover for the chargeback amounts.
Availability of products and services
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 interruptions in Adyen's services could cause current or potential merchants to believethat its systems are unreliable, leading them to switch to a competitor or to avoid Adyen's products and services.
Moreover, to the extent that any system failure or similar event results in damages to Adyen's merchants or theirbusiness partners, these 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.
Furthermore, frequent or persistent interruptions could lead to regulatory scrutiny, significant fines and penalties, and/or
mandatory and costly changes to its business practices, or could ultimately cause Adyen to lose its regulatory licenses.
Information security
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 otherattacks by cyber-criminals, internet fraudsters, employees or others, which could lead to, amongst other things, aleakage of merchants' data, damage related to incursions, destruction of documents, inability or delays in processing
transactions and unauthorized transactions. Any real or perceived privacy breaches or improper use of, disclosure of, oraccess 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 Adyen believes to be reasonable to cover such eventualities, it may
be possible that the insurance is insufficient to cover all losses.
28 Art. 445 CRR.
29 Art. 438(e) CRR.
30 Art. 446 CRR.

17

Data privacy
Adyen is subject to complex and evolving Dutch, European and other jurisdiction's laws, rules, regulations, orders anddirectives (referred to as "privacy laws") relating to the collection, use, retention, security, processing and transfer of
personally identifiable information about its merchants, their shoppers, third parties and others and their transactionsin the countries where Adyen operates. Much of the personal data that Adyen processes, especially financial information,is regulated by multiple privacy laws and, in some cases, the privacy laws of multiple jurisdictions. In many cases, theselaws apply not only to third-party transactions, but also to transfers of information between or among Adyen and its
subsidiaries. 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 resulting
reputational damage.
Entrepreneurial culture
Adyen's entrepreneurial culture has been one of the primary drivers of its historical growth. As Adyen grows, it may not
be able to maintain its entrepreneurial company culture, which fosters innovation and talent. The working from home
restrictions due to the pandemic add to the challenge of maintaining, transferring and fostering the right company
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 revenues.
TalentAdyen's future performance depends substantially on the continued services of key talent and its ability to attract, retain,
and motivate such talent. The loss of the services of any of Adyen's key talent or Adyen's inability to attract highly qualified
key talent may adversely affect its operations.
Integrity
Integrity risk is the risk of inappropriate behavior of management and employees 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. Such inappropriate behavior could refer to violations of law,regulations, internal policies, and market expectations of ethical business conduct. If Adyen (or a third party it does
business with) fails to comply with laws and regulations, or market expectations of ethical business conduct, supervisory
authorities may initiate legal and regulatory proceedings against Adyen.
Adyen has policies and procedures that it believes are sufficient to comply with the relevant anti-money laundering, anticorruption and sanctions rules and regulations. Inability to prevent integrity risks from materializing can have severe
consequences, including litigation, sanctions, administrative measures, fines, criminal penalties and reputational
consequences.
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 thesuccess of its business. Adyen seeks to protect its intellectual property rights by relying on applicable laws andregulations, 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 increasingly 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 other things, stop providing transaction processing and other payment-related services or redesign, stop sellingits 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 hascommercial relationships.
Tax
Social tolerance for tax avoidance is decreasing and international developments have led to the introduction of stricter
regulations around tax avoidance. Adyen has a low risk appetite to be involved in activities aimed at evasion or avoidanceof tax regulations by itself or third parties through the provision of its services. The determination of Adyen's worldwide
position for income taxes, value-added taxes and other tax liabilities requires clear processes and controls by which
Adyen Transparency and Disclosure Report 2020|Page 18Adyen aims to automate as much as possible as to reduce the amount of manual intervention. 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.
Basic indicator approach
Adyen applies the basic indicator approach in order to calculate its own funds requirements for operational risk under
Pillar 1. Under the basic indicator approach, the own funds requirement for operational risk is equal to 15% of the averageover three years of the relevant indicator. Where the relevant indicator refers to the sum of several elements within the
profit and loss statement of the institution.
Adyen’s total risk exposure amount for operational risk is EUR 986.5 million resulting in an own funds requirement of
EUR 78.9 million.31 Table 9 shows the build-up of the relevant indicator, based on the last three years.
Table 9 Build-up of the relevant indicator (in EUR ‘000)

