(Bloomberg) -- Two prominent German investors plan to vote against Adidas AG’s management and supervisory boards at next week’s annual shareholder meeting, a show of frustration over the sports company’s repeated crises.
Both Deka Investment and Union Investment said they will withhold their support in confidence votes over the performance of Adidas’s two leadership boards during the 2022 fiscal year, an era when earnings fell, the highly profitable Yeezy collaboration imploded and former Chief Executive Officer Kasper Rorsted left with more than three years remaining on his contract.
Rorsted’s six-year tenure was “disastrous” and the supervisory board waited far too long to replace him and deal with other problems, said Ingo Speich, head of corporate governance at Deka Investment, an Adidas shareholder, in emailed remarks.
Adidas’s shares plunged 64% through Nov. 3 of last year amid repeated profit warnings and personnel problems. The shares only recovered after reports emerged that the company would hire Bjorn Gulden away from crosstown rival Puma SE to take over as Adidas’s next CEO. Gulden started at Adidas in January.
The shareholder proxy service Glass Lewis also recommended that investors vote against Adidas’s supervisory board, chaired by Thomas Rabe, though it advised lending support to the management team. Glass Lewis criticized Adidas’s handling of diversity matters in recent years, saying investors need to see proof of real change in the company’s culture.
Typically, these ballots are formalities in corporate Germany. But in recent years, investors have at times used the non-binding but highly symbolic votes to express their dissatisfaction.
ISS, another proxy service, recommended that investors vote in favor of both of Adidas’s governing boards.
Adidas faced criticism last year for being slow to cancel the Yeezy partnership with the rapper and designer Ye — formerly Kanye West — after the performer made a string of antisemitic remarks. Rabe has nonetheless drawn praise for hiring Gulden, who has already removed two members of Rorsted’s management team.
Speich, of Deka, said he welcomed the appointment of Gulden, who needs to return Adidas quickly to profitable growth and improve communication with investors.
A spokesman for Union Investment shared the fund’s plans for the Adidas vote in an email, without elaborating on its reasons.
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