I only need for the economics and financial performance part to be done as per the table in the assignment question attachment. 600-800 words. I have completed the rest of the assignment already. The financial and economical performance should include a 3 year analysis from 2012-2014.

ACCT2060 Individual Assignment- Semester 1 2016 ACCT2060 Individual Assignment Sustainability/Corporate Social Responsibility Report Semester 1, 2016 DUE DATE: Monday 28 March 2016, 7 pm (Singapore time) (You may submit the assignment more than once, before the due date. Only the latest submission will be marked. Please be advised that it could take a few hours for Turnitin's Originality Report to be generated. Please also note that Turnitin will only generate one Originality Report in any 24 hour period - so you may have to wait longer to see a report on a resubmitted assignment than on your first submission.) LENGTH: 2000 - 2500 words (excluding table of contents, reference list and Appendix (if anyappendix is optional)) (Note: penalties apply to assignments that do not keep to the word limit) MARKS: This assignment is worth 30% of the total assessment for this course. (Note: This assignment is to be completed as an individual assignment) Objectives of the Assignment This assignment develops your capabilities to analyse, reason logically and conceptualise financial, social and environmental issues; and is aligned with the Course Learning Outcomes of identifying, understanding and interpreting accounting concepts. The use of Sustainability and/or Corporate Social Responsibility (CSR) Report enables you to apply your accounting knowledge to a real world context. The assignment is aligned with the following course learning objectives: - Understand the ethics of business, corporate governance, and corporate social responsibility (CSR) - Reflect on financial information use in a business context - Interpret business reports and accounting information to support business decision-making processes At the completion of the assignment you are also expected to achieve the following Program Learning Outcome (PLO): - Apply a broad theoretical and technical knowledge of business practice in diverse contexts. - Apply reasoned judgements to solve problems in a variety of business contexts with reference to ethical, regulatory and global perspectives. Overview of assignment requirements Assume you are preparing the report for a friend who wishes to invest in a business which conducts itself in a socially and environmentally responsible way. In your report, you are required to advise your friend on the economical/financial, social and environmental performance of the business. You should choose and analyse the financial and Sustainability/CSR reports of one of the specified below organisations (Please note that a marking rubric/guide will be available on RMIT Blackboard); and advise your friend whether or not to invest in the business in the report conclusion. You should demonstrate that you have undertaken research, and cite the sources you have used through appropriate in-text referencing and bibliography. Page 1 of 3 ACCT2060 Individual Assignment- Semester 1 2016 We highly suggest you go through the sustainability chapter in the text book before you commence writing the assignment. Then go through the annual reports of your chosen company as well as other online resources which provide extra support for financial, social and environmental performance of your chosen company. It is important that you follow the assignment template to write your report. You are required to prepare a report on one of the following specific organisations below: Qantas (Financial year 2015) Adidas (Financial year 2014) Myer (Financial year 2014) The assignment's template is as follows: Title Page Table of contents Introduction Financial/Economic performance Social performance Environmental performance Conclusion Reference List Appendix (optional) With the financial/Economic performance section of your assignment, the minimum requirement is to locate and summarise the company's basic financial information as outlined below. Then, most importantly you should discuss the financial performance (particularly profitability) of the company using the management reports, online resources, financial and sustainability reports. It's highly recommended to provide some comparison analysis with company's previous financial years (up to 2 years) and/or competitors or industry averages to support your report analysis. Company name: xxx General financial information (A) Total Assets Total Liabilities Total Owners Equity (B) (Basic) Profit earned- per share (EPS) (C) Total Ordinary Shares issued (D) Profit received by Shareholders- per share (DPS) (E) Net Cash flows from Operating Activities (F) Net Cash flows from Investing Activities Financial year xxx Page 2 of 3 ACCT2060 Individual Assignment- Semester 1 2016 As a result of reading your chosen company's CSR and/or Sustainability Report, you should discuss matters relating to the company's sustainability practices and reporting in your report including but not limited to the following issues: Aspects of company's environmental performance -related to natural capital- including but not limited to environmental protection, energy and carbon emission concerns, and waste production concerns. Aspects of company's social performance -related to human capital and society wealth creation potential- including but not limited to the employee health, human rights protection, contributions to the community, customer involvement, and product responsibility. Other appropriate issues in completing this assignment: A report format should be used for your written submission. Please ensure you use headings and sub-headings to structure your report. Please ensure that your report is typed with the following formatting style recommended: 1.5 line spacing, 11 point font, minimum 3 cm margin on left-hand side of paper. Your assignment must be appropriately referenced using the Harvard Style referencing system. Both in-text citations, as well as a reference list at the end of your assignment, are required. You should refer to the referencing guidelines provided at: https://www.dlsweb.rmit.edu.au/bus/public/referencing/index.html o Note that when citing an annual report, either by paraphrasing or using direct quotes, you must reference the annual report (in your reference list) according to the following format: Name of company. (Year of publication) Title of annual report (in italics). Place of publication: Publisher. (To cite an annual report in-text, you will generally have to use the organisation's name, as an author name is usually not present.) Penalties for inadequate or incorrect referencing will apply. This assignment is to be completed as an individual assignment. All electronically submitted assignments will be automatically forwarded to Turnitin and subjected to an assessment of authenticity/originality, so please ensure your submission is your own individual work - severe penalties will apply for work that is not original/individual. You are allowed to submit your work prior to the due date to obtain an originality report. If the report requires revision you are allowed to adjust your assignment and resubmit. Please note: Any resubmissions into Turnitin takes 48 hrs to obtain a new Originality Report. Late submissions due to this process will incur late penalties. Please aim to submit your assignment a week prior to assessment due date. Your assignment must be submitted electronically (via the course Blackboard site, at 'Assessment') by Monday 28 March 2016, 7 pm. This deadline will be strictly enforced. Late submissions will be marked as if submitted on time, and then the mark awarded will be reduced by 10% (of the total available marks) for each day or part-day that the assignment is late. For example, if your assignment is one day late then you will be penalised 10% of 30 marks which is 3 marks. Assignments that are late by 7 days or more will not be marked and will be awarded zero unless a formal extension of time has been granted. Please