Commissions/fees receivables
Sale of goods
Commission/fees payable
Changes in inventory
Interest receivable and similar income
Interest payable and similar charges
Income from shares and other variable/fixed yield
Relevant indicator

2018

2019

2020

1,642,200
10,748(1,270,473)(9,029)316(1,516)101

2,642,121
14,653(2,105,929)(16,545)70(4,633)264

3,622,037
19,353(2,935,182)(22,007)
1,052(9,406)281

372,347

530,001

676,128

Relevant
indicator

Own funds
requirement526,159

78,924

Countercyclical capital buffer
Adyen is subject to an institution specific countercyclical buffer32 requirement. The geographical distribution of Adyen’s
credit exposures relevant for the calculation of the countercyclical capital buffer is shown in Annex II. As can beconcluded from table 10 below, the institution-specific countercyclical capital buffer rate for Adyen is 0.00024%, whichamounts to an institution-specific countercyclical capital buffer of EUR 6 thousand.
Table 10 Countercyclical buffer (in EUR ‘000)
Institution-specific countercyclical capital buffer

31-Dec-20

Total risk exposure amount

2,439,397

Institution specific countercyclical capital buffer rate

0.00024%

Institution specific countercyclical capital buffer requirement

6

Leverage
Leverage means the relative size of an institution’s assets and off-balance sheet obligations as compared to theinstitution’s own funds.

Leverage ratio
The leverage ratio33 is a monitoring tool used to assess the risk of excessive leverage within institutions. It is defined asTier 1 capital divided by a non-risk-based measure of the on- and off-balance sheet items. By restricting the build-up ofleverage, the leverage ratio aims to avoid destabilizing deleveraging processes that can damage the broader financial
system and the economy.
The Banking Package introduces a binding 3% leverage ratio as a Pillar 1 requirement. In the CRR the leverage ratio iscurrently solely a reporting and disclosure requirement. The 3% leverage ratio requirement will be applicable from 24months after the entry into force (28 June 2021).
31 Art. 438(f) CRR.
32 Art. 440 CRR.
33 Art. 451 CRR.

Adyen Transparency and Disclosure Report 2020|Page 19

As per 31 December 2020 Adyen had a leverage ratio of 19.7%. Once net profits are included in CET1 capital, theleverage ratio becomes 26.2%. Annex III provides detailed information on both the reconciliation between total assets
as published in the financial statements and the total exposure measure.

Adyen Transparency and Disclosure Report 2020|Page 20

Disclosures on Pillar II
Pillar II sets out mandatory processes for institutions and supervisors to fulfill capital adequacy and liquidity adequacy
requirements. Adyen combines the assessment of these requirements within its ICLAAP. This chapter describes
Adyen’s ICLAAP and specifically addresses interest rate risk in the banking book.

Internal capital adequacy assessment process
Adyen has designed, implemented, maintains and monitors internal risk management and control systems to identify
and manage risks associated with its strategy and activities. Additionally, Adyen uses stress testing to understand its
financial resilience and to learn from its sensitivity to stress events. The stress scenarios that Adyen defines are basedon exceptional but plausible events with an adequate degree of severity. Threats and trends relevant to the management
board are included. Stress testing is performed in accordance with EBA guidelines on stress testing. The results fromstress tests are used as input for fine-tuning Adyen's risk appetite, risk capacity and risk limits as a feedback mechanism.
In 2020 Adyen’s Internal Capital and Liquidity Adequacy Assessment Process (ICLAAP34) showed that Adyen has a highfinancial shock absorption capacity and adequate levels of capital and liquidity.

