Corporate Governance   

Corporate Governance at PUMA SE   

The effective implementation of corporate governance principles is an important aspect of PUMA’s corporate policy. Transparent and responsible corporate governance is a prerequisite for achieving corporate targets and for increasing the Company’s value in a sustainable manner. The Supervisory Board and the Management Board work closely with each other in the interests of the entire Company so that the Company is managed and monitored in an efficient way ensuring sustainable added value through good corporate governance.   

Corporate Governance System

Corporate Governance System

PUMA SE has a dual management and supervisory structure. The Management Board is composed of three members. The Supervisory Board is composed of six members, four of whom are elected by the Annual General Meeting and two of whom are elected by the employees. Another important corporate body is the meeting of the shareholders.

German Corporate Governance Code

Management board & supervisory board

 Management board 

Björn Gulden
Bjørn Gulden Chief Executive Officer
MIchael Lämmermann
Michael Lämmermann Chief Financial Officer
Anne-Laure Descours
Anne-Laure Descours Chief Sourcing Officer

 Supervisory Board

Jean Francois Palus
Jean-François Palus Chairman of the Supervisory Board
HÉLOÏSE TEMPLE-BOYER
HÉLOÏSE TEMPLE-BOYER DEPUTY GENERAL MANAGER OF ARTÉMIS S.A.S., PARIS/ FRANCE
Fiona May
Fiona May Oly INDEPENDENT MANAGEMENT CONSULTANT
Thore Ohlsson
Thore Ohlsson Deputy Chairman of the Supervisory Board
Bernd Illig
Bernd Illig Employees' Representative
Martin Koeppel
Martin Koeppel Employees' Representative
Articles of Association
Rules of procedure for the SUPERVISORY Board of PUMA SE

(Convenience Translation)

PUMA SE (the “Company”, together with its affiliates according to Sections 15 et. seq. German Stock Corporation Act (Aktiengesetz
AktG), the “PUMA Group”) has dualistic management and supervisory system consisting of a management body (the
“Management Board”) and a supervisory body (the “Supervisory Board”) according to Art. 38 lit. b) alternative 1, Art. 39, Art. 40 of the Council Regulation (EC) No. 2157/2001 of 8 October 2001 on the Statute of a European Company (SE) (the “SE‐VO”):

Rules of procedure for the SUPERVISORY Board of PUMA SE

Rules of procedure for the MANAGEMENT BOARD of PUMA SE

(Convenience Translation)

PUMA SE (the “Company, together with its affiliates according to Sections 15 et. seq. German Stock Corporation Act (Aktiengesetz,
AktG), the “PUMA Group”) has a dualistic management and supervisory system consisting of a management body (the
“Management Board”) and a supervisory body (the “Supervisory Board”) according to Art. 38 lit. b) alternative 1, Art. 39, Art. 40 of the Council Regulation (EC) No. 2157/2001 of 8 October 2001 on the Statute of a European Company (SE) (the “SE‐VO”):

Rules of procedure for the MANAGEMENT BOARD of PUMA SE

Report by the SUPERVISORY Board of PUMA SE
Information concerning Takeovers

Information concerning Takeovers 2019  

The following information, valid December 31, 2019, is presented in accordance with Art. 9 p. 1 c) (ii) of the SE Regulation in conjunction with Sections 289a, 315a German Commercial Code (HGB). Details under Sections 289a, 315a HGB which do not apply at PUMA SE are not mentioned.

Download

Composition of the subscribed capital (Sections 289a [1][1][1], 315a [1][1][3] HGB)

On the balance sheet date, subscribed capital totaled € 150,824,640.00 and was divided into 150.824.640 no-par-value shares with a proportional amount in the statutory capital of EUR 1.00 per share. As of the balance sheet date, the Company held 1,276,839 treasury shares.

