Reebok 2008 Annual Report Download - page 102

098 Group Management Report – Our Financial Year Group Business Performance — Disclosures pursuant to § 315 Section 4 of the German Commercial Code and Explanatory Report — Business Performance by Segment — adidas Business Performance
— In addition, the Executive Board was authorised by
the Annual General Meeting on May 8, 2008 to conduct
the share buyback pursuant to the resolved authorisation,
also by using equity derivatives arranged with a fi nancial
institution in close conformity with market conditions.
Subject to Supervisory Board approval, adidas AG may
sell put options issued for physical delivery and buy call
options if the option conditions ensure that these shares
are only delivered if they were purchased in compliance
with the equality principle. All shares purchased by using
put and call options are limited to a maximum value of
5% of the stock capital existing at the date on which the
resolution was adopted by the Annual General Meeting.
The term of the options must be chosen in such a way that
the shares are acquired upon the exercise of the options
no later than November 7, 2009.
The purchase price payable per adidas AG share upon the
exercise of an option must not exceed or fall below the
opening price of the company’s shares in the Xetra Trading
System (or a comparable successor system) on the Frank-
furt Stock Exchange on the day of the conclusion of the
relevant option transaction by more than 20% (excluding
incidental purchasing costs), taking into account the option
premium received /paid.
For selling and cancelling shares purchased using deriva-
tives, the general rules resolved by the Annual General
Meeting are applicable.
As at December 31, 2008 adidas AG did not hold any treasury
shares.
Change of control /compensation agreements
A change-of-control clause is contained in the convertible bond
with a nominal value of € 400,000,000 issued by adidas Inter-
national Finance B.V. and guaranteed by adidas AG. The con-
vertible bond will be paid back to the bondholders on October
8, 2018, unless it has previously been redeemed, converted or
purchased and cancelled see Note 21, p. 176. A change of con-
trol within the meaning of this agreement is deemed to occur if
one person or several persons acting jointly reach control over
adidas AG. In this event, the holders of the convertible bond will
be granted the right to early redemption of the loan amount
including interest. In addition, some agreements between sub-
sidiaries and third parties include change-of-control clauses.
However, no compensation agreements exist with members
of the Executive Board or employees relating to the event of a
take-over bid.
Explanatory Report by the Executive Board
As a result of the buyback of adidas AG shares and the subse-
quent cancellation as well as the issuance of new shares within
the Management Share Option Plan (MSOP) in 2008, the stock
capital changed from € 203,628,960 to € 193,515,512.
Pursuant to § 21 German Securities Trading Act (Wertpapier-
handelsgesetz – WpHG), the company must be notifi ed if the
voting rights in the company reach or exceed the threshold
of 10%. The company has not received such a notifi cation. A
breach of this duty to report leads to a temporary loss of rights
deriving from the corresponding shares and constitutes an
administrative offence. In theory, a shareholding in the stock
capital of more than 10% can exist without this having been
reported.
At the 2008 Annual General Meeting, amendments to § 4 sec-
tion 3 (revocation and amendment to the Authorised Capital)
as well as to § 18 section 3 of the Articles of Association
(Remuneration of the Supervisory Board) were resolved upon.
In addition, the Supervisory Board resolved to amend the word-
ing of the Articles of Association relating to the stock capital
and the Contingent Capital (§ 4 section 1, § 4 section 5 of the
Articles of Association) based upon the cancellation of shares
and the issuance of new shares within the Management Share
Option Plan (MSOP).
As the authorisation pursuant to Authorised Capital 2005 /I
expires in June 2010, the Executive Board and Supervisory
Board expect to propose a new resolution on Authorised
Capital at the 2009 Annual General Meeting.
As the authorisation to repurchase adidas AG shares may only
be granted by the Annual General Meeting for a maximum of
18 months, it is common practice to propose to each Annual
General Meeting that the currently valid resolution be replaced
by a new authorisation. In light of this, the Executive Board also
intends to ask the Annual General Meeting 2009 to issue a new
authorisation to repurchase adidas AG shares.
The change-of-control clause contained in the convertible bond
follows common practice for the protection of bondholders.