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Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan
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Page 1: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Corporate Governance in

the Sportswear Industry

Alex, YEUNG, wai hon

Fu Jen Catholic University, Taipei, TaiwanNov 1, 2005,. Tokyo, Japan

Page 2: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Introduction

In the past decade, corporate catastrophe with maltreatment of corporate governance being the primary cause have included a list of prominent companies like Enron, WorldCom, Inc. and Barings (Zandstra, 2002; Boyd, 2003; Drummond, 2002).

The sportswear industry which is essentially a highly globalized industry is inevitably affected as the demand for sound corporate governance practices has gathered considerable momentum.

Page 3: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Introduction

This paper serves to explore the current development in the philosophies and practices of corporate governance in the global arena with an emphasis to explain the rationale behind such emergence as a kind of a shareholder activism,

followed by an attempt to scrutinize different approaches adopted by the World's prominent sportswear companies in response to such challenge in the context of globalization.

Page 4: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Corporate Governance (I)

Vinten (1998) suggests that the corporate governance issue could be dated back to the nineteenth century when limited liability corporations started to emerge and good corporate governance play a crucial role in sustaining businesses.

(Parker, Peters and Turetsky, 2002; Zandstra, 2002; Vinten, 1998, 2000, 2002)

Page 5: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Corporate Governance (II)

Pass (2004) defined corporate governance as the “duties and responsibilities of a company's board of directors in managing the company and their relationships with the shareholders of the company and the stakeholder groups

He presumed that it is the structure for the

policies and procedures which govern the Board of Directors in a business corporation, including non-executive directors and others who advise the Board.

Page 6: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Corporate Governance (III)

The OECD Principles of Corporate Governance (OECD, 2004; p.11) suggests “Corporate Governance involves a set of relationships between a company’s management, its board, its shareholders and other stakeholders.

Corporate Governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined”.

Page 7: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Corporate Governance (IV)

Accordingly, “Corporate Governance is a set of relationships between a company’s management, its board, its shareholders and other stakeholders”.

Corporate governance also provides the structure through which the objectives of the company are set and the means of attaining those objectives and how performances are being determined.

Page 8: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Corporate Governance (V)

Good corporate governance should provide proper incentives for the board and management to pursue objectives that are in the interests of the company and its shareholders and should facilitate effective monitoring.

Page 9: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Corporate Governance Scandals

In recent years, a number of high profile corporate scandals have occurred witnessed that poor corporate governance, including greed; lying; breaches of trust; conflicts of interest; lack of transparency; insider dealings; and fraud by directors and others.

Moreover, these corporate scandals are not restricted to any one country, or any particular business sector.

Page 10: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Corporate Governance Scandals in the USA (I)

The collapsed energy company, Enron and the collapsed telecommunications group, WorldCom led to the US Sarbanes-Oxley Act of 2002, which affects not only US corporations but also European and other businesses listed in the USA (Levine, 2005).

The former Chief Executive of WorldCom, Bernie Ebbers, was found guilty of manipulating the company’s accounts in late 2000 in order to conceal mounting network expenses and to satisfy stock earnings expectations. As a result, WorldCom collapsed!

Page 11: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Corporate Governance Scandals in the USA (II)

It was argued that the fraud could have been avoided, if Andersen, the global CPAs firm used to have sound reputation that was smashed in the Enron scandal, had been auditing with conscientiously care.

Page 12: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Corporate Governance Scandals in the in UK (I)

Equitable Life, the old established UK mutual Life Assurance Society, is suing currently in the High Court, London, 15 former executives and non-executive directors for negligence and breach of duty, alleging that they should have taken legal advice before deciding to award differential terminal bonuses in 1996-1998.

The controversial policy of differential terminal bonuses (DTBP) was introduced at Equitable Life in 1993. Equitable Life is seeking damages of up to £1.7 billion from the directors.

Page 13: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Corporate Governance Scandals in the in UK (II)

The trial will highlight the role of directors, non-executives, and raise questions about the extent to which non-executive directors can rely on executive management, and how extensive their role has to be to avoid draconian litigation risks.

However, the claims against them do not suggest that they were dishonest: rather, negligent and failing in their duty.

Page 14: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Corporate Governance Scandals in the in UK (III)

In addition, Equitable Life is suing its former auditors, Ernst & Young, a damage of £2.05 billion for negligence and breach of duty, alleging that the 1997-1999 accounts were deficient because they did not include proper provisions for “guaranteed annuity rate” (GAR) policies.

