Corporate Governance Report
We are committed to the principles of good corporate governance and continually strive to strengthen and sustain the trust that investors, business partners, employees and the public have placed in us. Accordingly, our Executive and Supervisory Boards regularly evaluate current national and international standards in responsible, transparent and efficient company management with the objective of enhancing corporate governance at the adidas Group and creating sustainable value. Important corporate governance activities in 2006 focused on the implementation of our Code of Conduct, the examination of the updated German Corporate Governance Code as well as on our successful efforts to increase Annual General Meeting attendance.
Dual Board System: Executive and Supervisory Boards
As required by the German Stock Corporation Act (Aktiengesetz
– AktG), adidas AG has a dual board system which
assigns management functions to the Executive Board and
control functions to the Supervisory Board. These two boards
are strictly separated in terms of membership and competencies.
Our Executive Board is currently composed of four
members (see Executive Board). Our 12-member Supervisory
Board comprises an equal number of shareholder and
employee representatives in accordance with the German
Co-Determination Act (Mitbestimmungsgesetz – MitbestG)
(see Supervisory
Board).
Efficiency through Supervisory Board Committees
In order to perform its tasks in a most efficient manner, our
Supervisory Board has formed expert committees, whose
chairmen report to the entire Supervisory Board on a regular
basis.
» The Steering Committee, which consists of the Supervisory Board Chairman and his two deputies, discusses major issues, prepares resolutions and is authorized in special urgent cases to take resolutions in lieu of the Supervisory Board.
» The co-determined General Committee with four members is responsible in particular for the preparation of Supervisory Board resolutions regarding the appointment of Executive Board members. Further, the General Committee decides on the content of the related employment agreements as well as the structure and level of Executive Board compensation.
» The co-determined Audit Committee, which comprises four members, deals primarily with accounting and risk management issues. It also assesses and monitors the auditor’s independence. It determines audit priorities, discusses the quarterly results and prepares Supervisory Board resolutions regarding the annual financial statements and the consolidated financial statements as well as the agreement with the auditor.
» The four-member Mediation Committee, formed in accordance with § 27 section 3 of the German Co-Determination Act, is responsible for submitting a proposal to the Supervisory Board regarding the appointment or dismissal of Executive Board members if the two-thirds Supervisory Board majority required for an appointment or dismissal is not achieved.
» In addition, the co-determined “Greg Norman” Committee was established ad hoc in 2006 with four members. The Supervisory Board delegated the authority to grant approval and pass resolutions relating to the sale of the Greg Norman Collection wholesale business to this committee.
For a summary of the activities of the Supervisory Board and its committees in 2006, see Supervisory Board Report. For an overview of the individual Supervisory Board and committee members, see Supervisory Board.
Close Cooperation between Executive and
Supervisory Boards
Our Executive and Supervisory Boards cooperate closely with
each other and on a basis of mutual trust in the best interest
of the adidas Group. Our Executive Board develops the Group’s
strategic orientation, and then coordinates it with the Supervisory
Board and ensures its implementation. The Executive
Board informs the Supervisory Board frequently, expeditiously
and comprehensively on the Group’s strategy, planning, business
development and risk management. In particular, the
Chairmen of our Executive and Supervisory Boards maintain
frequent contact. For certain business transactions and
measures, the Executive Board must obtain the Supervisory
Board’s prior consent. This includes, for example, engaging in
or giving up major fields of activity, the acquisition or disposal
of substantial corporate holdings and the approval of the budget,
including the capital expenditure and financial plan. For
particularly urgent matters, the Supervisory Board may also
resolve on issues by way of a written circular vote. The Rules
of Procedure of the Executive Board and Supervisory Board
can be viewed online at
www.adidas-Group.com.