Shareholdings exceeding 10% of the voting rights (Sections 289a [1][1][3], 315a [1][1][3] HGB)

As of December 31, 2019, there was one shareholding in PUMA SE that exceeded 10% of the voting rights. It was held by the Pinault family via several companies controlled by them (ranked by size of stake held by the Pinault family: Financière Pinault S.C.A., Artémis S.A.S. and Kering S.A.). The shareholding of Kering S.A. in PUMA SE amounted to 15.7% of the share capital according to Kering’s press release from May 16, 2018. The shareholding of Artémis S.A.S. and Kering S.A. amounts to 44.22% of the share capital according to their voting rights notification as of May 24, 2018.

 

Statutory provisions and regulations of the Articles of Association on the appointment and dismissal of the members of the Management Board and on amendments to the Articles of Association (Sections 289a [1][1][6], 315a [1][1][6] HGB)
Regarding the appointment and dismissal of the members of the Management Board, reference is made to the applicable statutory requirements of § 84 German Stock Corporation Act (AktG). Moreover, Section 7[1] of PUMA SE’s Articles of Association stipulates that Management Board shall consist of two members in the minimum; the Supervisory Board determines the number of members in the Management Board. The Supervisory Board may appoint deputy members of the Management Board and appoint a member of the Management Board as chairperson of the Management Board. Members of the Management Board may be dismissed only for good cause, within the meaning of Section 84[3] of the German Stock Corporation Act (AktG) or if the employment agreement is terminated, in which case a resolution must be adopted by the Supervisory Board with a simple majority of the votes cast.

Amendments to the Articles of Association of the Company require a resolution by the Annual General Meeting. Resolutions of the Annual General Meeting require a majority according to Art. 59 SE Regulation and Sections 133[1], 179 [2] [1] German Stock Corporation Act (AktG) (i.e. a simple majority of votes and a majority of at least three quarters of the share capital represented at the time the resolution is adopted). The Company has not made use of Section 51 SEAG.

Authority of the Management Board to issue or repurchase shares (Sections 289a [1][1][7], 315a [1][1][7] HGB)
The authority of the Management Board to issue shares result from Section 4 of the Articles of Association and from the statutory provisions:

Authorized Capital
The Management Board shall be authorized with the approval of the Supervisory Board to increase the share capital of the Company by up to EUR 15,000,000.00 by issuing, once or several times, new no par- value bearer shares against contributions in cash and/or kind until 11 April 2022 (Authorized Capital 2017). In case of capital increases against contributions in cash, the new shares may be acquired by one or several banks, designated by the Management Board, subject to the obligation to offer them to the shareholders for subscription (indirect pre-emption right).
The shareholders shall generally be entitled to pre-emption rights. However, the Management Board shall be authorized with the approval of the Supervisory Board to partially or completely exclude pre-emption rights

  • to avoid peak amounts;

  • in case of capital increases against contributions in cash if the pro-rated amount of the share capital

    attributable to the new shares for which pre-emption rights have been excluded does not exceed 10% of the share capital and the issue price of the newly created shares is not significantly lower than the relevant exchange price for already listed shares of the same class, Section 186 (3) sentence 4 AktG. The 10% limit of the share capital shall apply at the time of the resolution on this authorization by the Annual General Meeting as well as at the time of exercise of the authorization. Shares of the Company (i) which are issued or sold during the term of the Authorised Capital 2017 excluding shareholders’ pre-emption rights directly or respectively applying Section 186 (3) sentence 4 AktG or (ii) which are or can be issued to service option and convertible bonds applying Section 186 (3) sentence 4 AktG while excluding shareholders’ pre-emption rights during the term of the Authorised Capital 2017, shall be counted towards said limit of 10%.;

  • in case of capital increases against contributions in cash insofar as it is required to grant pre- emption rights regarding the Company’s shares to holders of option or convertible bonds which have been or will be issued by the Company or its direct or indirect subsidiaries to such an extent to which they would be entitled after exercising option or conversion rights or fulfilling the conversion obligation as a shareholder;

  • in case of capital increases against contributions in kind for carrying out mergers or for the (also indirect) acquisition of companies, participation in companies or parts of companies or other assets including intellectual property rights and receivables against the Company or any companies controlled by it in the sense of Section 17 AktG.