Equitable Life is demanding £2.05 billion damages from Ernst & Young. Both the auditors and the directors deny the charges (Phelps, 2005).

Page 15: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Corporate Governance Scandalsin Italy (I)

The Italian Parmalat Company grew rapidly after branched out to some 200 subsidiaries in 30 countries including Brazil, China and the United States of America.

The Parmalat founder, and former Chairman and Chief Executive, Signor Calisto Tanzi, sat on the Parmalat Board with other members of his family, Stefano Tanzi (his son), and Giovanni Tanzi (his brother).

Page 16: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Corporate Governance Scandalsin Italy (II)

His niece, Paola Viscounti, had also been a Board member. Non-core businesses, such as the Parma football team, and travel operations, were part of the empire of the Tanzi family.

Calisto Tanzi is reported to have admitted fallaciously invented huge cash reserves and revenues.

In December 2003, the Parmalat Empire collapsed (Porcheron, 2004).

Page 17: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Corporate Governance Scandalsin Italy (III)

Numerous international banks are alleged to have been aware of Parmalat’s precarious finances, prior to its collapse, but to have continued to finance the company in return for large fees.

Parmalat’s former auditors have also been accused of fraud, malpractice and negligence, for allegedly helping Parmalat’s former management to deceive investors about the true status of the company’s financial situation. The plea bargains relate to charges of deceiving the market, obstructing regulators, and fraudulent auditing.

Page 18: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Corporate Governance Scandalsin France (I)

George Soros, the Hungarian-born investor, appealed in the Paris Appeal Court in February 2005 against his earlier conviction in the lower court of insider dealing.

He was fined €2.2 million for using privileged information in 1988 liable to affect the price of Société Générale’s shares (O'Donoghue, 2002).

Page 19: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Corporate Governance Scandalsin France (II)

Mr. Soros had his Quantum Fund pay US$50 million for shares in the bank, and in three other French companies. Société Générale’s shares rose considerably and the takeover failed.

Mr. Soros sold his shares at a profit which the court deemed to be insider dealing, dismissing Soros’ claim that the information was in the public domain.

Page 20: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Corporate Governance Reforms

All above scandals confirmed that major corporate failures occurred either because of best practices were absent, or if available, being abandoned (Cutting and Kouzmin, 2000; Zandstra, 2002; Boyd, 2003; Rezaee, Olibe and Minmier, 2003; Doost and Fishman, 2004).

This activates the motive in searching for more effective corporate governance reforms in this era of globalization (Vinten, 1998, Taylor, 2000; Walker and Fox, 2002).

Page 21: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Sarbanes-Oxley Act, 2002in the USA (I)

Enacted in 15 July 2005, section 404 of the US Sarbanes-Oxley Act is probably as the most complicated provision to meet (Ramos, 2005).

This section of the governance legislation covers internal controls against fraud, and requires companies to document, test and report on the effectiveness of their internal controls. Also, section 404 requires auditors to give separate opinions on the state of the controls.

Page 22: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Sarbanes-Oxley Act, 2002in the USA (II)

With the advent also of the new International Financial Reporting Standards, some US-listed companies, including US-listed European Union companies, are struggling with the requirements.

Section 302 is another key provision of the Sarbanes-Oxley Act, compels Chief Executives to swear to the accuracy of their company’s accounts, possibly a direct response in the United States of America to the Enron and WorldCom scandals.

Page 23: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Sarbanes-Oxley Act, 2002in the USA (III)

Moreover, section 406 of the Sarbanes-Oxley Act requires a “Code of Ethics” for senior Financial Officers. The Act defines the term “Code of Ethics” as such standards as are reasonably necessary to promote:- honest and ethical conduct, including the ethical

handling of actual or apparent conflicts of interest between personal and professional relationships;

full, fair, accurate, timely and understandable disclosure in the periodic reports required to be filed by the issuer; and

compliance with applicable governmental rules and regulations.

Page 24: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

The UK Combined Code on Corporate Governance, 2003 (I)

The 2003 UK Combined Code on Corporate Governance, based on a review by Derek Higgs applies to UK-listed companies,

replaces the earlier Combined Code issued by

the Hampel Committee on Corporate Governance in June 1998,

the Greenbury recommendations in 1995, and the earlier Cadbury recommendations in 1992 (P

ass, 2004).