refer to the Academic Integrity presentation available at 'Assessment' on the course Blackboard site. o Do not include the wording of the assignment instructions in your submission o A hard copy submission is not required. Page 3 of 3 ACCT2060- Accounting for Organisations and Society Marking Rubric for Individual assignment Semester 1 2016 High distinction 10 Title page, and Title page, and table of Table of contents are provided with an Contents 5% outstanding/ creative format. (Title page must include the title of assignment, student name, student ID, with an appropriate format) Distinction 7.5 Title page, and table of contents' format show some creativity. (Title page must include the title of assignment, student name, student ID, with an appropriate format) Introduction 10% Introduction is written clearly with some interesting observations within the appropriate word length. (You are required to briefly summarize the following features about the organisation: Very brief history of the organisation; Structure (e.g. size, number of employees, line of business, locations); Key words in mission/plans; Financial and other performance trends; Concern for social and environmental/sustainability issues.) Introduction is clearly written with very interesting observations within the appropriate word length. (You are required to briefly summarize the following features about the organisation: Very brief history of the organisation; Structure (e.g. size, number of employees, line of business, locations); Key words in mission/plans; Financial and other performance trends; Concern for social and environmental/sustainability issues.) Credit 6.5 Title page, and table of contents are attractive, display a clear and formal approach, and meet all the requirements. (Title page must include the title of assignment, student name, student ID, with an appropriate format) Introduction is written clearly, within the appropriate word length. (You are required to briefly summarize the following features about the organisation: Very brief history of the organisation; Structure (e.g. size, number of employees, line of business, locations); Key words in mission/plans; Financial and other performance trends; Concern for social and environmental/sustainability issues.) Pass 5 Title page, and table of contents display a formal approach or they only meet the minimum standards. (Title page must include the title of assignment, student name, student ID, with an appropriate format) Reasonable introduction. Requirements are reasonably met. (You are required to briefly summarize the following features about the organisation: Very brief history of the organisation; Structure (e.g. size, number of employees, line of business, locations); Key words in mission/plans; Financial and other performance trends; Concern for social and environmental/sustainability issues.) Below standards 2.5 Title page, and table of contents provided are below standards. (Title page must include the title of assignment, student name, student ID, with an appropriate format) Introduction is below standards. (You are required to briefly summarize the following features about the organisation: Very brief history of the organisation; Structure (e.g. size, number of employees, line of business, locations); Key words in mission/plans; Financial and other performance trends; Concern for social and environmental/sustainability issues.) 1 |P a g e ACCT2060- Accounting for Organisations and Society Marking Rubric for Individual assignment Semester 1 2016 Financial /Economics 20% (Discuss on financial statements of the company) Social 20% (Discuss on social responsibility of the company) Environmental 20% Discuss on environmental responsibility of the company Financial section is clearly written with very interesting observations within the appropriate word length. Very thoroughly researched, effective use of material; Thorough discussion on financial statements. Social Section is written very thoroughly. Very thoroughly researched, effective use of material; Comprehensive identification and discussion of social issues; persuasively argued throughout; Clear and logical structure; precise and concise writing. Environmental section is clearly written with some interesting observations within the appropriate word length. Very thoroughly researched, effective use of material; Comprehensive identification and discussion of environmental issues; persuasively argued throughout; Clear and Financial section is written very well, with some interesting observations; Well researched, appropriate use of materials; financial statements very well discussed. statements. Social section is written clearly. Well researched, appropriate use of materials; Very good identification and discussion of social issues; argument well developed and supported; some critical evaluation of materials; suitable and coherent structure. Environmental section is written very well. Well researched, appropriate use of materials; Very good identification and discussion of environmental issues; argument well developed and supported; some critical evaluation of materials; suitable and coherent structure. Financial section is wellwritten. Competently researched; good use of materials; good discussion points on financial statements. Social section is generally well-written. Competently researched; good use of materials; social issues are identified and discussed appropriately; some arguments may be underdeveloped; reasonable writing, easy to follow. Environmental section is well-written Competently researched; good use of materials; issues are identified and discussed appropriately; some arguments may be underdeveloped; reasonable writing, is easy to follow. Financial section is mainly descriptive with little analysis of issues. Limited research, some materials overlooked or misunderstood; or poor discussion on financial statements. Social section is mainly descriptive with little analysis of the social issues. Limited research, some materials overlooked or misunderstood. Financial section is written below standards; research is very limited; failure to identify and discuss relevant issues; argument is lacking or unsound. Environmental section is mainly descriptive with little analysis of environmental issues. Limited research, some materials overlooked or misunderstood. Environmental section is written below standards; research is very limited; failure to identify and discuss relevant issues; argument is lacking or unsound Social section is written below standards; research is very limited; failure to identify and discuss relevant issues; argument is lacking or unsound 2 |P a g e ACCT2060- Accounting for Organisations and Society Marking Rubric for Individual assignment Semester 1 2016 Conclusion 10% logical structure; precise and concise writing The conclusion creatively summarizes the ideas, with very interesting observations within the appropriate word length. Referencing 10% Excellent referencing. All sources (information and graphics) are accurately documented in the desired format. More than 5 reputable sources are referenced. (The report must be fully referenced (in-text) using the Harvard referencing style, and include reference list formatted correctly.) Formatting 5% Creative formatting. All requirements met. (Report format must be used for the written submission. Appropriate headings and sub-headings must be used to structure the report. The following formatting style is recommended: 1.5 line The conclusion summarizes the ideas clearly; with some interesting observations within the appropriate word length. The conclusion summarizes the ideas appropriately, within the appropriate word length. The conclusion repeats ideas in the Paragraph, or begins new idea. Conclusion is written below standards; and/or relevant materials overlooked; and/or Writing is difficult to follow. Very well referenced. All sources (information and graphics) are accurately documented, but a few are not in the desired format. At least 3-4 reputable sources are referenced. (The report must be fully referenced (in-text) using the Harvard