Reebok 2006 Annual Report Download - page 30

026 ANNUAL REPORT 2006 › adidas Group ›
Corporate Governance
Report
We are committed to the principles of good corporate gov-
ernance 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 gover-
nance activities in 2006 focused on the implementation of
our Code of Conduct, the examination of the updated Ger-
man Corporate Governance Code as well as on our success-
ful efforts to increase Annual General Meeting attendance.
Dual Board System: Executive and Supervisory Boards
As required by the German Stock Corporation Act (Aktien-
gesetz – 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 compe-
tencies. Our Executive Board is currently composed of four
members (see Executive Board, p. 18). Our 12-member Super-
visory Board comprises an equal number of shareholder and
employee representatives in accordance with the German
Co-Determination Act (Mitbestimmungsgesetz – MitbestG)
(see Supervisory Board, p. 23).
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 Super-
visory 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 mem-
bers is responsible in particular for the preparation of Super-
visory Board resolutions regarding the appointment of Execu-
tive 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 man-
agement 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 consoli-
dated financial statements as well as the agreement with the
auditor.
» The four-member Mediation Committee, formed in accor-
dance 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” Commit-
tee 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, p. 20.
For an overview of the individual Supervisory Board and com-
mittee members, see Supervisory Board, p. 23.
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 Super-
visory Board and ensures its implementation. The Executive
Board informs the Supervisory Board frequently, expeditiously
and comprehensively on the Group’s strategy, planning, busi-
ness development and risk management. In particular, the
Chairmen of our Executive and Supervisory Boards main-
tain 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 bud-
get, 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.