Page 25: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

The UK Combined Code on Corporate Governance, 2003 (II)

The Derek Higgs Combined Code a review of the role and effectiveness of

non-executive directors, a review of audit committees by a group

led by Sir Robert Smith (Smith, 2003), and a guidance for directors on internal control

produced by the Turnbull Committee (Institute of Chartered Accountants in England and Wales, 1999).

Page 26: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

The UK Combined Code on Corporate Governance, 2003 (III)

This UK approach of principles of corporate governance, rather than legislation, is tied into the London Stock Exchange Listing Rules and is intended to be more flexible,

applied with common sense and due regard to companies’ individual circumstances, and with an annual report explaining the application of the principles.

Page 27: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

The UK Combined Code on Corporate Governance, 2003 (IV)

The London Stock Exchange Listing Rules require listed companies to make a disclosure statement in two parts in relation to the Combined Code:-

the company has to report on how it applies the Principles, and

confirm that it complies with the Code’s provisions.

Page 28: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

The UK Combined Code on Corporate Governance, 2003 (V)

The revised Code does not include the previous Code on remuneration, as ‘The Directors’ Remuneration Report Regulations 2002’ are now in force.

These Regulations require the directors of a company to prepare a remuneration report that is “clear, transparent and understandable to shareholders”.

A formal assessment of how the revised Combined Code is being implemented will be carried out in the second half of 2005 by the Financial Reporting Council (FRC).

Page 29: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

The OECD Principles Of Corporate Governance, 2004 (I)

The OECD Principles of Corporate Governance for publicly-traded companies, were first endorsed by OECD Ministers in 1999, and have since become an international benchmark in corporate governance initiatives in both OECD and non-OECD countries.

OECD Principles of Corporate Governance are not intended to substitute for government or private sector initiatives to develop more detailed ‘best practices’ in corporate governance (OECD, 2004).

Page 30: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

The OECD Principles Of Corporate Governance, 2004 (II)

These developments include the work of the World Council for Corporate

Governance; European Union directives and

company law reform studies; and reforms in individual countries.

Page 31: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Private Corporate Governance Initiatives

The FTSE ISS Corporate Governance Index Series, launched in phases from December 2004 as a joint project between the FTSE Group, London, and the US Institutional Shareholder Services

(ISS), the new Corporate Governance Index (CGI)

Series has among its aims “to raise the profile of companies achieving high standards of corporate governance” (FTSE Research, 2005), so that best corporate governance performers can optimize their access to capital.

Page 32: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Private Corporate Governance Initiatives

The financial performance of companies can be tracked against “themes in corporate governance practice”, including compensation systems for executives and non-executive directors; the structure and independence of the Board; and the independence and integrity of the audit process.

The rewards for those companies selected to be listed on the new Corporate Governance Indexes include an incentive for corporate governance.

Page 33: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

The Sportswear Industry (I)

The sportswear industry which is essentially a highly globalized industry is inevitably affected as the demand for sound corporate governance practices has gathered considerable momentum.

In the 1970s, sporting sportswear began to evolve from a product line aimed at niche and unique markets into a mainstream fashion product.

Page 34: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

The Sportswear Industry (II)

The clear divisions between performance and fashion, function and style, formal and informal that once existed have become increasingly blurred (Clean Clothes Campaign, 2004).

In the 1980s, the acceptability of casual dress on more occasions paved the way for sportswear to move into the mainstream clothing market.

The trend was accompanied by a real increase in sports participation.

Page 35: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

The Sportswear Industry (III)

Nike in particular has played an important role in transforming sport shoes and apparel into a fashion statement. Nike was not only the first to have its shoes produced in Asia; it was also the first in the marketing and advertising of sporting shoes.

Today, practically all brand-name corporations have a business plan similar to that of Nike’s strategy of focusing on the branding and marketing of sportswear.

Page 36: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

The Sportswear Industry (IV)

In 2002, the total worth of the sporting apparel and footwear market is estimated at US$58,479 million at the wholesale level.

Of which the sportswear apparel sector US$41,467(71%) forms a much larger part than the sporting footwear sector US$17,012 (29%) (Clean Clothes Campaign, 2004).

Page 37: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

The Sportswear Industry (V)

Of the international sporting apparel market which worth nearly US$41.5 billion, the US sporting goods market accounts for 41% of total sales as the World’s largest, followed by the European Union, which accounts for some 38% of total sporting apparel turnover (Clean Clothes Campaign, 2004).

Nike, Adidas and Reebok dominate market by some 14%.