referencing style, and include a reference list formatted correctly.)I Formatting shows some creativity, and meets all requirements. (Report format must be used for the written submission. Appropriate headings and sub-headings must be used to structure the report. The following formatting style is Good referencing. All sources (information and graphics) are accurately documented, but many are not in the desired format. At least 3-4 reputable sources are referenced. (The report must be fully referenced (in-text) using the Harvard referencing style, and include a reference list formatted correctly.) Formatting displays a clear and formal approach, and meets all the requirements. (Report format must be used for the written submission. Appropriate headings and sub-headings must be used to structure the report. The following formatting style is Some of sources are not accurately documented. Less than 2 reputable sources are referenced. (The report must be fully referenced (in-text) using the Harvard referencing style, and include a reference list formatted correctly.) In-text citation or reference list is missing. Reasonable formatting. Formatting meets some requirements. (Report format must be used for the written submission. Appropriate headings and sub-headings must be used to structure the report. The following formatting style is The report is not formatted appropriately. 3 |P a g e ACCT2060- Accounting for Organisations and Society Marking Rubric for Individual assignment Semester 1 2016 spacing, 11 point font, minimum 3 cm margin on left-hand side of paper.) recommended: 1.5 line spacing, 11 point font, minimum 3 cm margin on left-hand side of paper.) recommended: 1.5 line spacing, 11 point font, minimum 3 cm margin on left-hand side of paper.) recommended: 1.5 line spacing, 11 point font, minimum 3 cm margin on left-hand side of paper.) Note: The assignment is worth 30% of the total marks available for this course. The assignment will be initially marked out of 100, and then be converted to marks out of 30. 4 |P a g e MAKE A DIFFERENCE adidas Group Annual Report 2014 TARGETS - RESULTS - OUTLOOK Results 2014 1) 2) Targets 2014 Outlook 2015 1) Currency-neutral sales development: Currency-neutral sales development: Currency-neutral sales development: adidas Group increase at a adidas Group increase of adidas Group increase at a high-single-digit rate 6% mid-single-digit rate Group sales of 14.534 billion Gross margin Gross margin Gross margin 49.5% - 49.8% 47.6% 47.5 % - 48.5 % Operating margin Operating margin Operating margin 8.5% - 9.0% 6.6% 6.5% - 7.0% Average operating working capital (in % of sales) Average operating working capital (in % of sales) Average operating working capital (in % of sales) moderate decline expected 22.4% moderate decline Capital expenditure Capital expenditure Capital expenditure 500 million - 550 million 554 million around 600 million Gross borrowings Gross borrowings Gross borrowings further reduction 1.873 billion moderate decline Net borrowings/EBITDA ratio Net borrowings/EBITDA ratio Net borrowings/EBITDA ratio to be maintained below 2 0.1 to be maintained below 2 Net income attributable to shareholders Net income attributable to shareholders decreases 32% to Net income from continuing operations increase at a rate of 830 million - 930 million 568 million 3) 7% - 10% Earnings per share decrease 32% to 2.72 3) Shareholder value adidas AG share price decreases Shareholder value further increase 38 % increase Dividend per share 1.50 4) 1) Figures reflect continuing operations as a result of the planned divestiture of the Rockport business. 2) Excluding goodwill impairment of 78 million 3) Includes continuing and discontinued operations. 4) Subject to Annual General Meeting approval. FIN A NCI A L HIGHL IGH T S 2 0 14 01 / Financial Highlights (IFRS) 2014 2013 Change 14,534 14,203 2.3% 1,283 1,496 (14.3%) Operating profit 1) 3) 4) 961 1,233 (22.1%) Net income attributable to shareholders 2) 3) 4) 568 839 (32.2%) 47.6% 49.3% (1.7pp) Operating Highlights ( in millions) Net sales 1) EBITDA 1) Key Ratios Gross margin 1) sales 1) 42.7% 42.3% 0.3pp Operating margin 1) 3) 4) 6.6% 8.7% (2.1pp) Effective tax rate 1) 3) 4) 29.7% 29.2% 0.5pp 3.9% 5.9% (2.0pp) Average operating working capital in % of net sales 1) 22.4% 21.3% 1.0pp Equity ratio 45.3% 47.3% (2.0pp) Operating expenses in % of net Net income attributable to shareholders in % of net sales 2) 3) 4) Net borrowings/EBITDA 1) 0.1 (0.2) n.a. Financial leverage 3.3% (5.4%) 8.7pp Return on equity 2) 8.7% 14.3% (5.6pp) Total assets 12,417 11,599 7.1% Inventories 2,526 2,634 (4.1%) Receivables and other current assets 2,861 2,583 10.8% Working capital 2,970 2,125 39.7% Balance Sheet and Cash Flow Data ( in millions) Net cash/(net borrowings) (185) 295 n.a. Shareholders' equity 5,624 5,489 2.5% Capital expenditure 554 479 15.5% Net cash generated from operating activities 2) 701 634 10.5% Basic earnings 2) 3) 4) 2.72 4.01 (32.1%) Diluted earnings 2) 3) 4) 2.72 4.01 (32.1%) Net cash generated from operating activities 2) 3.36 3.03 10.7% Dividend 1.50 5) Per Share of Common Stock () Share price at year-end 57.62 1.50 - 92.64 (37.8%) Other (at year-end) Number of employees 1) 53,731 49,808 7.9% Number of shares outstanding 204,327,044 209,216,186 (2.3%) Average number of shares 208,776,457 209,216,186 (0.2%) 1) 2014 and 2013 reflect continuing operations as a result of the planned divestiture of the Rockport business. 2) Includes continuing and discontinued operations. 3) 2014 excluding goodwill impairment of 78 million. 4) 2013 excluding goodwill impairment of 52 million. 5) Subject to Annual General Meeting approval. OUR BRANDS ADIDAS IS A TRULY GLOBAL BRAND GERMAN ROOTS WITH TaylorMade TaylorMade leads the golf industry in metalwood sales and is the number one driver brand on the world's six major professional golf tours. The brand is recognised globally for its capacity to develop innovative and performance-enhancing technologies for drivers, fairway woods, hybrids, irons, putters and balls. adidas Sport Performance The guiding principle of adidas Sport Performance is to make athletes better. The main focus is on five key categories: football, running, basketball, training and outdoor. adidas Golf adidas Golf develops high-performance golf footwear and apparel for active, serious, athletic-minded golfers seeking products to elevate their game. adidas Originals & Sport Style adidas Originals: adidas Originals is the authentic, iconic sportswear label for the street. adidas Sport Style: adidas Sport Style includes the labels adidas NEO, Y-3 and Porsche Design Sport by adidas. Adams Golf Adams Golf designs and produces easy-to-hit equipment that makes playing the game more enjoyable for golfers of all skill levels. The brand ranks as the number one hybrid brand on the world's major professional golf tours. Five Ten Five Ten, the 'Brand of the Brave', is a leader in performance, high-friction footwear. From downhill mountain bike racing to rock climbing, from wingsuit flying to kayaking, Five Ten makes footwear for the world's most dangerous sports. Ashworth Ashworth is an authentic golf apparel and footwear brand with powerful name recognition among true, authentic golfers, offering products that move effortlessly from the golf course to the clubhouse and beyond. Reebok is an American-inspired sports brand with the clear objective to become the leading fitness brand in the world. Understanding and embracing the multi-facets and lifestyle potential of fitness, Reebok provides consumers with innovative products, experiences and inspirations. Its strong roots and history in fitness allow Reebok to empower consumers to be fit for life. Reebok-CCM Hockey is a leading designer and marketer of ice hockey equipment and apparel, with two of the world's most recognised ice hockey brand names: Reebok Hockey and CCM For more information on our brands: WWW.ADIDAS-GROUP.COM MAKE A DIFFERENCE adidas Group Annual Report 2014 SPORT, T H E Y M A K E A D I F F E R E N C E : FRACTIONS OF A SECOND. ONLY A FEW CENTIMETRES. A COUPLE OF GRAMS. T O ATHLETES , T H E Y M