    The total amount of shares issued or to be issued based upon this authorization while excluding shareholders’ pre-emption rights may neither exceed 20% of the share capital at the time of the authorization becoming effective nor at the time of exercising the authorization; this limit must include all shares which have been disposed of or issued or are to be issued during the term of this authorization based on other authorizations while excluding pre-emption rights or which are to be issued because of an issue of option or convertible bonds during the term of this authorization while excluding pre-emption rights.

The Management Board shall be entitled with the approval of the Supervisory Board to determine the remaining terms of the rights associated with the new shares as well as the conditions of the issuance of shares.

The Management Board of PUMA SE did not make use of the existing Authorized Capital 2017 in the current reporting period.

Conditional Capital
The Annual General Meeting of 12 April 2018 has authorized the Management Board until 11 April 2023 with the approval of the Supervisory Board to issue once or several times, in whole or in part, and at the same time in different tranches bearer and/or registered convertible bonds and/or bonds with warrants, and participation rights and/or participating bonds or combinations thereof with or without maturity restrictions in the total nominal amount of up to EUR 1,000,000,000.00 (Conditional Capital 2018).

The share capital is conditionally increased by up to EUR 30,164,920.00 by issue of up to 30,164,920 new no-par bearer shares. The conditional capital increase shall only be implemented to the extent that option/conversion rights are exercised or the option/conversion obligations are performed or tenders are carried out and to the extent that other forms of performance are not applied.

No use has been made of this authorization to date.

Authorization to purchase treasury shares
The resolution adopted by the Annual General Meeting on May 6, 2015 authorized the company to purchase treasury shares up to a value of 10% of the share capital until May 5, 2020.

Significant agreements of the Company which are subject to a change of control as a result of a takeover bid and the resulting effects (Section 289a [1][1][8], 315a [1][1][8] HGB)
Material financing agreements of PUMA SE with its creditors contain the standard change-of-control clauses. In the case of change of control the creditor is entitled to termination and early calling-in of any outstanding amounts.

For more details, please refer to the relevant disclosures in the Notes to the Consolidated Financial Statements (chapter 18).

 
Compensation report

Compensation report 2019

Compensation Report 2019

Compensation Philosophy

The Management Board compensation system is designed to create incentives for a sustainable and profit- oriented company performance. The objective of the compensation system is to stimulate the implementation of long-term Group strategy by ensuring that the relevant success parameters that govern the performance-based compensation are aligned with the PUMA SE management system. Furthermore, the long-term interests of our shareholders are taken into account by making the variable compensation strongly dependent on the performance of the PUMA SE share.

With a greater share of performance-based and therefore variable compensation, the intention is to reward the contribution of our Management Board members towards a sustainable development of our Company, while negative deviations from the set targets will result in a significant reduction of variable compensation.

Governance in Compensation Matters

It is the responsibility of the PUMA SE Supervisory Board to determine the compensation of the Management Board. The entire Supervisory Board decides on matters relating to the compensation of the Management Board members based on the respective recommendations of the Personnel Committee which is comprised of members of the Supervisory Board. Criteria for calculating the total compensation are the responsibilities and performance of the individual Management Board member, the economic situation, long-term strategic planning and related goals, the sustainability of targeted results and the company’s long-term prospects.

Overview of compensation elements

The compensation of the Management Board consists of non-performance-based and performance-based components. The non-performance-based components comprise the basic compensation, company pension contributions and other fringe benefits, while the performance-based components are divided into two parts, a bonus and a component with long-term incentive effect:

Target Compensation Structure

((CHART CAN BE VIEWED BY CLICKING ON ABOVE LINK TO PDF))

Non-performance-based Compensation and Fringe Benefits

Basic Compensation
The members of the Management Board receive a fixed basic salary which is paid monthly. This salary is based on the duties and responsibilities of the member of the Management Board. For employment periods of less than twelve months in a calendar year, all compensation payments are paid on a prorated basis.

Fringe Benefits

In addition, the Management Board members receive in-kind compensation, such as use of company cars, accident insurance and D&O insurance. These are part of the non-performance-based compensation.