Page 38: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

The Sportswear Industry (VI)

Meanwhile, Fila, Puma and Umbro each comprise of approximately 1% of market share, while Mizuno represents approximately 0.5%.

The other brands such as Lotto, Kappa, and New Balance— represent less than 0.5% of market share.

The top-20 brands manage to account for some 36% of the global wholesale market.

Page 39: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

The Sportswear Industry (VII)

The global sporting footwear market worth nearly US$17 billion in wholesale value.

The US sporting sport shoe market is the World’s largest, representing 47% (or US$7.8 billion) of the World’s total sales, followed by the European Union at 31% (US$5 billion).

In 2002, Nike (34%), Adidas (16%) and Reebok (10%), together account for 60% of the branded sporting footwear market (Clean Clothes Campaign, 2004).

Page 40: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

The Sportswear Industry (VIII)

In the US, 70% of this market is controlled by Nike, Reebok and Adidas. Asics, Fila, Kappa, Lotto, Mizuno, New Balance Puma, and Umbro each comprise somewhere from 1% ~ 8% of the total global sporting footwear market.

Together, however, they comprise some 24% of the World market. Together with Nike, Reebok, and Adidas; these companies comprise 84% of the branded sporting footwear market.

Page 41: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Research Methodology (I)

Considered the objective of this study is to explore the current development in the philosophies and practices of corporate governance in the global arena with an emphasis to explain the rationale behind such emergence as a kind of a shareholder activism,

followed by an attempt to scrutinize different approaches adopted by major sportswear companies in response to such challenge in the context of globalization.

Page 42: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Research Methodology (II)

It is the approaches, rather than the mechanism, of corporate governance reforms adopted by the World's prominent sportswear companies are of prime interest to this study.

Accordingly, this makes a predominantly qualitative approach appropriate, and the analytical approach is by qualitative case study technique was applied.

Page 43: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Research Methodology (III)

The uniqueness of qualitative approaches is its effectiveness in uncovering connotation via analysis of non-numerical data that come from multiple sources of information (O’Connor, 2002).

And, the qualitative case study technique is fit for the purpose of this research because it can provide an “exploration of a ‘bounded system’ or a case (or multiple cases) over time through detailed, in-depth data collection involving multiple sources of information rich in context” (Creswell, 1998).

Page 44: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Research Methodology (IV)

Nike, Adidas and Reebok were selected as samples for this study because of their dominance and active involvements in the global sportswear market, and hence their representativeness to the status quo of corporate governance in the global sportswear industry.

Secondary data are frequently used for both qualitative and quantitative analysis, including, but not limited to industry statistics, industry performance indicators, company reports and other documentary evidence.

Page 45: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Research Methodology (V)

The strength of secondary data is its low cost, accessibility and a broad exposure covering many events and settings. Nevertheless, the weaknesses of this type of data, its retrievability, biased selectivity, accessibility and reporting bias (Yin, 1994).

However, by retrieving the latest versions of corporate governance policies and guidelines of Nike, Adidas and Reebok from their official website can completely avoided the problem of retrievability, biased selectivity, accessibility and reporting bias, hence, assured the sufficiency, reliability and validity of the data for analysis.

Page 46: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Nike (I)

Nike, Inc. is “engaged in the design, development and worldwide marketing of footwear, apparel, equipment and accessory products.

The Company sells its products to retail accounts and through a mix of independent distributors, licensees and subsidiaries in over 160 countries around the World. Its athletic footwear products are designed primarily for specific athletic use, although some of its products are worn for casual or leisure purposes.

Page 47: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

The Company creates designs for men, women and children. Running, basketball, children's, cross-training and women's shoes are the Company's top-selling product categories.

It also markets shoes designed for outdoor activities, tennis, golf, soccer, baseball, football, bicycling, volleyball, wrestling, aquatic activities, hiking and other athletic and recreational uses.

Findings and Discussions --- Nike (II)

Page 48: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Nike (III)

Its apparel and accessories are designed to complement its athletic footwear products, feature the same trademarks and are sold through the same marketing and distribution channels”.

Nike was listed on the New York Stock Exchange since Oct 17, 1990 (NYSE, 2005).

Page 49: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Nike (IV)

In response to the challenge of more effective Corporate Governance in the context of globalization, the Board of Directors of Nike, Inc. has adopted its own Corporate Governance Guidelines (Nike, 2005) in April, 2003

with the intention to assist itself in the exercise of its responsibilities and reflect it’s commitment to monitor the effectiveness of policy and decision making both at the Board and senior management level, with a view to enhancing long-term shareholder value.

