Adidas facing investor unrest after yeezy crisis along with poor sales

Written by Tim Law

Two prominent German investors plan to vote against Adidas AG’s management and supervisory boards at next week’s annual meeting of shareholders, a display of frustration with the sports company’s repeated crises.

Deka Investment and Union Investment said they would confidently withhold their support from a vote on the performance of Adidas’ board of directors during fiscal 2022, an era when profits plummeted, the highly profitable Yeezy collaboration imploded, and former CEO Kasper Rorsted departed. More than three years left on his contract.

Ingo Speich, head of corporate governance at Deka Investment, an Adidas shareholder, said in e-mailed remarks that Rorsted’s six-year tenure was “disastrous” and the supervisory board had waited too long to replace him and deal with other problems.

Adidas shares fell 64% through November 3 last year amid repeated profit warnings and employee issues. Shares only recovered after reports emerged that the company would hire Bjorn Golden away from crosstown rival Puma SE to take over as the next CEO of Adidas. Goldin made his Adidas debut in January.

Shareholder service Glass Lewis also recommended that investors vote against the Adidas Supervisory Board, chaired by Thomas Rabe, although it advised support for the management team. Glass Lewis has criticized Adidas’ handling of diversity issues in recent years, saying investors need to see evidence of a real change in the company’s culture.

These ballots are usually a formality in German companies. But in recent years, investors have sometimes used non-binding but highly symbolic votes to express their displeasure.

The ISS, another proxy service, has recommended that investors vote in favor of both Adidas boards of directors.

Adidas faced criticism last year for being slow to cancel Yeezy’s partnership with rapper and designer Ye — formerly known as Kanye West — after the performer made a series of anti-Semitic remarks. However, Rabe won praise for hiring Golden, who had already fired two members of Rorsted’s management team.

Speich, of Deka, said he welcomes the appointment of Gulden, who needs to quickly return Adidas to profitable growth and improve communication with investors.