Source: https://www.adidas-group.com/en/investors/corporate-governance/declaration-compliance/
Timestamp: 2019-04-21 22:01:53+00:00

Document:
Once a year, the Executive Board and the Supervisory Board of adidas AG issue a declaration of compliance pursuant to § 161 German Stock Corporation Act.
The German Corporate Governance Code provides guidelines for the management and supervision of German listed companies and contains internationally and nationally recognized standards for good and responsible governance. The German Corporate Governance Code aims at promoting the trust of shareholders, business partners, employees and the general public in the management of German stock corporations.
We have examined the subject of corporate governance in depth and comply with the recommendations contained in the German Corporate Governance Code with a few exceptions. We comply with the non-binding suggestions with one exception. Once a year, the Executive Board and the Supervisory Board of adidas AG issue a declaration of compliance pursuant to § 161 German Stock Corporation Act (Aktiengesetz - AktG).
The Executive Board and Supervisory Board of adidas AG issued their last Declaration of Compliance pursuant to § 161 AktG in February 2018. For the period from the publication of the last Declaration of Compliance, the following Declaration refers to the German Corporate Governance Code (hereinafter referred to as the “Code”) as amended on February 7, 2017, which was published in the Federal Gazette on April 24, 2017 and May 19, 2017 (corrected version).
In the past, the Supervisory Board refrained from taking a generalized approach as regards a regular limit of length of membership for Supervisory Board members. When revising the objectives regarding its composition (and determining a competency profile for the full Supervisory Board) at its meeting in October 2018, the Supervisory Board resolved to determine a regular limit of length of membership for Supervisory Board members and has since been compliant with all recommendations pursuant to section 5.4.1 subsection 2 sentence 2 in conjunction with sentence 1 of the Code.
One member of the Supervisory Board, Ian Gallienne, holds more than three mandates in supervisory bodies of non-group companies which are listed at a stock exchange or have similar requirements. Ian Gallienne is Co-Chief Executive Officer of Groupe Bruxelles Lambert (GBL). GBL is a holding company and, in its capacity as an institutional investor represented by, inter alia, its Co-Chief Executive Officer, regularly holds mandates in supervisory bodies of portfolio companies. All companies (apart from adidas AG) in which Ian Gallienne holds mandates in supervisory bodies are portfolio companies or subsidiaries of GBL or are under common control with it and thus belong to the same group of companies. They have to be attributed to his main occupation as Co-Chief Executive Officer of GBL. Therefore, we are of the opinion that, as regards its intent and purpose, the recommendation of section 5.4.5 subsection 1 sentence 2 is not applicable to Ian Gallienne. However, as a precaution, we declare a deviation. Moreover, the Supervisory Board has assured itself that Ian Gallienne has sufficient time to perform his Supervisory Board mandate at adidas AG.
The Executive Board and Supervisory Board of adidas AG issued their last Declaration of Compliance pursuant to § 161 AktG on February 13, 2017. For the period from the publication of the last Declaration of Compliance up to and including May 19, 2017, the following Declaration refers to the German Corporate Governance Code (hereinafter referred to as the “Code”) as amended on May 5, 2015. For the period as of May 20, 2017, the following Declaration refers to the recommendations of the Code as amended on February 7, 2017, which was published in the Federal Gazette on April 24, 2017 and May 19, 2017 (corrected version).
For Executive Board members of adidas AG initially appointed on or after October 1, 2013 and for Executive Board members to be appointed in future, there are defined contribution pension plans which, due to their structure, do not aim to reach a defined target level of provision. In the view of the Supervisory Board, this structure leads to a higher degree of control and future planning capability with regard to the company's expenses for pension plans.
In accordance with section 5.4.1 subsection 2 sentence 2 in conjunction with sentence 1 of the Code, the Supervisory Board has specified concrete objectives for its composition. However, it has not specified a regular limit of length of membership for Supervisory Board members. The Supervisory Board is of the opinion that an extended length of membership of individual Supervisory Board members may, in the individual case, be in the interest of the company and of those entitled to elect members to the Supervisory Board, which would not be taken into consideration if there was a general limit.