Interest rate risk in the banking bookInterest rate risk on financial instruments included in the banking book 35 could arise from adverse movements inunderlying interest rates. Although significant liabilities towards the merchants are present, these liabilities are noninterest bearing and are settled at short notice.
Adyen is exposed to interest rate risk in the banking book in relation to its High-Quality Liquid Assets (HQLA): cash heldat central banks and government bonds. However, cash balances of Adyen are not significantly exposed to interest raterisk due to the fact that cash is used to settle the current liabilities towards the merchants at short notice. The nominal
values of the bonds held-to-maturity are minimal as compared to the overall financial instruments balance, are shortterm in nature and are held-to-maturity leading to minimal interest rate risk. As a result of the nature of the products on
the Adyen balance sheet the remaining interest rate risk is considered to be minimal.

34 Art. 438(a) CRR.
35 Art. 448 CRR.

Adyen Transparency and Disclosure Report 2020|Page 21

Remuneration
Adyen’s remuneration policy
Adyen’s remuneration policy is rooted in the Adyen Formula and is in full compliance with all relevant international andlocal legislation and regulations. The remuneration policy of Adyen has been published on the company’s website.

Remuneration principles
Adyen’s remuneration policy has the Adyen Formula at heart. The Adyen Formula consists of eight points on how we aresuccessful to create long-term value for our merchants.
By retaining the remuneration principles set out in our remuneration policy, the remuneration is consistent with andpromotes sound and effective risk management. As such, these remuneration principles also allow remuneration tocontribute to long-term value creation and to discourage improper risk-taking.

Remuneration package
The size of a remuneration package is based on the scope of responsibilities, the employee’s experience andperformance, and the local market circumstances, which may differ from country to country.
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 income.
Adyen has the right pay mix in place to mitigate short-term orientation and contribute to the long-term performance ofthe company. This is specifically achieved by awarding staff members, including the Management Board, with (longterm) 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 ofAdyen’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 asprovided 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.
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 accordance with theRemuneration 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 17.1 million (2019: EUR
16.7 million) compared to total staff expenses of EUR 180.0 million (2019: EUR 122.4 million).

Identified staff
In 2020 there were 21 employees (2019: 21) identified as “Identified Staff” (staff that is considered to have a material
impact on the risk profile of Adyen). None of these employees were entitled to a performance related bonus in 2020. As
such, Adyen avoids short-term incentives and focuses for all staff that is considered to have a material impact on ourbusiness, including the Managing Directors, thereby contributing to the long-term performance and value creation of
the company.
Table 11 provides an overview of remuneration awarded to identified staff over 2020, split into fixed and variable
remuneration.

Adyen Transparency and Disclosure Report 2020|Page 22

Table 11: Quantitative information on remuneration
Management &Supervisory Board
10

All other

Total

11

21

2,939
191

1,807
395

4,746
586

Variable remuneration
Cash
SharesShare-linked instruments
Other types

-

-

-

Ratio (variable to fixed)

-

-

-

Number of beneficiaries
Fixed remuneration
Cash based (in EUR ‘000)
Instrument based (in EUR ‘000)

Remuneration for the Management Board
In 2020 there were no employees to whom total annual remuneration (including employer pension contributions andany severance payments made) of EUR 1 million or more was awarded.

Nomination and Remuneration Committee
The Nomination and Remuneration Committee consist of four (4) Supervisory Directors as determined by theSupervisory Board. The current remuneration policy for the Management Board and the Supervisory Board andremuneration of the Managing Directors and fees for the members of the Supervisory Board was adopted at theshareholders 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. As such,the remuneration policy does not contain incentives that exclusively benefit Managing Directors themselves.
As of 2018 and in line with (i) the Act on Remuneration Policies in Financial Enterprises (Wet beloningsbeleid financiële
ondernemingen), and (ii) the Guidelines on Remuneration Policies and Practices as formally adopted on 10 December
2010 by the Committee of European Banking Supervisors, Adyen does not award variable remuneration to theManaging Directors.
The remuneration of the Managing Directors is determined by the Supervisory Board with due observance ofthe remuneration policy as adopted by the General Meeting. The Managing Directors do provide the Nomination andRemuneration Committee with their views with regard to the amount and structure of their own remuneration. In 2020base 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’ remunerationand that of a representative reference group was determined. For this ratio, Adyen deems most relevant the total directcompensation 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).

