Compensation of the Executive Board Members

For adidas, transparent and comprehensible reporting on the compensation of the Executive Board and Supervisory Board is an essential element of good corporate governance. The Compensation Report is a component of the combined Management Report and outlines the principles of the compensation system for the members of the Executive Board and Supervisory Board as well as the level and structure of the compensation system in accordance with the legal requirements and the recommendations of the German Corporate Governance Code (‘Code‘).

COMPENSATION OF THE EXECUTIVE BOARD MEMBERS

The compensation system which has been applicable for the members of the Executive Board since the 2018 financial year was adopted by the shareholders at the Annual General Meeting on May 9, 2018.

In view of the Act on the Implementation of the Second Shareholders’ Rights Directive (Gesetz zur Umsetzung der zweiten Aktionärsrechterichtlinie – ‘ARUG II’) and the new version of the German Corporate Governance Code, structural changes to the compensation system for the Executive Board members will become necessary. The new compensation system, revised in accordance with these requirements, will be presented for approval at the 2021 Annual General Meeting. The new compensation system will take also into account the new long-term strategy applicable from the 2021 financial year, and the short-term and long-term performance-related compensation components for Executive Board members will reflect the operational and strategic goals of the company outlined in the new strategy. Finally, our shareholders’ expectations regarding the further development of the compensation system will also be taken into account.

The details on the revised compensation system are provided in the invitation to the 2021 Annual General Meeting, which is expected to be published in March 2021.

COMPENSATION SYSTEM

Principles of the compensation system

The compensation system for Executive Board members, which is applicable until the end of the 2020 financial year, is geared toward creating an incentive for successful, sustainable, and long-term corporate management and development. The compensation is therefore structured with an appropriate balance of fixed non-performance-related components and variable performance-related components. The variable performance-related components are based mainly on forward-looking, multi-year performance criteria. They are designed in such a way that both positive and negative developments are considered. Moreover, the incentive to achieve the long-term targets that determine the multi-year variable performance-related compensation component is higher than the incentive to achieve the targets that determine the one-year variable performance-related compensation component. To promote the execution of the corporate strategy, the performance targets selected for the variable performance-related compensation are derived from the operational and strategic goals. Therefore, at least 80% of the variable performance-related compensation is directly linked to the short- and long-term sales and profitability targets externally communicated, thus bringing the compensation of the Executive Board members directly in line with the interests of the shareholders. SEE SECTION ‘VARIABLE PERFORMANCE-RELATED COMPONENTS’

When designing the compensation system and determining the Executive Board compensation, the Supervisory Board takes into account the size and global orientation, the economic situation, the success, and the outlook of the company. Compared with competitors, the compensation should be attractive, offering incentives to attract qualified members to the Executive Board and retain them on a long-term basis within the company. In addition, when determining the compensation, the complexity and importance of the tasks as well as the experience of the respective Executive Board member (especially with new appointments) and their contribution to the company’s success are taken into consideration. The variable performance-related compensation is measured based on the achievement of ambitious, pre-agreed targets; subsequent changes to performance targets or comparison parameters are not permitted. The compensation system aims to appropriately remunerate exceptional performance, while diminishing performance-related compensation when targets are not met.

Procedure for establishing, implementing, and reviewing the compensation system

Following preparation by the General Committee, the compensation system for the Executive Board and the total compensation of each member of the Executive Board is determined and regularly reviewed by the entire Supervisory Board. The topics dealt with by the Supervisory Board and General Committee in the year under review are described in detail in the Supervisory Board Report. See Supervisory Board REPORT

Horizontal (external) comparison

When determining the compensation of the Executive Board, the Supervisory Board takes into account current market compensation levels, especially among companies listed in the German share index (DAX) as well as other selected national and international companies in the sporting goods and textile industries. The Supervisory Board conducts regular horizontal comparisons to ascertain the appropriateness and competitiveness of the Executive Board compensation in relation to the economic situation of the company. In the appropriateness test carried out in the year under review, in addition to the companies listed in the German share index (DAX), the following national and international companies in particular were used for comparison purposes: Nike, Under Armour, VF, Puma, Lululemon, Skechers, Anta, H&M and Inditex.

