People First: Launching the adidas Group Stock Purchase Plan

Transcription

1 People First: Launching the adidas Group Stock Purchase Plan Alex Johnson, Senior Director Total Rewards, adidas Ralph Lange, Manager, Willis Towers Watson Dr. Andreas Löhdefink, Partner, Shearman & Sterling Iva Sonne, Market Development Director DACH, Solium Capital UK

2 Agenda About adidas (Alex Johnson) Introduction and Challenges (Alex Johnson) Plan design (Ralph Lange) Communication (Alex Johnson) Legal (Sami Toutounji) Plan Administration (Iva Sonne) Project success and further rollout (Alex Johnson)

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4 The adidas group at a glance GROUP SALES1) 19.3 BN NET INCOME ATTRIBUTABLE TO SHAREHOLDERS1)2)3) 1.0 BN EMPLOYEES WORLDWIDE MORE THAN 60,000 SUBSIDIARIES APPROXIMATELY 170 IMPORTANT LOCATIONS HERZOGENAURACH, AMSTERDAM, PORTLAND, CARLSBAD, HONG KONG, SHANGHAI 1) 2) 3) Based on 2016 full year results. Figures include continuing and discontinued operations. Excluding goodwill impairment of 34 million. Please note that only the annual report contains binding figures.

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6 The World s Corporate Health Award Most Attractive 'Special Award for Employers / healthy nutrition' / Universum EuPD Research Sustainable Management, Handelsblatt, TÜV SÜD Akademie and ias-gruppe Best Employer 2017 / glassdoor Germany trendence Graduate Barometer Business Edition / trendence

7 Introduction and Challenges The idea of implementing an Employee Share Purchase plan Meaningful reasons to join and stay Drive equity culture Innovative and creative solutions

8 Introduction and Challenges The adidas Stock Purchase Plan is a benefit on top has to work for all functions and levels is higly flexible is innovative but also aligned with established structures supports our equity culture has a positive cost/benefit ratio

9 Introduction and Challenges adidas workforce characteristics and design challenges to be met: Age Mobility Young and diverse workforce Frequent change of role and/or country Attractive for employees with a short-term planning horizon Turnover Financial Knowledge High turnover, especially in retail stores Limited knowledge about share investment A real challenge for SPP design Encouraging employees to become longterm shareholders Organization Communication Quite decentralized organization due to retail Partly difficult with employees in retail stores Manage global rollout in a decentralized company

10 Plan design adidas Stock Purchase Plan characteristics at a glance: Sustainability & equity culture Attractiveness & simplicity Holding incentive Innovation & competitiveness Modular add-on incentive Holding incentive Purchase incentive Purchase incentive Purchase incentive adidas AG share adidas AG share adidas AG share adidas AG share Holding period adidas AG share adidas AG share Additional perks Immediate incentives Small investments through fractional shares Savings plan with periodic investments

11 Plan design adidas Stock Purchase Plan cycle at a glance:

12 Plan design A modular approach to tackle the challenges: Addressing a short-term planning horizon 1 Including employees with lower income 2 Offering fractional shares Immediate Discount 15 % Encouraging long-term investment Fostering equity culture 3 Matching after 1 year 6:1 4 Participation on share price development

13 Unique Communication Design Starting-point Situation Impact of Communication Employee Decision-making Being a young and diverse workforce with recipients in headquarters, distribution centers and retail stores, a significant number of the target groups individuals might not be familiar with share investments. The communication of the plan design is essential. Employees must be enabled to understand the core principles of the plan with all its risks and chances. Every employee must be enabled to take an informed decision while being emotionally convinced and inspired. The communication design applies a balanced media-mix between print, online and face-to-face communication aiming at providing information both in a serious and playful way. Financial education elements are transmitted attractively, e.g. by using videos and calculators for mobile phones to attract the young and diverse workforce.

14 Communication examples What the media looks like: Link Video 1 Link Video 2

15 Legal A unique plan design specifically conceived to meet the needs and goals of adidas Yet still able to fit within qualified (tax-advantaged) plan requirements in key countries, current and future A common core plan design for all countries Monthly payroll deduction Quarterly investment in shares 15 % immediate discount Deferred matching contribution with time vesting Adaptable to local specificities and requirements Eligibility (very strict in Germany, relaxed for other countries) Pricing terms (very strict in the USA, relaxed for other countries) Payment dates (adapt to unpredictable conditions in countries like China) Mandatory holding periods (not required or desired, but can be introduced where helpful to qualify)

16 Plan administration Objectives User friendly, global, cloud-based solution accessible via Single-Sign-On or via web A completely paperless account activation and enrollment process Easy account activation process Easy and intuitive enrollment process which takes only few clicks to complete Simple transaction execution Document section incl. enrollment and transaction guides, plan rules etc. Local money movement of the sales proceeds Global participants support Biggest challenge Over 5,000 eligible retail employees without a company access

17 Plan administration Account activation For the first enrollment period, activation s sent out to over 17,000 eligible employees Activation codes provided to the line managers of over 1,000 employees without any access

18 Plan administration Enrollment

19 Plan administration Transacting via the Shareworks App

20 Plan administration Transacting via the Shareworks App

21 Plan administration Global Participants Support Call Center Support Support Live Chat

22 Project success Success: Participation rates 18 % Germany 20 % Hong Kong 48 % Netherlands 24 % USA 16 %

23 Project success and further roll-out Implementation roll-out country selection criteria: Local Legal Guidelines The implementation of the SPP has to be in line with local law and regulation Benefit Implementation costs should not significantly outweigh the potential benefit to employees, displayed by the discount and the matching shares provided. Country Selection Costs There are certain costs for both the implementation and the ongoing administration of the plan. Environment An implementation would generally be highly appreciated and local resources would be available and able to support it.

24 Project success and further roll-out Efficient implementation Fold-in package Plan Rules and Country Supplement (template in English) Tax Notes (template in English) Global Process Descriptions (Charts) Blueprint (global) and Blueprint Supplement (template in English) Shareworks Screenshots (Charts) Global Brochure and Local Inserts (template in English) Risk and Fact Sheets (template in English) Communication Plan (template)

25 Thank You Alex Johnson adidas Ralph Lange Willis Towers Watson Iva Sonne Solium Capital UK Dr. Andreas Löhdefink Shearman & Sterling

26 Thank You Thank you for attending GEO s 18 th Annual Conference in Rome. We hope you enjoyed this session. If you require CPE Credit, don t forget to Sign Out Two ways to give us your feedback on this session o Mobile app o Paper surveys available at the door