Adyen Transparency and Disclosure Report 2020|Page 23

Annexes
Annex I Own funds
Capital instruments main features template as derived from ITS (EU) 1423/2013.36
See: Attachment Adyen Pillar III 2020 Annexes.xls (Tab: Annex 1 - Shares)

Annex II Countercyclical capital buffer
Geographical distribution of credit exposures relevant for the calculation of the countercyclical capital buffer template
as derived from RTS (EU) 2015/1555.37
See: Attachment Adyen Pillar III 2020 Annexes.xls (Tab: Annex 2 - CCyB)

Annex III Leverage
CRR leverage ratio – Disclosure template (quantitative) as derived from ITS (EU) 2016/200.38
See: Attachment Adyen Pillar III 2020 Annexes.xls (Tab: Annex 3 – Leverage 1)

CRR leverage ratio – Disclosure template (qualitative) as derived from ITS (EU) 2016/200.39
See: Attachment Adyen Pillar III 2020 Annexes.xls (Tab: Annex 3 – Leverage 2)

36 Art. 437(1)(b) CRR.
37 Art. 440(1)(a) CRR.
38 Art. 451(1)(a-c) CRR.
39 Art. 451(1)(d&e) CRR.

Adyen Transparency and Disclosure Report 2020|Page 24

Annex I Own funds
Capital instruments main features template as derived from ITS (EU) 1423/2013.40
Ordinary shares
1

IssuerAdyen N.V.

2

Unique identifier

NL0012969182

3

Governing law(s) of the instrument
Regulatory treatment

4

Transitional CRR rules

Common Equity Tier 1

5

Post-transitional CRR rules

Common Equity Tier 1

6

Eligible at solo / (sub-)consolidated / solo & (sub-)consolidated

Consolidated

7

Instrument type

CET1 as published in the EBA list (art.
26(3))

8

Amount recognized in regulatory capital

80,000,000

9Nominal amount of instrument

0.01

9a

Issue price

240

9b

Redemption priceNot applicable

10

Accounting classification

Shareholders' equity

11

Original date of issuance

13 June 201812

Perpetual or dated

Perpetual13

Original maturity dateNo maturity

14

Issuer call subject to prior supervisory approval

No

15

Optional call date, contingent call dates and redemption amountNot applicable

16

Subsequent call dates, if applicable
Coupons / dividends

Not applicable

17

Fixed or floating dividend/coupon

Floating

18

Coupon rate and any related index

Not applicable

19

Existence of a dividend stopper

No
Fully discretionary - no dividend
pushers, dividend stoppers or ACSM

20b

Fully discretionary, partially discretionary or mandatory (in termsof timing)
Fully discretionary, partially discretionary or mandatory (in termsof amount)