A K E A D I F F E R E N C E : IN our groundbreaking INNOVATIONS EX P ERIENCE PAS SION A MBITION Our decades of Our unique Our overwhelming Sport has many facets and countless faces. Every sports enthusiast has his or her own ambition, every athlete has a different form of motivation. We help them all to achieve their very own individual goals, to feel good, to win, and to experience and harness the power of sport - so they can make a difference. D AY A F T E R D AY. A G A I N A N D A G A I N . E V E R Y W H E R E . MAKE A D I F F E R E N C E - /Content/ adidas Group Annual Report 2 0 14 - 01 TO OUR SHAREHOLDERS 01.1 01.2 01.3 01.4 01.5 01.6 01.7 Let ter from the CEO E x e c u t i v e B o a r d Super v isor y Board Super v isor y Board Repor t Cor por ate Gover nance Repor t including the Decl ar ation on Cor por ate Gover nance C o m p e n s a t i o n R e p o r t O u r S h a r e 6 10 12 14 20 28 38 0 2 \u0007 O U R G R O U P GROUP MANAGEMENT REPORT 02.1 02.2 02.3 02.4 02.5 02.6 02.7 02.8 Group Str ateg y 46 Global Sales Str ategy 49 G l o b a l B r a n d s S t r a t e g y 53 O ther Businesses Str ateg y 60 G l o b a l O p e r a t i o n s 66 Research and Development 73 Employees\t82 S u s t a i n a b i l i t y 8 9 G R O U P M A N A G E M E N T R E P O R T: This report contains the Group Management Report of the adidas Group, comprising adidas AG and its consolidated subsidiaries, and the Management Report of adidas AG. /Content/ 0 3 \u0007 F I N A N C I A L R E V I E W GROUP MANAGEMENT REPORT 03.1 03.2 03.3 03.4 03.5 03.6 I n t e r n a l G r o u p M a n a g e m e n t S y s t e m 98 Group Business Per for mance 10 3 Economic and Sector Development 1 0 3 Income Statement 1 0 6 Statement of Financial Position and Statement of Cash Flows 1 1 5 Treasury 1 2 1 Financial Statements and Management Report of adidas AG\t1 2 7 \u0007Disclosures pursuant to 315 Section 4 and 289 Section 4 of the German Commercial Code 1 3 1 Business Per for mance by Segment 13 6 Wholesale Business Performance 1 3 6 Retail Business Performance 1 3 9 Other Businesses Performance 1 4 3 Subsequent Event s and Outlook 14 6 Subsequent Events 1 4 6 Outlook 1 4 6 R i s k a n d O p p o r t u n i t y R e p o r t 15 4 Strategic Risks 1 6 3 Operational Risks 1 6 5 Legal & Compliance Risks\t1 7 0 Financial Risks 1 7 1 Strategic and Operational Opportunities\t1 7 8 Financial Opportunities\t1 8 0 Management A ssessment of P er formance, Risks and Oppor tunities, and Outlook 18 1 04 CONSOLIDATED FINANCIAL STATEMENTS 04.1 04.2 04.3 04.4 04.5 04.6 04.7 04.8 04.9 04.10 R e s p o n s i b i l i t y S t a t e m e n t 18 6 A u d i t o r 's R e p o r t 18 7 Consolidated Statement of Financial Position 18 8 C o n s o l i d a t e d I n c o m e S t a t e m e n t 19 0 Consolidated Statement of Comprehensi ve Income 19 1 Consolidated Statement of Changes in Equit y 19 2 Consolidated Statement of Cash Flow s 194 N o t e s 19 5 Notes to the Consolidated Statement of Financial Position 2 0 7 Notes to the Consolidated Income Statement 2 3 4 Notes - Additional Information 2 3 9 S t a t e m e n t o f M o v e m e n t s o f I n t a n g i b l e a n d Ta n g i b l e A s s e t s 246 S h a r e h o l d i n g s 2 4 8 05 ADDITIONAL INFORMATION 05.1 05.2 05.3 05.4 Te n -Ye a r O v e r v i e w 254 Gloss ar y\t25 8 Decl ar ation of Suppor t 2 61 Financial Calendar 262 TO OUR SH A REHOLDERS 01 TO OUR SHAREHOLDERS 01.1 01.2 01.3 01.4 01.5 01.6 01.7 Let ter from the CEO E xecuti ve Board Super v isor y Board Super v isor y Board Repor t Cor por ate Gover nance Repor t including the Decl ar ation on Cor por ate Gover nance C o m p e n s a t i o n R e p o r t Our Share 6 10 12 14 20 28 38 1 To Our Shareholders Letter from the CEO /01.1/ Letter from the CEO H e r b e r t H ain e r ADIDAS GROUP CEO 20 14 6 2014 was, without any question, a year of ups and downs for our Group. On the one hand, we look back on great moments such as the FIFA World Cup where we once again demonstrated what we are capable of when we focus and act with determination. We grew our currency-neutral football sales by more than 20% to 2.1 billion, exceeding even our own high expectations. But football was by no means the only highlight of the past year. We also recorded numerous other successes: /\u0007 Our revolutionary Boost technology not only gave significant impetus to runners on the streets but also to adidas Running, with sales growth in this category totalling 15%. All our regions contributed to the increase, with Western Europe a stand-out performer, recording growth of 22%. /\u0007 Our lifestyle business returned to strength in 2014, increasing 12%. At adidas Originals, we posted improvements from one quarter to the next, which culminated in strong double-digit sales growth in the fourth quarter. This increase reflects the success of the ZX Flux and the Stan Smith product franchise as well as our first product launches as part of our partnerships with Rita Ora and Pharrell Williams, to name just a few. Also our NEO business continues to experience dynamic growth, with sales up 27%. adidas Group / 2014 Annual Report To Our Shareholders Letter from the CEO /01.1/ /\u0007 Reebok sales grew 5% in total in 2014. During the fourth quarter, Reebok recorded its seventh consecutive quarter of growth. The 21% increase in the training category impressively underlines Reebok's positioning as THE fitness brand. In addition to these positive developments, the overall performance of the adidas brand underlines the strong improvement in our competitive position over the course of the year. adidas sales for the full year increased 11%, with double-digit growth rates throughout the year, with the exception of the first quarter. This shows that our sales dynamics are right, and the momentum of our core brands is fully intact. At the same time, however, 2014 also brought major disappointments. Mid-way through the year, in light of the various challenges we were facing, we recognised that we wouldn't be able to achieve our original goals for 2014. It never feels good to miss the mark, neither in sport nor in business. But it's all the more painful when this is brought about not only by external circumstances that we cannot influence but also by executional mistakes on our part. So let me go into more detail on the various factors that resulted in not meeting your and our high expectations last year. Russia, on the other hand, is a totally different story. Here, we are the victims of our own success. Being the clear market leader, we have been particularly impacted by the economic downturn, deteriorating consumer sentiment and the highly promotional environment in Russia. However, that does not alter the fact that Russia will remain a growth market for the adidas Group in the long term. And I am convinced that our perseverance will pay off. We have used the crisis as an opportunity, increasing our operational flexibility, significantly reducing the number of net store openings and further optimising our cost structure. With these initiatives, we aim to safeguard our profitability in this key market to the greatest extent possible and create optimal foundations for sustainable, profitable growth. On top of this, we have been severely impacted by the significant devaluation of the rouble and other emerging market currencies. Negative currency effects wiped more than 550 million off our top line last year. In addition, unfavourable hedging rates negatively impacted the Group's gross margin by 60 basis points. But none of this changes our underlying strength in the developing economies in general and our excellent market position in Russia in particular. adidas Group / 2014 Annual Report 14 7 20 As far as our golf business is concerned, we misjudged the market situation at the beginning of the year. A decline in the number of active players as well as high levels and slow liquidation of old inventories caused immense problems in the entire industry, and as market leader this hit us particularly hard. However, we reacted decisively to these challenges, taking a leading role in the clean-up of excess inventories in the golf market. At the same time, we implemented an extensive restructuring programme which has involved the closure of one of our facilities in the USA and a 15% reduction in the global TaylorMade-adidas Golf workforce. Building on these significantly healthier foundations, and thanks to numerous promising product launches, TaylorMade-adidas Golf will be back on track for growth and profitability this year. To Our Shareholders Letter from the CEO /01.1/ For me, one thing is certain: true champions come out and show their worth after defeat. Only those who analyse their mistakes, learn from them and work intensively on their own weaknesses have what it takes to be true champions. While the full results of our work over the last months will only become visible over time, I am proud of how hard our organisation and our employees have worked on themselves in the past few months in order to take up the fight for gold. As a result of our fast and decisive action, we have reached a first milestone, achieving our updated top- and bottom-line goals for last year, and now we are looking confidently out onto 2015. 