One member of the Supervisory Board, Ian Gallienne, holds more than three mandates in supervisory bodies of non-group companies with similar requirements. Ian Gallienne is Co-Chief Executive Officer of Groupe Bruxelles Lambert (GBL). GBL is a holding company and, in its capacity as an institutional investor represented by, inter alia, its Co-Chief Executive Officer, regularly holds mandates in supervisory bodies of its portfolio companies. All companies in which Ian Gallienne holds mandates in supervisory bodies are portfolio or group companies of GBL and these mandates thus have to be attributed to his main occupation as Co-Chief Executive Officer. Therefore, we are of the opinion that, as regards its intent and purpose, the recommendation of section 5.4.5 subsection 1 sentence 2 is not applicable to Ian Gallienne. However, as a precaution, we declare a deviation based on the good reasons set out above. Moreover, the Supervisory Board has assured itself that Ian Gallienne has sufficient time to perform his Supervisory Board mandate at adidas AG.
The Executive Board and Supervisory Board of adidas AG issued their last Declaration of Compliance pursuant to § 161 AktG on February 15, 2016 and made an intra-year change on March 3, 2016. For the period from the publication of the last complete Declaration of Compliance, the following Declaration refers to the German Corporate Governance Code (hereinafter referred to as the “Code”) as amended on May 5, 2015, which was published in the Federal Gazette on June 12, 2015.
In accordance with section 5.4.1 subsection 2 sentence 1 of the Code, the Supervisory Board has specified concrete objectives for its composition. However, it has not specified a regular limit of length of membership for Supervisory Board members. The Supervisory Board is of the opinion that an extended length of membership of individual Supervisory Board members may, in the individual case, be in the interest of the company and of those entitled to elect members to the Supervisory Board, which would not be taken into consideration if there was a general limit.
One member of the Supervisory Board, Ian Gallienne, holds more than three mandates in supervisory bodies of non-group companies with similar requirements. Ian Gallienne is Co-Chief Executive Officer of Groupe Bruxelles Lambert (GBL). GBL is a holding company and, in its capacity as a professional investor represented by, inter alia, its Co-Chief Executive Officer, regularly holds mandates in supervisory bodies of its portfolio companies. All companies in which Ian Gallienne holds mandates in supervisory bodies are portfolio or group companies of GBL and these mandates thus have to be attributed to his main occupation as Co-Chief Executive Officer. Therefore, we are of the opinion that, as regards its intent and purpose, the recommendation of section 5.4.5 subsection 1 sentence 2 is not applicable to Ian Gallienne. However, as a precaution, we declare a deviation based on the good reasons set out above. Moreover, the Supervisory Board has assured itself that Ian Gallienne has sufficient time to perform his Supervisory Board mandate at adidas AG.
Pursuant to section 5.4.5 subsection 1 sentence 2, any Supervisory Board member who is a member of the executive board of a listed company shall not accept more than a total of three supervisory board mandates in non-group listed companies or controlling bodies of non-group companies with similar requirements.
On March 2, 2016, the Supervisory Board of adidas AG resolved to propose to the Company's Annual General Meeting taking place on May 12, 2016, that the number of Supervisory Board members be increased from currently twelve to a total of sixteen members in future. The Supervisory Board has resolved to propose to the Annual General Meeting that Mr. Ian Gallienne be elected to one of the newly created seats on the Company's Supervisory Board. Mr. Gallienne is, inter alia, Co-Chief Executive Officer of the listed company Groupe Bruxelles Lambert (GBL) and holds more than three mandates in supervisory bodies of non-group companies with similar requirements.
The Supervisory Board is convinced that Mr. Gallienne nonetheless has sufficient time to perform all his mandates, including a Supervisory Board mandate for adidas AG. GBL is a holding company and, as a professional shareholder, regularly holds mandates in supervisory bodies of its portfolio companies through its Co‑Chief Executive Officer. All companies in which Mr. Gallienne is represented in supervisory bodies are portfolio or affiliated companies of GBL and therefore part of his principal professional activity as Co-Chief Executive Officer. In the opinion of the Supervisory Board, in terms of its meaning and purpose, the recommendation pursuant to section 5.4.5 subsection 1 sentence 2 is not applicable to Mr. Gallienne, and the Executive Board and the Supervisory Board are therefore convinced that there are good reasons for a deviation.
