Reebok 2006 Annual Report Download - page 119

» Based on a resolution of the Annual General Meeting
dated May 8, 2003, the Executive Board issued a convertible
bond which entitles bond holders to convert their bonds into
no more than 3,921,569 shares of adidas AG. If bond hold-
ers exercise their conversion rights, the Executive Board is
obligated to issue a corresponding number of shares from
the conditional capital, which was resolved upon at the same
Annual General Meeting. As at the balance sheet date, follow-
ing the implementation of the capital increase from retained
earnings without the issuance of new shares and the imple-
mentation of a share split in a ratio of 1 to 4 in June 2006
as well as the exercise of a conversion right resulting from
one bond, the Executive Board had 15,684,315 no-par-value
shares remaining for issuance to bond holders in the event of
conversion. Further, the Executive Board is entitled, until May
7, 2008, based on the aforementioned authorization, to issue
additional bonds with warrants or convertible bonds bearing
subscription or conversion rights to no more than 18,125,000
shares.
» Based on a resolution of the Annual General Meeting dated
May 20, 1999, the Executive Board implemented a Manage-
ment Share Option Plan (MSOP) for members of the Execu-
tive Board of adidas AG, as well as managing directors/senior
vice presidents of its related companies and other executives
of adidas AG and its related companies (MSOP beneficiaries).
The last stock options were issued in 2003. Stock options
arising from the MSOP may only be exercised subject to the
attainment of at least one of two performance objectives (see
Note 33, p. 178). If MSOP beneficiaries exercise their stock
options, the Executive Board is obligated to issue a corre-
sponding number of shares from the conditional capital con-
currently resolved upon by the Annual General Meeting. Fol-
lowing implementation of the capital increase from retained
earnings, without the issuance of new shares, and implemen-
tation of a share split at a ratio of 1 to 4 in June 2006, the ben-
eficiaries are now entitled to receive four shares per option
(see Our Share, p. 34). At the balance sheet date, taking into
consideration the shares already issued, the expired stock
options and the share split, the Executive Board had 234,500
no-par-value shares (58,625 stock options) remaining for
issuance to the MSOP beneficiaries.
Powers of the Executive Board to Repurchase Shares
By resolution of the Annual General Meeting held on May 11,
2006, the Executive Board is authorized to acquire treasury
shares subject to legal restrictions in an aggregate amount of
up to 10% of the nominal capital until November 10, 2007 for
the following purposes:
» Subject to Supervisory Board approval, for the resale
of shares via the stock exchange or via a tender offer to all
shareholders for cash at a price not significantly below the
stock market price of shares with the same features.
» Subject to Supervisory Board approval, for the acquisi-
tion of companies, parts of companies or participations in
companies.
» Subject to Supervisory Board approval, for the acquisition,
also through Group companies, of industrial property rights
such as patents, brands, names and logos of athletes, sports
clubs and other third parties or for the acquisition of licenses
relating to such rights.
» To meet subscription rights or conversion rights arising
from bonds with warrants and/or convertible bonds issued by
adidas AG or any of its direct or indirect subsidiaries.
» To meet the obligations of adidas AG arising from the
MSOP.
Executive Board and Supervisory Board Compensation
The basic structure of the compensation system and the
total compensation of the Executive and Supervisory Boards,
including individualized presentation, is described in the
Compensation Report (see Compensation Report, p. 30).
The compensation report is deemed to constitute part of the
Group Management Report.
Changes to the Articles of Association
The Annual General Meeting is responsible for all changes to
the Articles of Association (§ 179 section 1 sentence 1 AktG).
Solely amendments to the formulation of the Articles of Asso-
ciation, i.e. the wording of the Articles of Association, has been
assigned by the Annual General Meeting to the Supervisory
Board pursuant to § 10 section 1 sentence 2 of the Articles of
Association. An Annual General Meeting resolution requires
a simple majority of the votes cast (§ 133 section 1 AktG),
unless a larger majority is stipulated by law. An exception by
virtue of law to the principle of the simple majority of votes
cast applies, for example, to amendments to the purpose of
the corporation, for which pursuant to § 179 section 2 AktG a
three-quarters majority of the nominal capital represented at
the time of resolution is required.
Material Agreements Relating to the Event of a
Takeover Offer
adidas AG has not entered into any material agreements on
condition of a change in control following a takeover offer.
Certain changes of control clauses, however, do exist for
various subsidiaries. No compensation agreements currently
exist between adidas AG and Executive Board members or
employees relating to the event of a takeover offer.
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