Vertical (internal) comparison

The Supervisory Board also takes into account the company’s internal compensation structure and levels when determining the Executive Board compensation. In this context, the Executive Board compensation is compared to that of senior management and employees overall in Germany, also with regard to development over time.

Pay ratios

In the 2020 financial year, the ratio of the target direct compensation (sum of the annual fixed compensation and the annual bonus target amounts for the short- and long-term variable compensation) of the Chief Executive Officer to the target direct compensation of the senior management was 11.8 (2019: 11.6) and of the employees overall in Germany was 81.9 (2019: 81.8). The ratio of the average target direct compensation of the ordinary Executive Board members to the target direct compensation of the senior management was 4.8 (2019: 4.6) and of the employees overall in Germany was 33.3 (2019: 32.6).

Overall, the Supervisory Board believes that the compensation system is clear and easy to understand and makes use of transparent performance criteria. Due to the fact that the target direct compensation consists predominantly of variable components which are directly linked to the short- and long-term objectives of the company and due to the share-based long-term compensation of the Executive Board members, the interests of the Executive Board are aligned with the interests of the shareholders. The Supervisory Board is also of the opinion that the compensation of Executive Board members is appropriate.

COMPENSATION STRUCTURE

The total annual compensation of the Executive Board members is composed of a fixed compensation, an annual cash bonus (‘Performance Bonus’), a long-term share-based bonus (Long-Term Incentive Plan – ‘LTIP Bonus’) as well as pension benefits (service costs) and other benefits. In case of 100% target achievement, the target direct compensation (total annual compensation without pension benefits and other benefits) is composed of

• 35% fixed compensation,
• 25% Performance Bonus, and
• 40% LTIP Bonus.

Compensation system for the Executive Board members

FIXED NON-PERFORMANCE-RELATED COMPONENTS

Fixed compensation

The fixed compensation consists of an annual fixed salary. In principle, it is paid in twelve equal monthly installments and generally remains unchanged during the term of the service contract. The fixed compensation corresponds to 35% of the target direct compensation of the respective Executive Board member.

Other benefits

Other regular benefits for Executive Board members include payment for, or providing the monetary value of, non-cash benefits such as premiums or contributions to insurance schemes in line with market practice, the provision of a company car or the payment of a car allowance, reimbursement of costs for a regular health check, reimbursement of work-related moving costs, and, if Executive Board members are also subject to taxation abroad, the costs for the tax consultant selected by adidas. The total amount of other benefits is capped at 5% of the total amount of the fixed compensation and Performance Bonus granted in the respective financial year (‘Benefit Cap’).

Defined contribution pension plans

The current members of the Executive Board have defined contribution pension plans. Each year, as part of the pension commitments, the virtual pension account of each Executive Board member is credited with an amount which equals a percentage determined by the Supervisory Board and which is related to the Executive Board member’s individual annual fixed compensation. The appropriateness of the percentage is regularly assessed by the Supervisory Board. When making its decision, the Supervisory Board takes into account the targeted individual pension level – also based on the length of service on the Executive Board – and the resulting annual and long-term expenses for the company. The percentage most recently determined by the Supervisory Board amounts to 50%. The pension assets on the virtual pension account at the beginning of the respective calendar year yield a fixed interest rate of 3% p.a., however for no longer than until the pension benefits first become due. Entitlement to the pension benefits becomes vested immediately.

Entitlements to pension benefits comprise pensions to be received upon reaching the age of 65, or, on application, early retirement pensions to be received upon reaching the age of 62 or disability and survivors’ benefits.

On occurrence of the pension-triggering event, the pension benefits generally correspond to the balance of the pension account including accumulated interest on that date. In case of invalidity or death prior to reaching the age of 62, for the minimum coverage, the Executive Board member’s virtual pension account will be credited with the outstanding pension contributions for the time until the Executive Board member would have reached the age of 62, but for no longer than 120 months (without interest accrual).

At the option of the Executive Board member or the surviving dependents, the payout of all pension benefits is made either as a one-time payment or in up to ten equal annual installments. As a rule, in case of a payout in annual installments, the installments are due in January of the respective year.