The Supervisory Board intends to follow the recommendation of section 5.4.5 subsection 1 sentence 2 for future proposals regarding the election of Supervisory Board members.
The Executive Board and Supervisory Board of adidas AG issued their last Declaration of Compliance pursuant to § 161 AktG on February 12, 2015 and made an intra-year change on November 4, 2015. For the period from the publication of the last complete Declaration of Compliance up to June 12, 2015, the following Declaration refers to the German Corporate Governance Code (hereinafter referred to as the “Code”) as amended on June 24, 2014. For the period as of June 13, 2015, the following Declaration refers to the recommendations of the Code as amended on May 5, 2015, which was published in the Federal Gazette on June 12, 2015.
Since the issuance of the last Declaration of Compliance, we have followed the recommendations of the Code for one Executive Board service contract that has been newly concluded and for one Executive Board service contract that has been extended with effect from January 1, 2016. Thus, all Executive Board service contracts are now compliant with the recommendations of the Code.
Since the issuance of the last Declaration of Compliance, a severance payment cap in accordance with the recommendations of the Code was agreed for one Executive Board service contract that has been newly concluded and for one Executive Board service contract that has been extended with effect from January 1, 2016. Thus, all Executive Board service contracts are now compliant with the recommendations of the Code.
For Executive Board members of adidas AG initially appointed on or after October 1, 2013 and for Executive Board members to be appointed in future, the hitherto defined benefit pension plans were converted to defined contribution pension plans with retroactive effect from January 1, 2015. Due to their structure, the defined contribution pension plans do not aim to reach a defined target level of provision. In the view of the Supervisory Board, the new pension plan arrangement leads to a higher degree of control and future planning capability with regard to the company’s expenses for pension plans.
The pension plans of the Executive Board members initially appointed on or before September 30, 2013 will remain defined benefit pension plans. Thus, the deviation declared above does not apply to the entire Executive Board of adidas AG.
In accordance with section 5.4.1 subsection 2 sentence 1 of the Code, the Supervisory Board has specified concrete objectives for its composition. However, it has not specified a regular limit of length of membership for Supervisory Board members. The Supervisory Board is of the opinion that a general limit would not take into consideration specific factors which might justify an extended length of membership of individual Supervisory Board members in the interest of the company and from the point of view of those entitled to elect members to the Supervisory Board.
Pursuant to section 4.2.3 subsection 3, for pension plans, the Supervisory Board shall establish the pension level aimed for in each case – also considering the length of time for which the individual has been an Executive Board member – and take into account the resulting annual and long-term expense for the company.
Up until now, a defined benefit pension plan has been in place for the Executive Board members of adidas AG. On November 4, 2015, the Supervisory Board resolved to retroactively change the pension plans for Executive Board members of adidas AG initially appointed after October 1, 2013 from the current defined benefit pension plan to a defined contribution pension plan with effect from January 1, 2015. This shall also apply to Executive Board members appointed in future. The Executive Board members under the scope of this new pension plan are thus subject to a defined contribution pension plan which, due to its structure, does not aim to reach a defined target pension level.
In practice, there is a growing trend to switch to defined contribution pension plans. In the view of the Supervisory Board, the new pension plan leads to a higher degree of control and future planning capability with regard to the company’s expenses for the pension plan and thus also to a higher degree of transparency.
The pension plans of the Executive Board members initially appointed on or before September 30, 2013 will not be switched to defined contribution pension plans. Thus, the deviation declared above does not apply to the entire Executive Board of adidas AG.
The Executive Board and Supervisory Board of adidas AG issued their last Declaration of Compliance pursuant to § 161 AktG on February 13, 2014. For the period from the publication of the last Declaration of Compliance up to September 30, 2014, the following Declaration refers to the German Corporate Governance Code (hereinafter referred to as the “Code”) as amended on May 13, 2013. For the period as of October 1, 2014, the following Declaration refers to the recommendations of the Code as amended on June 24, 2014, which was published in the Federal Gazette on September 30, 2014.
We follow the recommendations of the Code in all contracts that have been newly concluded or extended since the issuance of the last Declaration of Compliance, and we intend to follow the recommendations in the future as well when contracts are extended or newly concluded. The company cannot, however, unilaterally interfere with existing contracts, nor would such interference be in line with the principle of contractual fidelity.