Page 50: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Nike (V)

Nike specified that these Guidelines will be reviewed annually by the Nominating and Corporate Governance Committee and the Board, and are subject to modification from time to time by the Board.

And, waivers of these Guidelines may be made only by the Nominating and Corporate Governance Committee or the Board.

Page 51: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Nike (VI)

The Guidelines of Nike, Inc. consists of five different sections, namely,

“The Board”, “Board Meetings”,  “Committee Matters”, ”Management Review and Succession”

and; “Policies and Guidelines”.

Page 52: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Nike (VII)

The “Board” section specifies the purpose of the Board as the ultimate decision-making body of the Company, to represents the owners’ interest in the operation of the business, including optimizing long-term financial returns.

The Board is also responsible for reviewing and establishing procedures designed to ensure that the Company’s management and employees operate in a legal and ethically responsible manner.

Page 53: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Nike (VIII)

It also describes the role of its Directors, its relationship with the senior management team, selection of the Chairman of the Board and CEO, Size of the Board, Board Membership Criteria and Independence.

It also sets the policy that The Corporate Governance Committee should properly be informed of, and to determine the number of other company boards upon which a Nike director may sit.

Page 54: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Nike (IX)

When a director’s principal occupation or business association changes substantially during his or her tenure as a Nike director, the director is expected to submit his or her resignation for consideration by the Nominating and Corporate Governance Committee for the best interests of the Company.

The “Board” section specifies the Term Limits and Retirement Age of the Board, the Board Compensation its access to Management and Advisors, the Board Orientation and Continuing Education, also Self-Evaluation of the Board.

Page 55: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Nike (X)

The “Board Meetings” section states clearly the frequency of Meetings, how the Agenda for Board and Committee Meetings are to be presented, the Attendance of Management at Board Meetings, Executive Sessions or meetings of Non-Employee Directors without management present.

Page 56: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Nike (XI)

The “Committee Matters” section stipulated that Nike should have six standing committees: Audit, Compensation, Nominating and Corporate Governance, Finance, Corporate Responsibility, and Executive.

The purpose and responsibilities of each committee are described in charters adopted by the Board.

Page 57: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Nike (XII)

The Audit, Compensation, and Nominating and Corporate Governance Committees are composed entirely of independent directors. The CEO chairs the Executive Committee.

The Board may, from time to time, form a new committee or disband a current committee depending on the circumstances.

In addition, the Board may form Ad hoc committees from time to time, and determine the composition of the committees.

Page 58: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Nike (XIII)

After consultation with the Chairman of the Board, makes recommendations for approval by the Board with respect to assignment of directors to committees, and the Chairs of committees.

The Chair of each committee, in consultation with the committee members, determines the frequency, agenda, and length of committee meetings consistent with any requirements of the committee’s charter.

The schedule of all committee meetings is furnished to all directors.

Page 59: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Nike (XIV) The “Management Review and Succession”

section spells out the Compensation Committee is responsible for overseeing the performance evaluation of the CEO.

The Compensation Committee considers (1) achievement against approved financial performance measures and targets (such as revenue, net income, and earnings per share), and (2) other factors such as leadership, achievement of strategic goals, market position, and brand strength, which are signals of Company success.

Page 60: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Nike (XV)

The Compensation Committee endeavors to reflect the CEO’s performance in the CEO’s compensation.

And, the Board plans for succession of the CEO and certain other senior management positions in order to assure the orderly functioning and transition of the management of the Company, in the event of emergency or retirement of the CEO.

Page 61: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Nike (XVI)

As part of this process, the Chairs of the Nominating and Corporate Governance Committee and the Compensation Committee, in consultation with the CEO, assess management needs and abilities in the event a transition becomes necessary.

Page 62: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Nike (XVII)

The “Policies and Guidelines” section orders that Copies of the current version of aforementioned Corporate Governance Guidelines, the Company’s Code of Business Conduct and Ethics, and the charter of each key committee of the Board shall be posted on the Company’s internet website.

Page 63: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Adidas (I)

Adidas product line is strong in athletic shoes, but the three-stripe logo appears on apparel and other jock accoutrements.

Bankruptcy once had it on the ropes, but it made a riposte by shifting production to Asia and cheering up its marketing.

