Two Adidas Holders Raise Questions on New Board Chief, Diversity

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Two major Adidas AG shareholders criticized the selection of the new chairman of the sportswear company’s supervisory board, saying he already has a full-time job leading another company.

Thomas Rabe, who joined Adidas’s supervisory board last year, is set to replace longtime chairman Igor Landau in leading the oversight body following Tuesday’s annual shareholder meeting. Rabe is also chief executive officer of German media company Bertelsmann SE. That makes him unfit to head the Adidas supervisory board, “because those are two full-time jobs,” Vanda Heinen, an analyst with Union Investment, said in an emailed statement.

Two Adidas Holders Raise Questions on New Board Chief, Diversity

Shareholders have also raised concerns about Bodo Uebber, who joined Adidas’s supervisory board last year. He’s a member of two boards affiliated with Bertelsmann -- as well as a partner in a third entity connected with that business. That creates the possibility of conflicts of interest between Uebber and Rabe, said Ingo Speich, head of corporate governance for Deka Investment in Frankfurt.

On Tuesday, Deka plans to vote against absolving Adidas’s supervisory board of responsibility for its actions last year, a rare rebuke in corporate Germany from a major shareholder.

The new 16-member supervisory board would include four people who are CEOs of other companies. “It’s questionable if these people have enough time” for the Adidas board, Speich said in a statement, “or if the work there will be a minor matter.”

Adidas did not immediately respond to a request for comment on the investors’ statements. Bertelsmann did not immediately respond to a request for comment from Rabe or Uebber.

Union Investment has a 1.3% stake in Adidas, making it the 11th-largest shareholder, according to data compiled by Bloomberg. Deka has a 0.6% stake, making it the 17th-largest.

Both Union and Deka criticized Adidas’s executive team, including Chief Executive Officer Kasper Rorsted, who just signed a five-year contract extension. The company’s leadership has faced heightened scrutiny after human resources chief Karen Parkin resigned on June 30 following criticism from Black employees that she had characterized staff concerns over racial disparities as “noise.”

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While saying that some progress has been made on promoting diversity, the investors both called for more concrete plans. Still, both plan to vote in support of Rorsted’s team.

That contrasts with the recommendation of influential advisory group Glass Lewis & Co., which called for shareholders to withhold support for the executive team, while backing the supervisory board. High-profile problems with diversity matters could cause Adidas to lose customers and talented workers, Glass Lewis said.

“Adidas condemns discrimination in all forms,” the company said in a statement on the Glass Lewis recommendations. “Over the last few months, our executive board has acted decisively in taking action to create a diverse and inclusive workplace and fight racism.”

On Thursday, Rorsted said that he’s engaged in listening sessions with employees around the world since assuming leadership of human resources in recent weeks and has heard about some workers’ discomfort with Adidas’s handling of diversity matters. The CEO pledged to fix the situation.

Rorsted’s messaging has won him praise from some quarters.

The company is “moving in the right direction with diversity,” John Kernan, a New York-based analyst with Cowen, said in an email.

©2020 Bloomberg L.P.

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