We believe that for contracts with a term of up to three years the short contractual term agreed in connection with further contractual provisions offers sufficient protection from inappropriate severance payments. Nevertheless, we have agreed on a severance cap in accordance with the recommendations of the Code for all contracts that have been newly concluded or extended since the issuance of the last Declaration of Compliance, and we intend to follow the recommendations in the future as well when contracts are extended or newly concluded.
In the past, we have not reported the ownership of shares or related financial instruments on an individual basis for the members of the Boards if such ownership exceeded 1% of the shares issued by adidas AG. Henceforth, we will observe this recommendation of the Code and report accordingly in the Corporate Governance Report.
The Executive Board and Supervisory Board of adidas AG issued their last Declaration of Compliance pursuant to § 161 AktG on February 13, 2013. For the period from the publication of the last Declaration of Compliance up to June 10, 2013, the following Declaration refers to the German Corporate Governance Code (hereinafter referred to as the “Code”) as amended on May 15, 2012. For the period as of June 11, 2013, the following Declaration refers to the recommendations of the Code as amended on May 13, 2013, which was published in the Federal Gazette on June 10, 2013.
The service contracts of the Executive Board members existing at the time of this Declaration are capped regarding not only the fixed compensation but also the variable compensation components. They do not, however, stipulate a further separate cap for any potential special bonus granted at the discretion of the Supervisory Board. In our opinion, compensation components granted at the discretion of the Supervisory Board do not require a cap. Nevertheless, we intend to make a corresponding amendment to the service contracts as of their respective extension or upon conclusion of a new contract. The company cannot unilaterally interfere with existing contracts, nor would such interference be in line with the principle of contractual fidelity.
In accordance with the recommendations of the Code, contracts with a term of more than three years provide for a severance payment cap. We believe that for contracts with a term of up to three years the short contractual term agreed in connection with further contractual provisions offers sufficient protection from inappropriate severance payments. Hence, no formal severance payment cap is planned.
Insofar as no further statutory obligations exist, we report the ownership of shares or related financial instruments if it exceeds 1% of the shares issued by adidas AG, but we do not report this on an individual basis for the members of the Boards. Instead, we publish the total holdings of all members of the Executive Board and all members of the Supervisory Board separately in order to safeguard the Board members’ protectable interests.
The Executive Board and Supervisory Board of adidas AG issued their last Declaration of Compliance pursuant to § 161 AktG on February 13, 2012. For the period from the publication of the last Declaration of Compliance up tp June 15, 2012, the following Declaration refers to the German Corporate Governance Code (hereinafter referred to as the “Code”) as amended on May 26, 2010. For the period as of June 16, 2012, the following declaration refers to the recommendations of the Code as amended on May 15, 2012, which was published in the Federal Gazette on June 15, 2012.
In order to ensure the independence of the Supervisory Board in their supervisory functions, the members of the Supervisory Board do not receive any performance-related compensation.
This no longer counts as a deviation from the Code, as the recommendation regarding performance-related Supervisory Board compensation no longer exists as a recommendation in the new version of the Code dated May 15, 2012.
The Executive Board and Supervisory Board of adidas AG issued their last Declaration of Compliance pursuant to § 161 AktG on February 11, 2011. For the period from the publication of the last Declaration of Compliance, the following Declaration refers to the German Corporate Governance Code (hereinafter referred to as the “Code”) as amended on May 26, 2010, which was published in the electronic Federal Gazette on July 2, 2010.
In the past, Chief Executive Officer Herbert Hainer has held four non-Group supervisory board or supervisory body mandates with similar requirements. With effect from February 28, 2011, Herbert Hainer has resigned from his position at Engelhorn KGaA. Consequently, as of March 1, 2011, all Executive Board members meet the recommendation of the Code.
Insofar as no further statutory obligations exist, we report the ownership of shares if it exceeds 1 % of the shares issued by adidas AG, but we do not report this on an individual basis for the members of the Boards. Instead, we publish the total holdings of all members of the Executive Board and all members of the Supervisory Board separately in order to safeguard the Board members’ protectable interests.
