Supervisory Board Report

Supervision and advice in dialogue with the Executive Board

In 2008, we, as the Supervisory Board, carefully and regularly monitored the Group’s management and supported the Executive Board in matters relating to the strategic development of the Group as well as major individual initiatives.

In this respect, the Executive Board informed us regularly, extensively and in a timely manner at Supervisory Board meetings as well as by additional oral and written reports. This information covered the Group’s business policy as well as all relevant aspects of business planning, including finance, investment and personnel planning. We were also kept up-to-date on the course of business, the operational position of adidas AG and the Group (including the risk situation and risk management), the Group’s financial position and profitability, as well as all major decisions and business transactions. We were involved in all of the Group’s fundamental decisions at an early stage, granting our approval insofar as was necessary and, in our opinion, in the best interest of the Group after detailed consultation and examination. Our Supervisory Board members again had no conflicts of interest in 2008.

We held five Supervisory Board meetings in 2008. Furthermore, we passed additional resolutions on urgent matters between our meetings. All Supervisory Board members attended more than half of the Supervisory Board meetings. The external auditor, KPMG AG Wirtschaftsprüfungsgesellschaft (formerly: KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft), Frankfurt am Main (KPMG), attended four of our five meetings. In addition, Dr. Friderichs, Chairman of the Supervisory Board, also maintained regular contact with the Executive Board, in particular with the Executive Board Chairman, between the Supervisory Board meetings, discussing strategy and keeping himself informed on the course of business and important events.

Main topics covered and examined by the Supervisory Board

The development of sales and earnings as well as the financial position of the Group and the development of the individual brand segments were presented to us in detail by the Executive Board and subsequently discussed jointly at each of our meetings. Other Supervisory Board agenda items included numerous individual topics, which we discussed in depth with the Executive Board. These discussions did not give rise to any doubt as to the legality or compliance of the Executive Board’s management in carrying out its duties.

In our meeting held in the form of a conference call on January 29, 2008, we discussed and resolved upon the implementation of a share buyback programme based upon the authorisation granted by the Annual General Meeting on May 10, 2007, to repurchase adidas AG shares totalling up to 5% of the company’s stock capital.

The main topic on the agenda of the March 4, 2008 financial statements meeting was the review of the consolidated financial statements and the adidas AG annual financial statements as well as the respective Management Reports for the year ending on December 31, 2007, as certified by KPMG. The Supervisory Board also reviewed the Executive Board’s proposal regarding the appropriation of retained earnings. Following initial Audit Committee examination and consultation, we discussed material aspects of these financial statements with the Executive Board and KPMG. Both provided us with detailed responses to all of our questions. After having carefully considered adidas AG’s financial position and the expectations of shareholders and the capital market, we approved the proposal put forward by the Executive Board regarding the appropriation of retained earnings. Additionally, we discussed the proposed resolutions to be put to the 2008 Annual General Meeting. Following the recommendation of the Audit Committee, we resolved to propose to the Annual General Meeting that KPMG be appointed as auditor of the 2008 consolidated financial statements and the adidas AG annual financial statements and, if applicable, to examine the interim financial statements. We also approved all other resolutions which would later be put to the Annual General Meeting. Lastly, the Executive Board reported to us at this meeting on the business development of the Group with regard to the ongoing revitalisation process in the Reebok segment and the current status of the share buyback programme that we had approved in January. We also kept ourselves informed on key aspects of personnel development and training as well as the adidas Group’s performance-oriented compensation concept.

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