VARIABLE PERFORMANCE-RELATED COMPONENTS

Performance Bonus

As the annual variable performance-related component, the Performance Bonus serves as compensation for the Executive Board’s performance in the past financial year in line with the short-term development of the company. At the beginning of the financial year, the Supervisory Board establishes the respective weighted performance criteria. In case of 100% target achievement, the target amount of the Performance Bonus corresponds to 25% of the target direct compensation of the respective Executive Board member.

The amount of the Performance Bonus is determined based on the achievement of, generally, four weighted criteria. Two of these criteria are the same for all Executive Board members and are overall weighted at 60%. These criteria are directly linked to the annual guidance externally communicated and, at the same time, follow directly from the – also externally communicated – long-term growth targets of adidas. The other two criteria, which are also in line with the company’s short- and long-term targets and reflect priorities of the respective Executive Board function also taking into account non-financial aspects, are determined on an individual basis for the respective Executive Board member and are overall weighted at 40%.

All criteria are designed in such a way that target achievement may also be zero. If the overall degree of target achievement (sum of all degrees of target achievement) is greater than 150%, the Performance Bonus Amount is limited to 150% of the individual Performance Bonus target amount. If the overall degree of target achievement lies at or below 50%, the Executive Board member is not entitled to the Performance Bonus. Therefore, the Performance Bonus may be omitted entirely if targets are clearly not met.

At the end of the financial year, the precise target achievement of each Executive Board member, which is, in principle, based on a comparison of the predefined target values with the values achieved in the year under review, is assessed by the Supervisory Board (‘target/actual comparison’). The Supervisory Board determines the factor by which the Performance Bonus target amount is multiplied by adding up these degrees of target achievement (‘overall degree of target achievement’). The result is the individual amount of the Performance Bonus to be paid (‘Performance Bonus Amount’). When determining the degrees of target achievement and thus when determining the Performance Bonus Amount, the Supervisory Board may, at its equitable discretion in justified special cases, take into account extraordinary positive and negative developments which are not related to the performance of the Executive Board. If there are extraordinary developments that at Supervisory Board´s equitable discretion necessitate an adjustment, these developments will be explained in detail and with transparency in the annual Compensation Report.

The Performance Bonus Amount is payable following approval of the consolidated financial statements of the past financial LTIP 2018/2020: Annual LTIP tranches year.

Long-Term Incentive Plan 2018/2020 (‘LTIP 2018/2020’)

The LTIP 2018/2020 aims to link the long-term performance-related compensation of the Executive Board to the company’s performance and thus to the interests of the shareholders. Therefore, the LTIP 2018/2020 is share-based. It consists of three annual tranches (2018, 2019, and 2020), and each tranche is assessed based on a period of approximately four and a half years. Each of the three annual LTIP tranches consists of a performance year and a subsequent lock-up period of slightly more than three years. In case of 100% target achievement, the LTIP target amount for each of the LTIP tranches corresponds to 40% of the target direct compensation of the respective Executive Board member.

At the beginning of 2018, the Supervisory Board determined for each of the three performance years (2018, 2019, and 2020) the absolute increase in net income from continuing operations compared to the respective previous year as a performance criterion. The target values for the annual LTIP tranches followed directly from the externally published long-term net income growth targets of the company. For instance, if net income from continuing operations had been increased by a total of € 630 million (100% target achievement) in the three-year period from 2018 to 2020, net income from continuing operations would have amounted to € 2,060 million in 2020. Compared to 2015 (basis of adidas’ corporate strategy ‘Creating the New’, which ended in 2020), this would have corresponded to an average increase in net income of 23% per year, which would have been within the target corridor of 22% to 24%, as defined by adidas for the corporate strategy ‘Creating the New’.

The LTIP 2018/2020 stipulated that if the increase in net income from continuing operations is below € 210 million in the respective performance year, the target value for 100% target achievement must be increased accordingly for the following performance year, unless the Supervisory Board decides otherwise at its equitable discretion. However, if the increase in net income was higher than € 210 million in a performance year, the target for the following performance year remained unaffected.