20 14 8 We are also profiting from the progress we have made since the introduction of our 'Route 2015'. Only those who set themselves ambitious goals are in a position to continuously improve. Against this background, in 2010, we created and presented to you our ambitious strategic business plan. And even though we will not achieve our sales and earnings targets this year, the adidas Group today is significantly stronger and better positioned than at the start of our Route 2015 journey. Two examples: we know that our brands and products resonate best with the consumer when we are able to present them in exactly the way we envisage. That is why we set ourselves the goal of generating 45% of our revenues from controlled space initiatives by 2015. We have made great progress in this respect over the past few years and today we are already generating more than 50% of our sales from controlled space initiatives. In addition, we have multiplied our eCommerce business over the last couple of years and we will over-achieve the targeted online sales level of 500 million in 2015. We will continuously build on these successes and, with the help of our Concepts-to-Consumer team, which we strengthened with valuable expertise last year, we will further enhance the consumer shopping experience and the consistency of our messaging - across all distribution channels. This, by the way, is a key characteristic that will increasingly distinguish us in future: our focus is on consumers and the brand experiences we create for them. In order to live up to this claim to the best possible extent, my Board colleagues Eric Liedtke and Roland Auschel have completed the realignment of our marketing and sales activities accordingly. As part of our 'brand leadership' initiative, the categories now for the first time have full end-to-end responsibility for all marketing processes. This massive shift in tactics will make us significantly more agile, enabling us to drive our brand initiatives in the marketplace more professionally and to bring our concepts to the consumer in a more effective way. We know that consumers today use several different channels simultaneously, and because consistent messaging across all these channels is crucial for enhancement of the consumer shopping experience we have also realigned our sales strategy. Thanks to our omni-channel approach, we will integrate all sales channels and marketing activation activities, utilise cross-selling opportunities and align pricing across all channels. As part of initial pilot projects, we have given consumers in some markets the option to order online and then pick up their products in a store. First feedback on our 'click and collect' offer is very encouraging. Therefore we will continue to invest in infrastructure and processes that will enable us to implement the omni-channel approach globally. adidas Group / 2014 Annual Report To Our Shareholders Letter from the CEO /01.1/ A top priority for the entire senior management team in 2015 will be the North American market. Our new leadership team there, all high-calibre experts with Mark King, an American-born industry veteran, at the helm, will focus on increasing the relevance of our brands among US consumers. The brand campaigns that we launched for adidas and Reebok since the start of the year, with a clear focus on the US market, are a key step in this direction. They impressively underline our ambitions and make it clear that adidas and Reebok know and understand athletes' motivations better than any other sports brand in the world - another important cornerstone is the development of the right products for the US market. The addition of new external talent in design and the opening of our design studio in New York will leave a clear and lasting mark on our efforts in this context. In addition, we need to make our brands more visible on the playing fields of sports that young American athletes love: basketball, American football and baseball, just to name a few. In this context, we will not only focus on growing our already strong portfolio in professional sports but will also significantly increase our visibility in college sports and at the grassroots level. At the same time, we aim to enhance our execution at the point of sale. Here too, we will significantly improve our brand presence and the presentation of our products. HE R B ERT H A I NER adidas Group CEO adidas Group / 2014 Annual Report 14 9 20 To close, allow me to say that we have everything it takes to be successful going forward: our brands are enjoying great momentum, our product pipeline is full, and our campaigns will make our brands even more desirable. We know what our priorities are, we have drawn up our plan accordingly and we will now work in a consistent, resolute and bold way to implement it. At the same time, we will remain vigilant, in order to be able to react quickly and resolutely to any changes in the market environment. The roadmap for the future is clear. We will significantly improve our business and grow our top and bottom line in 2015. But that's only just the beginning. At the end of March we will present our long-term strategy for the period up to 2020. Of course I cannot report on the contents of this strategy today. But I can already assure you of one thing: the adidas Group is and will remain a growth company, founded on strong brands. And with this, we will continue to make a difference going forward. 2 To Our Shareholders Executive Board /01.2/ Executive Board Our Executive Board is comprised of five members. Each Board member is responsible for at least one major function within the Group. Her ber t Hainer CHIEF EXECUTIVE OFFICER Herbert Hainer was born in Dingolfing, Germany, in 1954. Following his business studies, he spent eight years with Procter & Gamble in various sales and marketing positions. Herbert Hainer joined adidas Germany in 1987 and has held numerous management positions within the Group, including Managing Director Germany and Senior Vice President for Sales and Logistics in Europe, Africa and the Middle East. Herbert Hainer joined the Executive Board in 1997 and became CEO of adidas AG in 2001. He is married, has two daughters and lives in Herzogenaurach, Germany. Herbert Hainer is also: / \u0007Deputy Chairman of the Supervisory Board, FC Bayern Mnchen AG, Munich, Germany / \u0007Member of the Supervisory Board, Allianz Deutschland AG, Munich, Germany / \u0007Member of the Supervisory Board, Deutsche Lufthansa AG, Cologne, Germany 20 14 10 Robin J. S t al ker CHIEF FINANCIAL OFFICER Robin J. Stalker was born in Palmerston North, New Zealand, in 1958. In 1982, following his degree in business studies, he began his professional career and qualified as a Chartered Accountant. He worked for Arthur Young in New Zealand and London and subsequently held financial and controlling positions in the entertainment industry, including United International Pictures and Warner Bros. International, and also worked as an independent consultant. Robin