21

Existence of step up or other incentive to redeemNo22

Non-cumulative or cumulative

Non-cumulative

23

Convertible or non-convertible

Non-convertible

24

If convertible, conversion trigger(s)Not applicable25

If convertible, fully or partially

Not applicable26

If convertible, conversion rates

Not applicable27

If convertible, mandatory or optional conversion

Not applicable28

If convertible, specify instrument type convertible into

Not applicable29

If convertible, specify issuer of instrument it converts into

Not applicable

20a

The shares are governed by the laws of
the Netherlands

Fully discretionary

40 Art. 437(1)(b) CRR.

Adyen Transparency and Disclosure Report 2020|Page 25

30

Write-down features

No31

If write-down, write-down trigger(s)Not applicable32

If write-down, full or partial

Not applicable33

If write-down, permanent or temporary

Not applicable34

If temporary write-down, description of write-up mechanism

Not applicable

35

Position in subordination hierarchy in liquidation

Subordinated to all claims

36

Non-compliant transitioned features

No37

If yes, specify non-compliant feature

Not applicable

Adyen Transparency and Disclosure Report 2020|Page 26

Annex II Countercyclical capital buffer
Geographical distribution of credit exposures relevant for the calculation of the countercyclical capital buffer template as derived from RTS (EU) 2015/1555.41
In EUR (‘000)
Breakdown by Country:(AT) Republic of Austria(AU) Australia(BE) Kingdom of Belgium(BR) Federative Republic of Brazil(CH) Swiss Confederation(CN) People's Republic of China(DE) Federal Republic of Germany(ES) Kingdom of Spain(FI) Republic of Finland(FR) French Republic(GB) Great Britain and Northern Ireland(GR) Hellenic Republic(HK) Hong Kong
(ID) Republic of Indonesia(JP) Japan(KR) Korea, Republic of(MX) United Mexican States(MY) Malaysia(NL) Kingdom of Netherlands(PH) Republic of the Phillipines(PL) Republic of Poland(PT) Portuguese Republic(SE) Kingdom of Sweden(SG) Republic of Singapore(SK) Slovak Repuplik(TR) Republic of Turkey(US) United States of America
Total

General credit exposures42
Exposure value for SA
453
188
24,325
125
606
1,448
1,408
458
13
1,303
44,254
131
101
398
621
89
315
1,897
364,150
1
117
115
225
2,307
17
331
130,436575,832

Own funds requirementsof which: Generalcredit exposures
Total
36
15
999
10
48
116
113
37
1
104
749
10
8
32
50
7
25
152
29,132
9
9
18
185
1
26
8,185
40,077

36
15
999
10
48
116
113
37
1
104
749
10
8
32
50
7
25
152
29,132
9
9
18
185
1
26
8,185

Own funds
requirements weights
0.09%
0.04%
2.49%
0.03%
0.12%
0.29%
0.28%
0.09%
0.00%
0.26%
1.87%
0.03%
0.02%
0.08%
0.12%
0.02%
0.06%
0.38%
72.69%
0.00%
0.02%
0.02%
0.05%
0.46%
0.00%
0.07%
20.42%

40,077100%

CCyB bufferrate 43
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
1.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
1.00%
0.00%
0.00%

Institutionspecific CCyB rate
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.000202%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.000034%
0.00%
0.00%
0.000236%

41 Art. 440(1)(a) CRR.
42 General credit exposures comprise Adyen’s total credit risk exposure, excluding exposures to ‘central governments and central banks’ and ‘institutions’, in line with RTS (EU) 2013/15.
43 The national Countercyclical capital buffer rates were obtained from the websites of the Bank for International Settlements and the European Systemic Risk Board.

27

Annex III Leverage
CRR leverage ratio – Disclosure template (quantitative) as derived from ITS (EU) 2016/200.44.
In EUR (‘000)

Table A: Summary reconciliation of accounting assets and leverage ratio exposures
1
2
3

Total assets as per published financial statements

Adjustments for derivative financial instruments

5

Adjustment for securities financing transactions (SFTs)

EU-6a
EU-6b

4,158,460

Adjustment for entities which are consolidated for accounting purposes but are outside thescope of regulatory consolidation(Adjustment for fiduciary assets recognized on the balance sheet pursuant to the applicableaccounting framework but excluded from the leverage ratio total exposure measure inaccordance with Article 429(13) of Regulation (EU) No 575/2013)

4

631-Dec-20

Adjustment for off-balance sheet items (i.e. conversion to credit equivalent amounts of offbalance sheet exposures)(Adjustment for intragroup exposures excluded from the leverage ratio total exposure measurein accordance with Article 429(7) of Regulation (EU) No 575/2013)(Adjustment for exposures excluded from the leverage ratio total exposure measure inaccordance with Article 429(14) of Regulation (EU) No 575/2013)

7

Other adjustment(103,758)