At the end of the performance year, the Supervisory Board assesses the precise target achievement of the Executive Board members, which is, in principle, based on a comparison of the predefined target value with the value achieved in the performance year (‘target/actual comparison’). The degree of target achievement by which the annual LTIP target amount determined for the respective Executive Board member is multiplied is derived from the amount of the actual increase in net income from continuing operations for the respective performance year. In this respect, the Supervisory Board may, at its equitable discretion in justified special cases, take into account extraordinary positive and negative developments which are not related to the performance of the Executive Board. If there are extraordinary developments that at the Supervisory Board´s equitable discretion necessitate an adjustment, these developments will be explained in detail and with transparency in the annual Compensation Report.

If the actual increase in net income from continuing operations compared to the previous year is between the predefined threshold values, the degree of target achievement is determined based on a sliding scale. If the annual increase in net income is below € 140 million, the degree of target achievement is zero. Consequently, the LTIP Bonus for the respective LTIP tranche is omitted completely. Furthermore, the degree of target achievement is capped at 150%, even if the increase in net income exceeds € 280 million.

By multiplying the degree of target achievement thus calculated with the annual LTIP target amount determined for the respective Executive Board member based on 100% target achievement, the Grant Amount is determined, which is paid out to the Executive Board member for the respective annual LTIP tranche following the approval of the consolidated financial statements for the performance year. The Executive Board members have to invest the full Grant Amount which remains after deducting applicable taxes and social security contributions (‘LTIP Payout Amount’) into the acquisition of adidas AG shares. The shares purchased are subject to a lock-up period. The lock-up period ends in the third financial year after the acquisition of the shares upon expiry of the month in which the Annual General Meeting of adidas AG takes place. The Executive Board members may only dispose of the shares after expiry of the lock-up period.

LTIP 2018/2020: Annual LTIP tranches

Due to this mechanism, the compensation which the Executive Board members eventually receive from each of the LTIP tranches is also directly dependent on the share price performance during the respective lock-up period of slightly more than three years and is thus dependent on the long-term performance of the company. The Executive Board members are entitled to any dividends distributed in connection with these shares during the lock-up period.

Furthermore, to ensure sustainable management and development of the company, the terms and conditions of the LTIP 2018/2020 contain malus and clawback provisions; until expiry of the lock-up period (malus) and beyond (clawback), these provisions allow the Supervisory Board at its equitable discretion, under certain circumstances, to partially or completely reduce the compensation from the LTIP 2018/2020 or to reclaim part or all of the variable compensation already paid. Such circumstances are, for instance, material misstatements in the financial reports, serious compliance violations and violations of duty as well as breaches of the company-internal rules of conduct by the Executive Board member which, in any such case, would lead to an unjustified bonus payment in the context of the LTIP 2018/2020. Moreover, in the event of violations of duty by Executive Board members, the respective claims for damages under stock corporation law are applicable.

The compensation system for the Executive Board allows the Supervisory Board, at its equitable discretion and in rare, justified special cases, to grant a special bonus in case of extraordinary performance by an Executive Board member. If such special bonus is granted, it is capped at a maximum of 100% of the annual fixed compensation of the financial year for which the special bonus is granted. If a special bonus is granted, it is reported in detail and with transparency in the annual Compensation Report.

Share ownership

40% of the target direct compensation of the Executive Board members is granted based on the long-term performance-related compensation component LTIP 2018/2020. To promote sustainable development of the company, the Executive Board members are obligated in the context of the LTIP 2018/2020 to invest the full Payout Amount into the acquisition of adidas AG shares. The shares purchased are subject to a lock-up period of slightly more than three years. If an LTIP Bonus is granted annually, the number of adidas AG shares directly held by the Executive Board members increases on an annual basis to a multiple of their fixed compensation.

Commitments to Executive Board members upon termination of tenure

Unless otherwise agreed upon in the individual case, if the service contract ends upon the Executive Board member reaching the age of 65 or upon non-renewal of the service contract, the Executive Board member is entitled to receive annual fixed compensation on a pro rata basis up to the date on which they leave office as well as a potential prorated Performance Bonus and a potential prorated LTIP Bonus.¹ In principle, Executive Board members are furthermore subject to a post-contractual competition prohibition of two years. As consideration, for the duration of the competition prohibition, the Executive Board members generally receive a monthly compensation amount totaling 50% of the monthly fixed compensation last received, subject to offsetting (e.g. of income from other use of their work capacity). If the departed Executive Board member receives pension payments from the company, this compensation is offset against any pension benefits owed by the company during the period of the competition prohibition.