J. Stalker joined adidas AG in 1996. Since February 2000, he has been Chief Financial Officer of adidas AG and was appointed to the Executive Board, responsible for Finance, in 2001. In 2005, he assumed additional responsibility as Labour Director. Robin J. Stalker is married and lives near Herzogenaurach, Germany. Robin J. Stalker is also: /\u0007 Member of the Supervisory Board, Schaeffler AG, Herzogenaurach, Germany FOR MORE INFORMATION ON THE ADIDAS GROUP'S EXECUTIVE BOARD: WWW.ADIDAS-GROUP.COM EXECUTIVE-BOARD adidas Group / 2014 Annual Report To Our Shareholders Executive Board /01.2/ Rol and A us chel GLOBAL SALES Roland Auschel was born in Bad Waldsee, Germany, in 1963. After obtaining his Bachelor's degree in European business studies in Germany and the UK as well as an MBA in the United States, he joined the adidas team as a Strategic Planner in 1989. During his career with the adidas Group, he has held many senior management positions, including Business Unit Manager, Key Account Manager Europe and Head of Region Europe, Middle East and Africa. In 2009, he became Chief Sales Officer Multichannel Markets. In 2013, Roland Auschel was appointed to the Executive Board where he assumed responsibility for Global Sales. He is married, has two children and lives in Erlangen, Germany. Gl enn B enne t t GLOBAL OPERATIONS Er ic L ie d t ke 1) GLOBAL BRANDS Eric Liedtke was born in Dayton/Ohio, USA, in 1966. After obtaining his Bachelor's degree in journalism, he started his career at DMB&B Advertising in the USA. He joined the adidas Group in 1994 as Global Line Manager for Cross Training in Portland/Oregon. During his 20-year career with adidas, Eric Liedtke has held various senior management positions at adidas America, including Director of Footwear Marketing and Vice President Brand Marketing. In 2006, he moved to the adidas Group headquarters in Germany. In 2011, he became Senior Vice President adidas Sport Performance, responsible for all adidas sports categories globally. He was appointed to the Executive Board in 2014, where he assumed responsibility for Global Brands. Eric Liedtke lives in Nuremberg, Germany. 1) \u0007Appointed to the Executive Board effective March 6, 2014. Eric Liedtke succeeded Erich Stamminger who was responsible for Global Brands until March 5, 2014. adidas Group / 2014 Annual Report 14 11 20 Glenn Bennett was born in New Hampshire, USA, in 1963. With a degree in computer science, he began his professional career with Reebok International Ltd. in 1983, where he worked for ten years in various operations and product functions, of which the latest was Director of Footwear Development. In 1993, Glenn Bennett joined adidas AG and began working as the Head of Worldwide Footwear Development. He was promoted to Senior Vice President of Footwear Operations a few months later. In 1997, Glenn Bennett was appointed to the Executive Board where he assumed responsibility for all Footwear, Apparel and Accessories & Gear Operations activities shortly thereafter. Glenn Bennett lives in Boston/Massachusetts, USA. 3 To Our Shareholders Supervisory Board /01.3/ Supervisory Board Igor L andau S abine B auer * W il l i S ch w er d t l e C H A I R M A N 1) D E P U T Y C H A I R W O M A N 1) D E P U T Y C H A I R M A N 1) residing in Lugano, Switzerland Pensioner, Member of the Board of Directors, Sanofi-Aventis S.A., Paris, France residing in Erlangen, Germany Chairwoman of the Central Works Council, adidas AG residing in Munich, Germany Independent Management Consultant/Partner, WP Force Solutions GmbH, Bad Homburg v. d. Hhe, Germany /\u0007 Member of the Supervisory Board, Allianz SE, Munich, Germany2) /\u0007 Member of the Board of Directors, Sanofi-Aventis S.A., Paris, France /\u0007 Member of the Supervisory Board, Eckes AG, Nieder-Olm, Germany 20 14 12 Die t er Hauens t ein* Dr. Wolf gang J ger * Dr. S t e f an Jen t z s ch residing in Herzogenaurach, Germany Full-time member of the Works Council Herzogenaurach, adidas AG3) residing in Bochum, Germany Managing Director in charge of Public Relations and Scholarships, Hans-Bckler-Stiftung, Dsseldorf, Germany residing in London, Great Britain Corporate Finance Consultant/Partner, Perella Weinberg Partners UK LLP, London, Great Britain Her b er t K au f f mann K a t ja K r aus 4 ) K a t hr in Menge s 4 ) residing in Stuttgart, Germany Independent Management Consultant, Stuttgart, Germany residing in Hamburg, Germany Managing Partner, Jung von Matt/sports GmbH, Hamburg, Germany residing in Neuss, Germany Executive Vice President Human Resources and Infrastructure Services, Henkel AG & Co. KGaA, Dsseldorf, Germany /\u0007 Chairman of the Supervisory Board, Uniscon universal identity control GmbH, Munich, Germany / \u0007Member of the Supervisory Board, DEUTZ AG, Cologne, Germany /\u0007 Member of the Supervisory Board, Sky Deutschland AG, Unterfhring, Germany /\u0007 Deputy Chairman of the Supervisory Board, AIL Leasing Mnchen AG, Grnwald, Germany Mandates within the Henkel Group /\u0007 Member of the Supervisory Board, Henkel Central Eastern Europe GmbH, Vienna, Austria /\u0007 Member of the Supervisory Board, Henkel Nederland B.V., Nieuwegein, The Netherlands /\u0007 Member of the Board of Directors, Henkel Norden AB, Stockholm, Sweden /\u0007 Member of the Board of Directors, Henkel Norden Oy, Vantaa, Finland /\u0007 Member of the Board of Directors, Henkel of America, Inc., Wilmington, USA adidas Group / 2014 Annual Report To Our Shareholders Supervisory Board /01.3/ Rol and No sko* Hans Rupr e ch t * Heidi T hal er-Veh* residing in Wolnzach, Germany Trade Union Official, IG BCE, Headquarter Nuremberg, Nuremberg, Germany residing in Herzogenaurach, Germany Sales Director Customer Service Central Europe West, adidas AG residing in Uffenheim, Germany Member of the Central Works Council, adidas AG /\u0007 Deputy Chairman of the Supervisory Board, CeramTec GmbH, Plochingen, Germany S U P E R V I S O R Y B O A R D M E M B E R S IN C U M B E N T U N T I L T H E E N D O F T H E A N N U A L G E N E R A L M E E T IN G O N M AY 8 , 2 0 14 residing in Lungern, Switzerland Former Member of the Executive Board of adidas AG S TA N D IN G C O M M I T T E E S A S O F M AY 8 , 2 0 14 Steering Committee/ Igor Landau (Chairman), Sabine Bauer*, Willi Schwerdtle General Committee/ Igor Landau (Chairman), Sabine Bauer*, Roland Nosko*, Willi Schwerdtle Audit Committee/ Herbert Kauffmann (Chairman), Dr. Wolfgang Jger*, Dr. Stefan Jentzsch, Hans Ruprecht* Nomination Committee/ Igor Landau (Chairman), Kathrin Menges, Willi Schwerdtle Mediation Committee pursuant to 27 section 3 Co-Determination Act (MitbestG)/ Igor Landau, Sabine Bauer*, Willi Schwerdtle, Heidi Thaler-Veh* Finance and Investment Committee (as of September 25, 2014)/ Igor Landau, Sabine Bauer*, Dr. Wolfgang Jger*, Herbert Kauffmann S TA N D IN G C O M M I T T E E S U N T IL M AY 8 , 2 0 14 Steering Committee/ Igor Landau (Chairman), Sabine Bauer*, Willi Schwerdtle General Committee/ Igor Landau (Chairman), Sabine Bauer*, Roland Nosko*, Willi Schwerdtle Audit Committee/ Herbert Kauffmann (Chairman), Dr. Wolfgang Jger*, Dr. Stefan Jentzsch, Hans Ruprecht* Nomination Committee/ Igor Landau (Chairman), Willi Schwerdtle, Christian Tourres Mediation Committee pursuant to 27 section 3 Co-Determination Act (MitbestG)/ Igor Landau, Sabine Bauer*, Willi Schwerdtle, Heidi Thaler-Veh* * Employee representative. 1) Re-elected at the constituent meeting of the Supervisory Board on May 8, 2014. 2) Until May 7, 2014. 3) Since April 4, 2014; formerly Deputy Chairman of the Works Council Herzogenaurach. 