The Executive Board and Supervisory Board of adidas AG issued their last Declaration of Compliance pursuant to § 161 AktG on February 11, 2010. For the period from the publication of the last Declaration of Compliance to July 2, 2010, the following Declaration refers to the German Corporate Governance Code (hereinafter referred to as the “Code”) as amended on June 18, 2009. For the period as of July 3, 2010, the following Declaration refers to the recommendations of the Code as amended on May 26, 2010, which was published in the electronic Federal Gazette on July 2, 2010.
The D&O liability insurance for the members of our Executive Board and Supervisory Board, a group insurance for a number of executives, had not provided for a deductible until June 30, 2010. With effect from July 1, 2010, a deductible which complies with the provisions of the German Act on the Appropriateness of Management Board Remuneration (Gesetz zur Angemessenheit der Vorstandsvergütung – VorstAG) was agreed for the Executive Board of adidas AG. A corresponding deductible was also agreed for the members of the Supervisory Board with effect from July 1, 2010.
An age limit for Supervisory Board members has not been set so far. The Audit Committee and the entire Supervisory Board discussed the recommendations of the Code regarding concrete objectives for the composition of the Supervisory Board. Subsequently, at its meeting on February 9, 2011, the Supervisory Board resolved upon the objectives and also set an age limit for Supervisory Board members. The new recommendations of the Code will thus be met when appointing new Supervisory Board members.
As the Executive Board member Herbert Hainer currently holds two supervisory board mandates in Group-external listed companies and two mandates in supervisory bodies of companies with similar requirements, there has been a deviation from the recommendation since section 5.4.5 sentence 2 new version came into force. With effect from February 28, 2011, Herbert Hainer will resign his position at Engelhorn KGaA. Given the long period of membership in this supervisory body, the amended recommendation of the Code can only be met following a certain period of preparation. We regard this temporary deviation as justified. As of March 1, 2011, all Executive Board members will meet the recommendation of the Code.
The members of our Supervisory Board do not receive any performance-related compensation in order to exclude any potential conflicts of interest with regard to decisions of the Supervisory Board, which might influence performance criteria.
Insofar as no further statutory obligations exist, we report the ownership of shares if it exceeds 1% of the shares issued by adidas AG but we do not report this on an individual basis for the members of the Boards. Instead, we publish the total holdings of all members of the Executive Board and all members of the Supervisory Board separately in order to safeguard the Board members’ interests worthy of protection.
The Executive Board and Supervisory Board of adidas AG issued their last Declaration of Compliance pursuant to § 161 AktG on February 11, 2009. The following declaration refers to the German Corporate Governance Code (hereinafter referred to as the “Code”) as amended on June 6, 2008 for the period between February 12 and August 5, 2009. For the period as of August 6, 2009, the following declaration refers to the recommendations of the Code as amended on June 18, 2009, which was published in the electronic Federal Gazette on August 5, 2009.
So far, the D&O liability insurance policy for our Executive Board and Supervisory Board members does not provide for a deductible as this is a group insurance for a number of executives in Germany and abroad and a deductible is not common practice outside of Germany. Since the German Act on the Appropriateness of Management Board Remuneration (Gesetz zur Angemessenheit der Vorstandsvergütung - VorstAG) became effective, § 93 section 2 sentence 3 AktG in its new version stipulates that a deductible is mandatory when concluding a D&O liability insurance for Executive Board members. adidas AG will comply with the statutory provisions on the deductible and amend existing D&O liability insurance policies within the statutory transition period, i. e. at the latest effective July 1, 2010. In addition, section 3.8 of the Code as amended on June 18, 2009 recommends agreeing upon a respective deductible for Supervisory Board members. adidas AG has decided to comply also with this recommendation as of July 1, 2010 at the latest.
The recommendation of the Code provides for a severance payment cap for contracts with a term of more than three years. We believe that for contracts with a term of up to three years the short contractual term agreed in connection with further contractual provisions offer sufficient protection from inappropriate severance payments. Hence, no formal severance payment cap is intended.
We do not set an age limit for Supervisory Board members as this is, in our opinion, an unnecessary limitation of the rights of our shareholders and employees when electing their representatives to the Supervisory Board.
The members of our Supervisory Board do not receive any performance-oriented compensation in order to exclude any potential conflicts of interest with regard to decisions of the Supervisory Board, which might have influence upon performance criteria.