In case of premature termination of tenure in the absence of good cause, the Executive Board service contracts cap potential severance payments at a maximum of twice the total annual compensation, not exceeding payment claims for the remaining period of the service contract (‘Severance Payment Cap’). If the service contract is terminated due to a change of control, a possible severance payment is limited to 150% of the Severance Payment Cap. The Executive Board member does not receive a severance payment if they terminate tenure prematurely at their own request or if there is good cause for the company to terminate the employment relationship. The service contracts concluded with Executive Board members newly appointed with effect from January 1, 2020, generally stipulate that compensation for periods of competition prohibition possibly paid on a monthly basis to departing Executive Board members is offset against any severance payments potentially paid by adidas.

Sideline activities of Executive Board members

Executive Board members may only take on sideline activities with or without remuneration, in particular supervisory board mandates in group-external companies, with the prior approval of the Supervisory Board. Group-internal mandates are deemed covered by the contractually agreed Executive Board compensation. The Supervisory Board decides whether or not compensation for group-external mandates is credited to the Executive Board compensation. See Executive Board

EXECUTIVE BOARD COMPENSATION 2020

2020 Performance Bonus

As in previous years, for the 2020 financial year, the Supervisory Board has in general determined the following performance criteria:

• currency-neutral sales growth,
• an increase in the operating margin and
• two criteria relating to the individual performance of the Executive Board members.

The Performance Bonus targets determined were based on the company forecast communicated at the beginning of the 2020 financial year before the global outbreak of the coronavirus pandemic. When setting the targets for the 2020 financial year, the initial impact of the coronavirus pandemic was becoming apparent and mainly affecting the operating business in Asia, especially in Greater China. Under these circumstances, the Supervisory Board decided that the operating business in Greater China should not be taken into account when determining the criteria and targets for the 2020 Performance Bonus. At the same time, to strengthen the market position in the important chinese market, the Supervisory Board set an additional performance criterion for the Executive Board – aimed at increasing market shares in Greater China compared to the previous year – and adjusted the weighting of each performance criterion accordingly.

In the 2020 financial year, the individual criteria relating to the respective Executive Board function focused on, in particular, development of the new strategy valid from 2021, succession planning, commercial success of key sales channels, marketing, and operating efficiency.

The shared and individual criteria established at the beginning of the financial year were not adjusted during the financial year in light of further developments of the coronavirus pandemic. Due to the unforeseeable, serious impact of the ongoing coronavirus pandemic on the company, the targets and the target values for the 2020 Performance Bonus set by the Supervisory Board at the beginning of the financial year did not adequately reflect the actual course of business. The achievement of the shared financial targets (currency-neutral sales growth and increase in operating margin) was 0% in each case, while the target achievement for the increase in market shares in Greater China was 100%. The achievement of the individual targets varied considerably from 0% to 123%, which is attributable in particular to the different degrees of impact of the coronavirus pandemic on the respective individual criteria, which could not be considered adequately at the time of target setting. For example, the target achievement for Roland Auschel’s individual criterion ‘success of the direct-to-consumer business‘ was 0% despite a very successful increase in e-commerce sales (currency-neutral net sales growth of 53% compared to the previous year), as the material revenue decline in the physical sales channels could only partially be offset. The same applies to the target achievement of Harm Ohlmeyer’s individual criterion ‘cost management‘, as operating overhead expenses increased as a percentage of sales, although the company’s liquidity situation was stabilized in the course of the coronavirus pandemic also due to a very successful cost discipline.

Due to the inadequately set performance criteria in view of the unforeseeable impact of the coronavirus pandemic, the minimum overall degree of target achievement of over 50% required for a payout was only achieved by some of the Executive Board members.

As a liquidity management measure, the Executive Board had already decided in April 2020 to waive the Performance Bonus for the 2020 financial year. As a result, a Performance Bonus will also not be paid to those Executive Board members who have achieved an overall target achievement of over 50%.