4) Since the end of the Annual General Meeting held on May 8, 2014. adidas Group / 2014 Annual Report 13 14 Chr is t ian Tour r e s residing in Moscow, Russia Chairman, RFSO 'Lokomotiv', Moscow, Russia 20 A l ex ander Pop o v 4 To Our Shareholders Supervisory Board Report /01.4/ Supervisory Board Report Igor Landau CHAIRMAN OF THE SUPERVISORY BOARD 20 14 14 Dear Shareholders, We look back on 2014 as a challenging year. Thanks to strong brands and partnerships in the world of sport, as well as firstclass innovations, the adidas Group was again able to achieve strong sales growth. However, the ongoing weakness in the golf market, negative economic developments in Russia/CIS and continuing unfavourable currency developments, in particular the considerable devaluation of the Russian rouble, significantly impacted the Group's results. Nevertheless, these issues have been resolutely managed, and we have taken the appropriate steps not only to safeguard the financial results in the short term but also to sustainably improve the Group's profitability in the long term. Our company is now well positioned to again achieve sales growth at all brands as well as an overproportionate improvement in the Group's profitability in 2015. Supervision and advice in dialogue with the Executive Board In the year under review, we again performed all our tasks laid down by law, the Articles of Association and the Rules of Procedure carefully and conscientiously. We regularly advised the Executive Board on the management of the company and diligently and continuously supervised its management activities, assuring ourselves of the legality, expediency and regularity thereof. The Executive Board involved us directly in all of the Group's fundamental decisions. After in-depth consultation and examination of the detailed information submitted to us by the Executive Board, we approved individual transactions where required by law. The Executive Board informed us extensively and in a timely manner through written and oral reports at our Supervisory Board meetings. This information covered all relevant aspects of the Group's business strategy, business planning, including finance, investment and personnel planning, the course of business and the Group's financial position and profitability. We were also kept up to date on matters relating to the risk situation, risk management and compliance as well as all major decisions and business transactions. adidas Group / 2014 Annual Report To Our Shareholders Supervisory Board Report /01.4/ The Executive Board always explained immediately and in a detailed manner any deviations in business performance from the established plans, and the Supervisory Board as a whole discussed these matters in depth. The Executive Board regularly provided us with comprehensive reports for the preparation of our meetings. We thus always had the opportunity to critically analyse the Executive Board's reports and resolution proposals within the committees and within the Supervisory Board as a whole and to put forward suggestions before resolving upon the Executive Board's proposals after in-depth examination and consultation. In the periods between our meetings, the Executive Board kept us informed on a monthly basis, and if necessary more frequently, regarding the current business situation. In addition to the constituent meeting and five regular meetings of the Supervisory Board, we held two extraordinary meetings in the year under review. Apart from one regular meeting, which two members were prevented from attending due to other business appointments that could not be postponed, all Supervisory Board members attended all meetings in the year under review. The average attendance rate at meetings of the entire Supervisory Board was therefore just under 97%. All the committee meetings, with the exception of two Audit Committee meetings at which one member was absent, were fully attended. The external auditor, KPMG AG Wirtschaftsprfungsgesellschaft (KPMG), attended all regular meetings of the Supervisory Board, inasfar as they did not deal with Executive Board matters. KPMG also attended all meetings of the Audit Committee. The employee representatives held separate meetings to prepare and discuss agenda items for all meetings of the entire Supervisory Board. Topics for the entire Supervisory Board Our consultations and examinations focused on the following topics: Situation and business development The development of sales and earnings, the employment situation as well as the financial position of the Group and the business development of the Group's individual segments and regions were presented to us in detail by the Executive Board following the close of the respective quarter and were discussed regularly. Further ongoing topics for discussion were the possible impact of global economic developments and negative currency translation effects as well as the development of our individual brands. In March 2014, we reviewed and dealt intensively with the KPMG-certified 2013 annual financial statements and consolidated financial statements, including the combined management report for adidas AG and the Group, as well as the Executive Board's proposal regarding the appropriation of retained earnings. At the meetings held in February and August, the Executive Board provided us with comprehensive information on the continuing weakness of the golf market worldwide and the resulting unsatisfactory business development for the TaylorMade-adidas Golf segment in the year under review, and furthermore provided us with a first outlook on this segment's future sales development. At two other meetings we dealt in depth with the Group's goals laid out in the mid-term business plan 'Route 2015', which the Executive Board adjusted in July in light of increasingly negative currency effects, the significantly lower profit contribution expected from TaylorMade-adidas Golf as well as the increased investment into marketing. At the May and August meetings, we also dealt comprehensively with the Executive Board's planned sale of the brown-shoe business segment Rockport. The Executive Board outlined to us the strategic reasons as well as the opportunities and risks of a potential divestiture. In order to advise the Executive Board on the contract negotiations efficiently and in a timely manner, we transferred the authority to approve conclusion of the contract to the ad hoc committee 'Relay' which we established for this purpose. In November, the Executive Board provided us with information on the growth potential of the adidas and Reebok brands in the North American market and presented the corresponding three-year plan 2015/2017, which we discussed intensively. adidas Group / 2014 Annual Report 14 15 20 In the periods between meetings, the Supervisory Board Chairman and the Audit Committee Chairman maintained regular contact with the Chief Executive Officer and the Chief Financial Officer, conferring on matters such as corporate strategy, business development and planning, the risk situation and risk management as well as compliance. In addition, the Supervisory Board Chairman was immediately informed about any significant events of fundamental importance for evaluating the situation and development of the company and management activities. To Our Shareholders Supervisory Board Report /01.4/ Transactions requiring Supervisory Board approval In accordance with statutory regulations and the Rules of Procedure of the Supervisory Board, certain transactions and measures require a formal resolution or the prior approval of the Supervisory Board. In the context of this requirement, at our meetings in January and February, we discussed in detail the Group's warehouse infrastructure and the development of logistics and warehouse costs. In the interest of optimising profitability, we approved the purchase of the strategically important distribution centre in Spartanburg/South Carolina, USA, which had previously been leased. At our meeting in March, following detailed discussions, we resolved upon the resolutions to be proposed to the 2014 Annual General Meeting, including the proposal regarding the appropriation of retained earnings for the 2013 financial year and the candidates for election as shareholder representatives on the Supervisory Board. Another topic of this meeting was the resolution on the 2014 Budget and Investment Plan presented by the Executive Board. Composition of the Executive Board In the year under review, we took important decisions concerning changes on the Executive Board. At our extraordinary meeting held in January, we dealt with the request of our long-standing Executive Board member Erich Stamminger to release him from his duties as Executive Board member effective March 5, 2014. After due consideration within the Supervisory Board as a whole, we approved the termination of his appointment by mutual consent and the termination agreement pertaining to his Executive Board service contract. As his successor, we appointed Eric Liedtke as member of the Executive Board responsible for Global Brands effective March 6, 2014 and resolved on the terms of his Executive Board service contract. At our meetings in March and May, we extensively discussed and resolved to extend the Executive Board mandates and service contracts of Herbert Hainer, Glenn Bennett and Robin J. Stalker. 