8

Leverage ratio total exposure measure

4,054,702

In EUR (‘000)

Table B: Leverage ratio common disclosure

31-Dec-20

On-balance sheet exposures (excluding derivatives and SFTs)
1

On-balance sheet items (excluding derivatives, SFTs and fiduciary assets, but
including collateral)

4,158,460

2(Asset amounts deducted in determining Tier 1 capital)(103,758)

3

Total on-balance sheet exposures (excluding derivatives, SFTs and fiduciary assets)(sum of lines 1 and 2)

4,054,702

Derivative exposures
4
5
EU-5a
6
7

Replacement cost associated with all derivatives transactions (i.e. net of eligible cash variation
margin)Add-on amounts for PFE associated with all derivatives transactions (mark- to-market
method)Exposure determined under Original Exposure Method
Gross-up for derivatives collateral provided where deducted from the balance sheet assets
pursuant to the applicable accounting framework(Deductions of receivables assets for cash variation margin provided in derivatives
transactions)

8(Exempted CCP leg of client-cleared trade exposures)

9

Adjusted effective notional amount of written credit derivatives

10(Adjusted effective notional offsets and add-on deductions for written credit derivatives)

11

Total derivatives exposures (sum of lines 4 to 10)

12

Gross SFT assets (with no recognition of netting), after adjusting for sales accounting
transactions

12a

Gross SFT assets (with no recognition of netting)

12b

Adjustments for sales accounting transactions

13(Netted amounts of cash payables and cash receivables of gross SFT assets)

14

Counterparty credit risk exposure for SFT assets

SFT exposures

44 Art. 451(1)(a-c) CRR.

28

EU-14a15
EU-15a16

Derogation for SFTs: Counterparty credit risk exposure in accordance with Articles 429b(4)and 222 of Regulation (EU) No 575/2013
Agent transaction exposures(Exempted CCP leg of client-cleared SFT exposure)
Total securities financing transaction exposures (sum of lines 12 to 15a)Other off-balance sheet exposures

17

Off-balance sheet exposures at gross notional amount

18(Adjustments for conversion to credit equivalent amounts)

19

Other off-balance sheet exposures (sum of lines 17 to 18)
Exempted exposures in accordance with Article 429(7) and (14) of Regulation (EU) No
575/2013 (on and off-balance sheet)

EU-19aEU-19b(Intragroup exposures (solo basis) exempted in accordance with Article 429(7) of Regulation(EU) No 575/2013 (on and off-balance sheet))(Exposures exempted in accordance with Article 429 (14) of Regulation (EU) No 575/2013 (onand off-balance sheet))
Capital and total exposure measure

20

Tier 1 capital

799,867

21

Leverage ratio total exposure measure (sum of lines 3, 11, 16, 19, EU-19a and EU-19b)

4,054,702

Leverage Ratio
22

Leverage Ratio

19.73%

Choice on transitional arrangements and amount of derecognized fiduciary items
EU-23

Choice on transitional arrangements for the definition of the capital measure

EU-24

Amount of derecognized fiduciary items in accordance with Article 429(11) of Regulation (EU)No 575/2013
In EUR (‘000)

Table C: Split-up of on balance sheet exposures (excluding derivatives, SFTs andexempted exposures)

31-Dec-20

EU-1

Total on-balance sheet exposures (excluding derivatives, SFTs, and exempted
exposures), of which:

4,148,490

EU-2

Trading book exposures

EU-3

Banking book exposures, of which:

EU-4

Covered bonds

EU-5

Exposures treated as sovereigns

EU-6

Exposures to regional governments, MDB, international organizations and PSE not treated assovereigns

EU-7

Institutions

EU-8

Secured by mortgages of immovable properties

EU-9

Retail exposures

EU-10

Corporate

EU-11

Exposures in default

EU-12

Other exposures (e.g. equity, securitizations, and other non-credit obligation assets)

4,148,490

1,606,682

1,965,975

318,422

257,411Adyen Transparency and Disclosure Report 2020|Page 29