LTIP 2018/2020: Performance year 2020

In the 2018 financial year, the Supervisory Board determined as a performance criterion for each of the three performance years (2018, 2019, and 2020) the absolute increase in net income from continuing operations compared to the respective previous year.

At the time the targets were set for the 2020 financial year, the initial impact of the coronavirus pandemic was becoming apparent and mainly affecting the operating business in Asia, especially in Greater China. Under these circumstances, the Supervisory Board decided that the operating business in Greater China should not be taken into account when determining the target value for the 2020 LTIP tranche. The annual performance criterion ‘absolute increase in net income from continuing operations’ was therefore set at a target value of € 170 million (instead of € 210 million).

The target value established at the beginning of the financial year was not adjusted during the financial year despite of further developments of the coronavirus pandemic. Due to the unforeseeable, serious impact of the ongoing coronavirus pandemic on the company, the target value established for the 2020 LTIP tranche by the Supervisory Board at the beginning of the financial year therefore did not reflect the actual course of business adequately. Against this background, the target value set for the 2020 LTIP tranche could not be met by the Executive Board members. The degree of target achievement for all Executive Board members during the year under review was 0%.

Furthermore, as a liquidity management measure, the Executive Board had already decided in April 2020 to waive the LTIP Bonus for the 2020 financial year. This means that Executive Board members will not acquire any adidas AG shares in the context of the 2020 LTIP tranche.

As at December 31, 2020, the total number of adidas AG shares acquired in the context of the LTIP 2018/2020 and which are subject to a lock-up period, amounts to 40,371 shares (2019: 21,451 shares). The lock-up period for the adidas AG shares purchased in the 2018 LTIP tranche expires on May 31, 2022 and for the adidas AG shares purchased in the 2019 LTIP tranche on May 31, 2023. The number of the adidas AG shares purchased by the Executive Board members in the context of the LTIP 2018/2020 are set out individually in the following.

Share ownership 2020

The share ownership of the Executive Board members incumbent as at December 31, 2020 in relation to their individual annual fixed compensation is disclosed individually in the following.

Special bonus

The compensation system for the Executive Board allows the Supervisory Board, at its equitable discretion and in rare, justified special cases, to grant a special bonus in case of extraordinary performance by an Executive Board member. If such special bonus is granted, it is capped at a maximum of 100% of the annual fixed compensation of the financial year for which the special bonus is granted.

Due to the unforeseeable, serious impact of the ongoing coronavirus pandemic on the company, the target values for the 2020 Performance Bonus and 2020 LTIP tranche set by the Supervisory Board at the beginning of the financial year did not adequately reflect the actual course of business. The target values were not adjusted during the financial year despite further developments of the coronavirus pandemic. As a result, the target values set by the Supervisory Board at the beginning of the financial year could predominantly not be met by the Executive Board members. Furthermore, as a liquidity management measure, the Executive Board had already decided in April 2020 to waive the 2020 Performance Bonus and the 2020 LTIP Bonus. Against this background, the 2020 Performance Bonus will also not be paid to those Executive Board members who have achieved an overall target achievement of over 50%.

In the Supervisory Board’s opinion, all members of the Executive Board have demonstrated outstanding performance in leading the company in times of the coronavirus pandemic with a sole focus on the long-term prosperity of adidas and the health of its global employees, consumers and partners. Not only were coronavirus pandemic-related employee layoffs avoided entirely, the company’s liquidity position was also stabilized due to strict cost discipline and a strong increase in the share of e-commerce sales through consistent investment in digital capabilities and marketing. Furthermore, following a series of successful financing activities, the syndicated revolving loan facility with the participation of the state-owned development bank KfW was redeemed ahead of schedule in November 2020. The € 500 million share of the loan utilized in July 2020 was repaid in October 2020 including agreed-upon market interest and fees. At the same time, the share price of adidas AG has stabilized again and at € 297.90 at the end of the year under review (Xetra closing price as at December 30, 2020) was back at the level before the start of the coronavirus pandemic. In addition, in view of the stabilization of the liquidity situation and management’s confidence in the company’s long-term growth potential, the Executive Board and the Supervisory Board of adidas AG intend to propose to the Annual General Meeting on May 12, 2021 a dividend of € 3.00 per dividend-entitled share for the 2020 financial year. Against this background, the Supervisory Board considers it appropriate to grant a special bonus for the first time to the Executive Board members incumbent as at December 31, 2020.

