Internal Group Management System
The adidas Group’s central planning and controlling system is designed to continually increase the value of our Group and brands to maximize shareholder value. By improving our top- and bottom-line performance and optimizing the use of capital employed, we aim to maximize free cash flow generation. This is our principal goal for increasing shareholder value. Management utilizes a variety of decision-making tools to assess our current performance and to align future strategic and investment decisions to best utilize commercial and organizational opportunities.
FREE CASH FLOW AS INTERNAL GROUP MANAGEMENT
FOCUS
The cornerstone of our Group’s Internal Management
System is our focus on free cash flow generation, which we
believe
is the most important driver to sustain and increase
shareholder value. Free cash flow is comprised of operating
components (operating profit, change in operating working
capital and capital expenditure) as well as non-operating
components such as financial expenses and taxes. To maximize
free cash flow generation across our multi-brand organization,
brand management has direct responsibility
for
improving operating profit as well as optimizing operating
working capital and capital expenditure. Non-operating
items
such as financial expenses and taxes are managed centrally
by the Group Treasury and Tax departments. To keep Group and
brand management focused on ongoing performance
improvement,
a portion of the responsible managers’ total compensation
is variable and linked to a combination of operating profit,
operating working capital development, Group earnings before
tax, or relative / absolute stock price performance.
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FREE CASHFLOW COMPONENTS |
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| 1) | Excluding goodwill and finance leases. |