Company Pension

Pension benefits are available for the members of the Management Board in the form of deferred compensation paid out of the performance-based and/or the non-performance-based compensation, and for which the Company has taken out pension liability insurance. The proportion of the pension capital that is already financed through contributions to the pension liability insurance is deemed to be vested.

Performance-based Compensation

In addition to the non-performance-based compensation, the members of the Management Board receive performance-based and therefore variable compensation. The amount of this compensation is based on the attainment of previously defined financial and non-financial targets. It consists of a bonus and a component with a long-term incentive effect. In the event of any outstanding performance, the Supervisory Board may, at its discretion, grant the members of the Management Board a voluntary one-off payment.

Short-term variable Compensation Bonus

As part of the performance-based compensation, the bonus is primarily based on the financial goals of the operating result (EBIT) and free cash flow (FCF) of the PUMA Group and the individual performance of the respective Management Board member as well as the attainment of Group-wide sustainability targets. The Supervisory Board assesses the individual performance of the Management Board member based on previously defined criteria, such as sustainable leadership, strategic vision and good corporate governance. The sustainability targets include goals to reduce CO2 emissions, compliance targets and occupational health and safety objectives, are applied throughout the PUMA Group and measured quantitively on a standardized basis. The two financial success targets are weighted with 60% for EBIT and 20%, respectively, for FCF. The individual performance is included in the calculation with a weighting of 15%. The degree to which the sustainability targets have been achieved is taken into account in the calculation with a weighting of 5%. If 100% of the target is achieved ("target bonus"), the amount of the bonus, is 100% of the annual basic compensation for the Chair of the Management Board and the Management Board members.

The aforementioned performance targets are combined. For EBIT, FCF and the sustainability targets, the bandwidth of possible target attainments ranges from 0% to 150%. It is therefore possible that no short- term variable compensation at all is paid out if minimum targets are not attained.

One-year performance period
((CHART CAN BE VIEWED BY CLICKING ON ABOVE LINK TO PDF))

An identical target attainment curve has been created, respectively, for the two financial goals. If the budget target for EBIT or FCF is reached, the target attainment is 100% (target value). If EBIT/FCF are less than 95% of the target value, this results in a target attainment of 0%. If EBIT/FCF reach 95% of the target value, the target attainment is 50%. If EBIT/FCF reach 120% or more above target value, the target attainment is limited to 150% (maximum value). Target attainments between the determined target attainment points are interpolated on a linear basis. This results in the following target attainment curve for the EBIT and FCF performance targets:



Target Attainment Curve EBIT/FCF

((CURVE CAN BE VIEWED BY CLICKING ON ABOVE LINK TO PDF))

Target Attainment Sustainability Targets

The Supervisory Board determines four target criteria for calculating the sustainability targets every year. At the end of the performance period, the Supervisory Board evaluates the degree of attainment of the target criteria. For every target criterion that has been met or exceeded, a target attainment percentage of 1.25% is credited.

Long-term variable share-based compensation PUMA Monetary Units Plan 2019 (LTI)

The long-term variable compensation program of PUMA SE (PUMA Monetary Units Plan) is designed as a future-oriented, virtual shareholding with cash payments. As part of this program, virtual shares of PUMA SE, the "Monetary Units", are allocated at the start of a three-year vesting period, at the end of which the holder is eligible to receive a cash payment. The amount of the allocation value is 240% of the annual basic salary for the Chair of the Management Board and 110% of the basic salary for the other Management Board members. The number of the allocated Monetary Units is determined by dividing the allocation value by the value of one PUMA Monetary Unit. The relevant value of a Monetary Unit for the tranche of the following year is calculated once per year at the end of December as the average value of the PUMA SE share over the past 30 trading days. The amount of the cash payment is therefore a result of the absolute development of the PUMA SE share. At the end of the three-year vesting period, the Management Board members are able to exercise their Monetary Units within a period of two years. The payment of the amount can be requested on a quarterly basis. The value of the Monetary Units is the average value of the PUMA SE share over the last 30 trading days before the next quarterly report. The fundamental exercise condition after the vesting period is the existence of an active employment relationship with PUMA SE until the end of the vesting period.

