In accordance with IAS 24, CNH Industrial’s related parties are companies and persons who are capable of exercising control or joint control or who have a signifi cant infl uence over the Group, CNH Industrial N.V.’s parent company EXOR S.p.A. and the companies that EXOR S.p.A.
controls or has a signifi cant infl uence over, including Fiat Chrysler Automobiles N.V. and its subsidiaries and affi liates (“FCA”), unconsolidated subsidiaries of CNH Industrial and the associates or joint ventures of CNH Industrial. Finally, the members of the Board of Directors, the statutory auditors (in 2013 for Fiat Industrial S.p.A.) and managers of CNH Industrial with strategic responsibility and members of their families are considered related parties too.
As of December 31, 2014, on the basis of the information published on the website of the Netherlands Authority for the Financial Markets and in reference to the up-to-date information on the fi les of CNH Industrial, EXOR S.p.A. held 41.44% of CNH Industrial’s voting power and had the ability to signifi cantly infl uence the decisions submitted to a vote of CNH Industrial’s shareholders, including approval of annual dividends, the election and removal of directors, mergers or other business combinations, the acquisition or disposition of assets and issuances of equity and the incurrence of indebtedness. The percentage above has been calculated as the ratio of (i) the aggregate number of common shares and special voting shares benefi cially owned by EXOR S.p.A. and (ii) the aggregate number of outstanding common shares and special voting shares of CNH Industrial as of December 31, 2014.
CNH Industrial engages in transactions with unconsolidated subsidiaries, joint ventures, associates and other related parties on commercial terms that are normal in the respective markets, considering the characteristics of the goods or services involved. The Company’s Audit Committee conducts a review to determine that all related party transactions are on what the Committee believes to be arm’s-length terms.
Relations between CNH Industrial N.V. and its unconsolidated subsidiaries, its joint ventures, its associates and other related parties consist mainly of transactions of a commercial nature, which have an effect on revenues, cost of sales and trade receivables and payables.
Transactions with FCA
In connection with the Demerger, Fiat and Fiat Industrial entered into a Master Services Agreement (“MSA”) which sets forth the primary terms and conditions pursuant to which the various service provider subsidiaries of such entities provide services (such as purchasing, tax, accounting and other back offi ce services, security and training) to the various service receiving subsidiaries. As structured, the applicable service provider and service receiver subsidiaries become parties to the MSA through the execution of an Opt-In letter which may contain additional terms and conditions. Pursuant to the MSA, service receivers are required to pay to service providers the actual cost of the services plus a negotiated margin. In 2011, various entities of CNH Industrial approved the MSA and the applicable related Opt-In letters. Companies of FCA provide CNH Industrial with administrative services such as accounting, cash management, maintenance of plant and equipment, security, research and development, information systems and training under the terms and conditions of the MSA and the applicable Opt-in Letters.
Additionally, CNH Industrial sells engines and light commercial vehicles to, and purchases engine blocks and other components from, the companies of FCA. The main effects of such transactions refl ected on this Consolidated Annual Report are as follows:
|Cost of sales||551||631|
|Selling, general and administrative costs||234||275|
|($ million)||At December 31, 2014||At December 31, 2013|
Transactions with joint ventures
CNH Industrial sells commercial vehicles, agricultural and construction equipment, and provides technical services to joint ventures such as Iveco Oto Melara Società consortile, CNH de Mexico SA de CV, Turk Traktor ve Ziraat Makineleri A.S., SAIC Iveco Commercial Vehicle Investment Company Limited and New Holland HFT Japan Inc. CNH Industrial also purchases equipment from joint ventures, such as Turk Traktor ve Ziraat Makineleri A.S. The main effects of such transactions refl ected on this Consolidated Annual Report are as follows:
|Cost of sales||564||505|
|($ million)||At December 31, 2014||At December 31, 2013|
Transactions with associates
CNH Industrial sells trucks and commercial vehicles and provides services to associates. In 2014, revenues from associates totaled $97 million ($54 million in 2013) and mainly related to transactions with IVECO-AMT Ltd. At December 31, 2014 receivables arising from the revenues discussed above amounted to $68 million ($26 million at December 31, 2013).
Transactions with other related parties
In 2014, no such transactions occurred. In 2013, the cost of sales included $25 million due to purchases of components from the Brembo Group, controlled by Alberto Bombassei who was a member of the Board of Directors of Fiat Industrial S.p.A. until the Merger.
Compensation to Directors, Statutory Auditors and Key Management
The fees of the Directors and Statutory Auditors of CNH Industrial N.V. for carrying out their respective functions, including those in other consolidated companies, are as follows:
|(in thousands of dollars)||2014||2013|
|Statutory Auditors (b)||-||252|
(a.) This amount includes the notional compensation cost of $25,084 thousand in 2014 ($9,950 thousand in 2013) arising from stock grants awarded to the Chairman, the Chief Executive Offi cer and certain Directors.
(b.) Statutory Auditors refer to Fiat Industrial S.p.A. before the Merger.
The aggregate expense incurred in 2014 for the compensation of Executives with strategic responsibilities of the Group amounts to approximately $28 million ($27 million in 2013). This amount is inclusive of the notional compensation cost for share-based payments.
Commitments and guarantees with related parties
At December 31, 2014 the Group had issued guarantees on commitments of its joint ventures for amount of $277 million ($272 million at December 31, 2013), mainly related to Iveco - Oto Melara Società consortile.