The special bonus is payable following approval of the 2020 consolidated financial statements and amounts to 25% of the LTIP target amount determined for the 2020 financial year for each Executive Board member. This establishes consistency with the granting of an LTIP Bonus to senior management in the corresponding amount of 25%. The special bonus is granted share-based and shall therefore be invested by the Executive Board members into the acquisition of adidas AG shares after deduction of applicable taxes and social security contributions in full. The shares purchased are subject to a lock-up period of slightly more than three years which ends upon expiry of the month in which the Annual General Meeting of adidas AG for the 2024 financial year takes place. As a result, the special bonus granted to the members of the Executive Board is also aligned with the performance of the company and thus with the interests of the shareholders.

The granting of the special bonus represents an absolutely exceptional case in light of the unprecedented and serious impact of the coronavirus pandemic, in order to ensure fair and equal treatment of the members of the Executive Board. This approach follows the overall concept of the company to grant its employees worldwide a bonus payment that is appropriate in view of all circumstances for their outstanding performance in the 2020 financial year.

Pension commitments

The service costs for the pension commitments granted to the Executive Board members and the cash values of the vested rights in the 2020 financial year are set out individually in the following.

Overall compensation 2020

Based on the Supervisory Board’s aforementioned determination, the overall compensation of the Executive Board for the 2020 financial year amounts to € 11.376 million. This represents a decrease of approximately 49% compared to previous year (2019: € 22.361 million). Of this overall compensation, € 1.482 million was attributable to the special bonus granted for the first time for the 2020 financial year. The Executive Board members did not receive any further one-year or multi-year performance-related compensation.

Benefits granted

In the following table, the individual compensation components for Executive Board members in case of 100% target achievement of the performance-related compensation are disclosed for each Executive Board member individually, including other benefits and service costs, and also including the maximum and minimum achievable compensation.

Allocation

In the following table, the individual compensation components of the Executive Board members are disclosed as an allocation for the financial year in which the compensation was granted, with the service costs not constituting an actual allocation to the Executive Board members.

Commitments to Executive Board members upon termination of tenure

Termination of Karen Parkin’s tenure effective June 30, 2020:

In connection with the termination of her Executive Board mandate, Karen Parkin received a severance payment of € 5,341,367.

As regards the post-contractual competition prohibition, Karen Parkin has received monthly compensation to the amount of € 37,500 since July 1, 2020, payable for a total period of 24 months. This corresponds to 50% of the last fixed monthly salary. If the compensation paid for the post-contractual competition prohibition and any potential income from other employment in total exceed the monthly fixed salary last received by Karen Parkin before her departure, any income from other employment will be offset against the compensation paid for the post-contractual competition prohibition. The overall maximum compensation for the post-contractual competition prohibition payable to Karen Parkin therefore amounts to € 900,000.

Overall payments to former members of the Executive Board and their surviving dependents

In the 2020 financial year, overall payments to former members of the Executive Board and their surviving dependents amounted to € 10.641 million (2019: € 14.567 million).

Provisions were created for pension entitlements for former members of the Executive Board who resigned on or before December 31, 2005 and their surviving dependents, amounting to € 45.799 million in total as at December 31, 2020 (2019: € 46.326 million). There are pension commitments toward six former Executive Board members who resigned after December 31, 2005, which are covered by a pension fund or a pension fund in combination with a reinsured pension trust fund. From this, indirect obligations amounting to € 48.549 million (2019: € 46.216 million) arise for adidas AG, for which no provisions were created due to financing through the pension fund and pension trust fund. For two former members of the Executive Board who resigned on or before December 31, 2019, there are pension commitments amounting to € 3.971 million.

Miscellaneous

The Executive Board members do not receive any additional compensation for mandates within adidas. The Executive Board members have not received any loans or advance payments from adidas AG. Furthermore, no Executive Board member received any payments or promises of payments from third parties with regard to their work at adidas.