20 14 16 With these personnel decisions, the Supervisory Board acknowledges the Executive Board's performance and strives for continuity. Notwithstanding the above, in November the members of the General Committee discussed, inter alia, the matter of long-term succession planning for the Executive Board. Executive Board compensation In addition to the financial conditions of the Executive Board service contracts, we dealt at our January meeting with waiving the competition prohibition that had been agreed with Erich Stamminger and approved the respective contracts. Key topics of our meeting in February were the approval of the contractual conditions concerning Erich Stamminger's departure as well as the in-depth discussion of the performance of the Executive Board members in the year under review, and we resolved upon the 2013 Performance Bonuses to be granted to them. As required by the German Corporate Governance Code (the 'Code'), we examined the appropriateness of Executive Board compensation and, in this context, considered Executive Board target compensation in relation to the compensation of senior management and employees overall. In consideration of this aspect, at our meeting in March we comprehensively discussed the targets and key criteria for the 2014 Performance Bonus together with the individual Performance Bonus target amount determined for each Executive Board member, as well as the adjustment of Herbert Hainer's Executive Board service contract, and resolved thereon. In line with the Code, we commissioned an independent external compensation expert to review the Executive Board compensation system and the appropriateness of Executive Board compensation. The review found that the compensation structure is oriented towards sustainable development of the company and that it meets statutory requirements as well as those of the Code. A comparison with other companies regarding the compensation of individual Executive Board members' target compensation, however, found that there is a need for action especially concerning the pension benefits granted to Executive Board members, and that there is room for a moderate increase in the future in order to ensure competitive compensation. At the meetings of the General Committee and of the Supervisory Board as a whole in May and August, the members of the Supervisory Board considered in detail the results of the review of Executive Board compensation and agreed with the assessment of the compensation expert. The Supervisory Board already took the findings of the review into consideration in its resolutions in August relating to the extension of Glenn Bennett's and Robin J. Stalker's Executive Board service contracts and their pension benefits. adidas Group / 2014 Annual Report To Our Shareholders Supervisory Board Report /01.4/ At our meeting in February 2015, we considered in-depth the performance of each Executive Board member in the year under review as well as during the three-year period 2012/2014, and then resolved upon the 2014 Performance Bonuses and the LTIP Bonuses 2012/2014 to be granted to them. Further information on compensation for the 2014 financial year can be found in the Compensation Report /SEE COMPENSATION REPORT, P. 28. Corporate governance The Supervisory Board regularly monitors the application and further development of the corporate governance regulations within the company, in particular the implementation of the recommendations of the Code. At our February meetings, matters of corporate governance are usually the focal point. In February 2014, we discussed and resolved to introduce compensation caps, also covering any potential special bonus, for new or extended Executive Board service contracts. In preparation for the upcoming issuance of the 2015 Declaration of Compliance, our meeting in February 2015 focused on reviewing and resolving upon the key objectives for the composition of the Supervisory Board as a whole and the introduction of a severance payment cap for Executive Board service contracts. Thus, in this matter as well, we follow the recommendations of the Code for all newly concluded and extended Executive Board service contracts. After comprehensive discussion, we resolved upon the 2015 Declaration of Compliance. The Declaration of Compliance was then made permanently available to our shareholders on the corporate website at /WWW.ADIDAS-GROUP.COM/S/CORPORATE-GOVERNANCE. In the year under review, no conflicts of interest arose with regard to the Executive Board members. With the exception of the following matter, there were also no conflicts of interest within the Supervisory Board. Further information on corporate governance at the adidas Group can be found in the Corporate Governance Report including the Declaration on Corporate Governance /SEE CORPORATE GOVERNANCE REPORT INCLUDING THE DECLARATION ON CORPORATE GOVERNANCE, P. 20. Efficient committee work In order to perform our tasks in an efficient manner, in addition to the six Supervisory Board standing committees /SEE SUPERVISORY BOARD, P. 12 we have also established the project-related ad hoc committee 'Relay'. The committees prepare resolutions of the Supervisory Board as well as topics for Supervisory Board meetings. Within the legally permissible framework and in appropriate cases, we have furthermore delegated the Supervisory Board's authority to pass certain resolutions to individual committees. With the exception of the Audit Committee, the Supervisory Board Chairman also chairs all the standing committees. The committee chairpersons inform the Supervisory Board about the content and results of the committee meetings at the subsequent meeting of the entire Supervisory Board. /The Steering Committee did not meet in the year under review. /\u0007The General Committee held six meetings in 2014, one of them by way of a conference call. Two additional meetings, dealing with topics of the year under review, took place in February 2015. The main focus of the meetings of the General Committee was the preparation of the resolutions of the Supervisory Board as a whole, detailed individually above, concerning the termination agreement with Erich Stamminger, the conclusion of new or extended Executive Board service contracts as well as the concrete assessment of the Executive Board members' adidas Group / 2014 Annual Report 14 17 20 At the beginning of the 2015 financial year, a consulting contract and a service contract, in each case project-specific, fixed-term and independent of one another, were entered into with two companies in which in each case one Supervisory Board member has an interest. Approval of these contracts was finally granted after being discussed in detail by the Supervisory Board at its meetings in November 2014 and January 2015 and at its meeting in February 2015. In order to avoid conflicts of interest, the two Supervisory Board members concerned participated neither in the respective discussions nor in the resolutions. To Our Shareholders Supervisory Board Report /01.4/ variable compensation such as the Performance Bonus for the 2013 and 2014 financial years and the LTIP Bonus 2012/2014. It furthermore dealt in depth with the results of the review of the appropriateness of Executive Board compensation overall. /\u0007The Audit Committee held five meetings in the year under review and also one meeting in March 2015, dealing with to