Pursuant to § 161 AktG the Executive Board and the Supervisory Board of a joint stock company are required to annually declare that the recommendations of the “German Corporate Governance Code Government Commission” (hereinafter referred to as the “Code”) published in the official section of the electronic Federal Gazette by the Federal Ministry of Justice have been and are met or which recommendations have not been or are not applied. Shareholders must be given permanent access to such declaration.
The Executive Board and the Supervisory Board of adidas AG issued last year’s Declaration of Compliance in accordance with § 161 AktG on February 11, 2008. For the period from February 12 until August 8, 2008, the declaration hereafter refers to the Code as amended on June 14, 2007. For the period as of August 9, 2008, this declaration refers to the recommendations of the Code as amended on June 6, 2008, published in the electronic Federal Gazette on August 8, 2008.
The D&O liability insurance for Executive Board and Supervisory Board members does not provide for a deductible (Article 3.8).
The Executive Board employment contracts do not provide for a severance payment cap if the contracts are terminated prematurely without serious cause (Article 4.2.3).
No age limit has been specified for Supervisory Board members (Article 5.4.1).
The members of the Supervisory Board do not receive any performance-oriented compensation (Article 5.4.6).
§ 161 of the German Stock Corporation Act (AktG) requires the Executive Board and the Supervisory Board of a publicly listed stock corporation to declare each year that the recommendations of the “German Corporate Governance Code Government Commission” (hereinafter referred to as the “Code”) published in the official section of the electronic Federal Gazette by the Federal Ministry of Justice have been and will be met or which recommendations have not been or will not be applied. Shareholders must be given permanent access to such declaration.
The Executive Board and the Supervisory Board of adidas AG issued last year’s Declaration of Compliance in accordance with § 161 AktG on February 16, 2007. For the period from February 17 until July 20, 2007, the declaration hereafter refers to the Code in effect as of June 12, 2006. For the period as of July 21, 2007, this declaration refers to the recommendations of the Code as amended on June 14, 2007, published in the electronic Federal Gazette on July 20, 2007.
The D&O liability insurance for Executive Board and Supervisory Board members does not include a deductible (Article 3.8).
The structure of the Executive Board compensation system is reviewed and determined by the Supervisory Board’s General Committee (Article 4.2.2).
The stock options granted to Executive Board members within the scope of the Management Stock Option Plan (MSOP) do not provide a possibility of limitation (Cap) for extraordinary, unforeseen developments (Article 4.2.3). Future stock option plans will comply with this recommendation.
The compensation of the Supervisory Board members does not include performance-related components based on the Group’s performance (Article 5.4.7).
The ownership of shares or related financial instruments by Executive and Supervisory Board members is reported if it reaches, exceeds or falls below the notification thresholds provided in the German Securities Trading Act and if adidas AG is notified of this fact (Article 6.6).
In addition, in the Supervisory Board meeting on November 7, 2007, the Supervisory Board resolved to comply with the recommendation of the Code to form a nomination committee (Article 5.3.3). A decision upon the composition of the committee is expected for spring 2008 in order for the committee to have sufficient time for its tasks with regard to the election of the Supervisory Board members at the Annual General Meeting in 2009.
 Our Executive Board members do not have any further stock options to exercise in the fiscal year 2008.
 adidas AG has followed the recommendation to compensate for memberships in Supervisory Board committees since January 1, 2008.
Investors Corporate Governance Overview We are convinced that good corporate governance enhances the confidence placed in our company by our shareholders, business partners, employees and the financial markets.
Investors Bodies The Executive Board, the Supervisory Board and the Annual General Meeting form the central corporate bodies of adidas AG.
Investors Articles of Association The German Stock Companies Act requires joint-stock companies to have Articles of Association.
Investors adidas Fair Play Code of Conduct Fair Play is the Rule of our Game!
Investors Risk and Opportunity Report adidas continuously explores and develops opportunities to sustain earnings and drive long-term increases in shareholder value.
Investors Accounting and Annual Audit adidas AG prepares its consolidated financial statements and interim financial report in accordance with International Financial Reporting Standards (IFRS) as applicable in the European Union.
Company Supervisory Board The Supervisory Board of adidas AG - in accordance with the German Co-Determination Act (Mitbestimmungsgesetz) - is composed of sixteen members.

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