((INFO-GRAFIK CAN BE VIEWED BY CLICKING ON ABOVE LINK TO PDF))
 

Rules for Terminating Management Board Activity and other Contractual Provisions

In the event of a temporary disablement due to illness, the Management Board member retains his or her entitlement to full contractual compensation up to a total duration of six months but for no longer than the end of the employment contract. The Management Board member must offset payments received from health insurance companies or pension insurances in the form of sick pay or pension benefits against the compensation payments, insofar as these benefits are not fully based on contributions by the Management Board member.

In the case of an early termination of the employment contract without good cause within the meaning of section 626 (1) of the German Civil Code (BGB), any payments to be agreed to the Management Board member, including fringe benefits, shall not exceed the amount of two annual compensations (severance cap) and must not exceed the value of the compensation for the remaining duration of the Management Board employment contract. The calculation of the severance cap is based on the total compensation of the past financial year and also on any expected total compensation for the current financial year. In the event of an early termination of the employment contract before the end of the relevant performance period for the bonus and/or the three-year vesting period of the long-term variable compensation, the contract makes no provision for an early payout of the variable compensation components. If the member of the Management Board becomes permanently disabled during the term of the employment contract, the contract is terminated on the day on which the permanent disability is determined. A permanent disability exists within the meaning of this provision, if the member of the Management Board is no longer able, due to illness or accident, to fulfill the responsibilities assigned to him or her. In this respect, the specific duties and particular responsibility of the member of the Management Board must be taken into account.

If the member of the Management Board dies during the term of the employment contract, his or her widow or widower and children, provided they have not yet reached the age of 27, are entitled as joint creditors to receive the unreduced continued payment of the fixed compensation for the month in which

the death occurred and for the six following months, but for no longer than up to the end of the regular term of the contract.

Management Board Compensation

The following tables show the compensation paid during the financial year and inflows during or for the reporting year and the total related pension expenses for all Management Board members. *

* The grants and inflows shown below include the portion of the compensation of Ms. Anne-Laure Descours granted to Ms. Descours for her services as a member of the Management Board of PUMA SE. In addition, Ms. Descours receives compensation for her function as General Manager PUMA Group Sourcing of World Cat Ltd, Hong Kong, a subsidiary of PUMA SE.






Compensation paid (€ million)

2018

2019

2019 (min)

2019 (max)






Fixed compensation

2.3

2.0

2.0

2.0

Fringe Benefits

0.1

0.1

0.1

0.1

Total

2.4

2.1

2.1

2.1

Short-term variable compensation

2.8

2.7

0.0

3.0

Long-term variable share-based compensation





LTI 2019 (2019 to 2021)


3.9

0.0

11.8

LTI 2018 (2018 to 2020)

4.3




Total variable compensation

7.0

6.6

0.0

14.8

Pension expenses

0.5

0.4

0.4

0.4

Total compensation

9.9

9.1

2.4

17.3




Inflow (€ million)

2018

2019




Fixed compensation

2.3

2.0

Fringe Benefits

0.1

0.1

Total

2.4

2.1

Short-term variable compensation

2.8

2.7

Long-term variable share-based compensation



LTI 2016 (2016 to 2018)


1.7

LTI 2015 (2015 to 2017)

8.8


Total variable compensation

11.6

4.3

Pension expenses

0.5

0.4

Total compensation

14.4

6.8


Pension benefits are available for the members of the Management Board in the form of deferred compensation paid out of the performance-based and/or the non-performance-based compensation, for which the Company has taken out pension liability insurance. The proportion of the pension capital that is already financed through contributions to the pension liability insurance is deemed to be vested. During
the financial year, PUMA allocated € 0.4 million for members of the Management Board (previous year: 0.5 million). The present value of the pension benefits granted to active Management Board members of € 10.8 million as of December 31, 2019 (previous year: € 10.1 million) was netted against the pledged asset value of the pension liability insurance on the balance sheet.

