Reebok 2009 Annual Report Download - page 42

Compensation ReportCompensation Report 1 ) 1 )
For the adidas Group, transparent and comprehensible reporting on the compensation of the Executive Board and Supervisory
Board are essential elements of good corporate governance. In the following, we summarise the principles of the compensation
system of the Executive Board and Supervisory Board and outline the structure and level of Executive Board and Supervisory
Board compensation. We are also reporting on the benefits the members of our Executive Board will receive if they resign
from office or retire.
1) This Compensation Report is a component of the audited Group Management Report and is also part of the
Declaration on Corporate Governance including the Corporate Governance Report.
Responsibility of the Supervisory BoardResponsibility of the Supervisory Board
Following preparation by the General
Committee, the individual compensa-
tion of our Executive Board members is
discussed and determined by the entire
Supervisory Board in accordance with
the German Act on the Appropriate-
ness of Management Board Remunera-
tion (Gesetz zur Angemessenheit der
Vorstandsvergütung – VorstAG) effective
as of August 5, 2009 and a correspond-
ing regulation stipulated in the Rules of
Procedure for the Supervisory Board. In
addition, the Supervisory Board resolves
upon the Executive Board compensa-
tion system following the proposal by the
General Committee and is also respon-
sible for its regular review.
In the financial year 2009, the
Supervisory Board had the compensation
system examined in detail by an external
compensation expert being independent
of the Executive Board and the company.
This examination showed that the current
compensation system had, to a large
extent, already been in compliance with
the new statutory regulations and only
few adjustments were required.
Compensation systemCompensation system
The compensation system of our Execu-
tive Board, which includes fixed and vari-
able elements, consists of the following
components:
non-performance-related compen-
sation component,
performance-related compensation
component,
compensation component with long-
term incentive effect.
The individual components are structured
as follows:
The non-performance-related com-
pensation component consists of a
fixed annual salary paid in twelve
monthly instalments. Other benefits
are granted in addition. These benefits
are primarily composed of the values
set in accordance with tax guidelines
for the private use of a company
car and the payment of insurance
premiums.
The performance-related compensa-
tion component is paid as a variable
Performance Bonus. Its amount
is linked to the fixed annual salary
and is determined by the individ-
ual performance of the respective
Executive Board member as well as
by the development of income before
taxes (IBT) and the reduction of net
debt. The Performance Bonus is paid
out following the end of the respec-
tive financial year upon adoption of
the annual financial statements and
determination of target achievement.
As a compensation component with a
long-term incentive effect, our Execu-
tive Board members receive compen-
sation from the Long-Term Incentive
Plan 2009/2011 (LTIP 2009/2011).
Payments resulting from the LTIP
2009/2011 (LTIP Bonus) depend on the
fulfilment of the following perform-
ance criteria which are exactly defined
in the LTIP 2009/2011, with different
weightings:
Increase of consolidated net income
Reduction of net debt (adjusted for
non-operating effects)
Sales growth with regard to the
Reebok, Rockport and Reebok-CCM
Hockey brands as well as
38 TO OUR SHAREHOLDERS Compensation Report
Absolute and relative share price
development,
each measured over the three-year
period from 2009 to 2011. The amount
of the LTIP Bonus is calculated by
multiplying the accumulated degree
of achievement of the performance
cri teria by the target bonus deter-
mined for each member of the Execu-
tive Board in advance. The individual
payout amount of the LTIP Bonus is
limited to a maximum of 150% of the
individual target bonus (Cap). If the
degree of target achievement lies
below 50%, no LTIP Bonus will be
paid. The possible payout of the LTIP
Bonus will be effected following the
approval of the consolidated financial
statements for the period ending on
December 31, 2011.
A compensation component resulting
from a management share option plan
does not exist and is not planned.