Compensation for former Management Board Members

The appointment of Lars Radoor Sørensen as member of the Management Board was terminated by mutual agreement with effect from the end of January 31, 2019. At this point, Mr. Sørensen's Management Board employment contract had a remaining term through December 31, 2020. Mr. Sørensen's Management Board employment contract was terminated by mutual agreement with effect from the end of January 31, 2020. For the period from January 31, 2019 until January 31, 2020, the basic salary and short-term variable compensation was paid out assuming a target attainment of 100%. The tranche of the long-term variable compensation was prorated for 2018-2020 and reduced by 11/36. No tranche was granted for 2019-2021. The compensation components for Mr. Sørensen based on his work as a Management Board member are included in section “Management Board Compensation”.

There were pension obligations to former members of the Management Board and their widows/widowers amounting to € 3.3 million (previous year: € 3.2 million) as well as contribution-based pension commitments in connection with the deferred compensation of former members of the Management Board and Managing Directors amounting to € 11.6 million (previous year: € 10.6 million). Both items were recognized as liabilities within pension provisions to the extent they were not offset against asset values of an equal amount. Pension obligations to former members of the Management Board and their widows/widowers were incurred amounting to € 0.2 million (previous year: € 0.2 million).

Supervisory Board Compensation System

The Supervisory Board compensation system consists of two components. As for the Management Board, the relevant criteria for calculating the compensation are the responsibilities and performance of the individual Supervisory Board member, the long-term strategic planning and related goals, the sustainability of achieved results and the Company’s long-term prospects. For this reason, the first component of the Supervisory Board compensation is a fixed, non-performance-based amount, while the second component is a performance-based compensation.

The non-performance-based component conforms to § 15 of the Articles of Association, according to which each Supervisory Board member receives a fixed annual compensation of € 25,000.00. This amount is payable after the Annual General Meeting for the respective financial year. In addition to the fixed, annual compensation, the members of the Supervisory Board are entitled to an increase of their fixed compensation based on their position on the board and their participation in committees. The Chair of the Supervisory Board and the Vice Chair receive an additional fixed annual amount of € 25,000.00 respectively € 12,500.00. The chair of a committee additionally receives € 10,000.00, and the members of a committee 5,000.00, respectively. The respective committees are the Personnel Committee, the Audit Committee and the Sustainability Committee.

In addition to the fixed compensation, each Supervisory Board member receives annual performance-based compensation equal to € 20.00 for each € 0.01 by which the earnings per share figure as disclosed in the consolidated financial statements exceeds a minimum amount of € 16.00 per share. The performance- based compensation amounts to a maximum of € 10,000.00 per year. If earnings per share in the financial year are below the minimum amount, no performance-related compensation is payable. The Chair of the Supervisory Board receives € 40.00 for every € 0.01 exceeding the minimum amount per share and a maximum of € 20,000.00 per year. The Vice Chair receives € 30.00 for every € 0.01 exceeding the minimum amount per share and a maximum of € 15,000.00 per year.

A member of the Supervisory Board who is only active for part of a financial year receives prorated remuneration calculated on the basis of the period of activity determined for full months.

Supervisory Board Compensation

The compensation for the Supervisory Board for financial years 2018 and 2019 are shown in the table below.

Supervisory Board Compensation
(€ million)

Fixed compensation

Variable compensation

Committee compensation

Total


2018

2019

2018

2019

2018

2019

2018

2019

Total

0.2

0.2

--

--

0.0

0.0

0.2

0.2

Corporate Governance Report including the Statement on Corporate Governance
Charitable Contributions (TOP10)


 Stiftung Profifussballer helfen Kindern 

 Stiftung 2 Grad, Berlin

 Global Sports & Play Initiative e.V. 

 Right to Play Deutschland gGmbH

 Unicef

 SPVGG Oberrad 05

 Badenstedter SC e.V.

 Evang.-Luth. Kirchengemeinde

 1. FC Herzogenaurach 1916 e.V. 

 Fortuna Mönchengladbach 07/10 e.V.