As the World's second-biggest maker of sporting goods worldwide, it owns sponsorship agreements with US football and basketball stars, as well as the New York Yankees.

Page 64: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Adidas (II)

The firm won sponsorship rights to the 2008 Olympic Games in Beijing (Yahoo, 2005a). Its purchase of Salomon, the French maker of ski and golf gear, was not strategically ideal.

On May 2, 2005, Adidas sold its Salomon business segment, including the related subsidiaries and brands Salomon, Mavic, Bonfire, Arc’Teryx and Cliché, to the Amer Sports Corporation, based in Helsinki, Finland.

Adidas acquired Reebok by a total of US$3.8 billion on Aug 3, 2005 (Howard, 2005). Adidas is publicly trades on DAX in Frankfurt since 19 June 1998(Yahoo, 2005a).

Page 65: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Adidas (III)

Considered that the long-term confidence of domestic and international stakeholders is a key element in the positive development of Adidas, the Corporation strives to continuously provide more transparency regarding the rights of the shareholders, the administration and the supervision of Adidas, as well as regarding the accounting principles of the Corporation.

Page 66: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Adidas (IV)

In February 2003, Adidas published its own Corporate Governance Principles (Adidas, 2005), based on the recommendations of the Government Commission German Corporate Governance Code and subsequently amended Declaration of Compliance.

Adidas is committed to develop and improve its Corporate Governance Principles, as an ongoing process in order to be able to take into consideration domestic and international developments in this sector and meet the further needs of its shareholders.

Page 67: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Adidas (V)

The Corporation will nominate a Corporate Governance Officer who will regularly monitor the conformity of Adidas with compliance rules and report to the Supervisory Board.

Adidas will report on the current status of its corporate governance in its Annual Report and on the section of the Corporation’s website.

Page 68: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Adidas (VI)

The Corporate Governance Principles of Adidas denoted that the scopes and authorities of the

Shareholders’ Meeting, the Supervisory Board, the Executive Board; and the cooperation between the Executive Board

and the Supervisory Board, the transparency of its corporate activity,

reporting & Audit of Financial Statements.

Page 69: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Adidas (VII)

The “Shareholders’ Meeting” section describes the qualification of shareholders, their rights and, the organization and management of the Shareholders’ Meeting.

Page 70: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Adidas (VIII)

The “Supervisory Board” section explains the tasks and responsibilities of the Supervisory Board, the Chair of the Supervisory Board, formation of committees, composition and remuneration of board members and avoidance of conflicts of Interest.

The Supervisory Board will examine the efficiency of its activities on a regular basis and reports on it in the Annual Report and to the Ordinary Shareholders’ Meeting.

Page 71: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Adidas (IX)

The “Executive Board” section clarifies the tasks and responsibilities of the Executive Board, the level of its confidentiality, the composition and remuneration of its members, and avoidance of conflicts of interest.

Page 72: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Adidas (X)

The “Cooperation between the Executive Board and the Supervisory Board” section elucidates the mode of Cooperation between The Executive Board and the Supervisory Board cooperates closely for the benefit of the Corporation to ensure a constructive and efficient working relationship.

The Chair of the Executive Board represents the Executive Board vis à vis the Supervisory Board.

Page 73: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Adidas (XI)

He asks for the approval of the Supervisory Board in matters requiring such approval according to law, Articles of Association, Rules of Procedure or Supervisory Board resolutions.

This section clarifies that both the Executive Board and the Supervisory Board shall hold joint final responsibility for Corporate Governance issues.

They will report on deviations from the German Corporate Governance Code in the Annual Report and on the corporate website.

Page 74: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Adidas (XII)

Reports and applications by members of the Executive Board to the Supervisory Board are submitted to the Chair of the Executive Board with the request to forward them to the Supervisory Board.

The Executive Board informs the Supervisory Board regularly, comprehensively without delay, of all issues important to the Corporation with regard to planning, business development, risk situation and risk management.

Page 75: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Adidas (XIII)

The Executive Board will indicate deviations of the actual business development from previously formulated plans and targets, indicating the relevant reasons.

In the event of a possible takeover offer by another company, the Executive Board and the Supervisory Board of Adidas must submit a statement of their reasoned position so that the shareholders can make an informed decision regarding the offer.

Page 76: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Adidas (XIV)

After the announcement of a takeover offer, the Executive Board is not allowed to take any actions outside the ordinary course of business that could prevent the success of the offer unless the Executive Board has been authorized by the Shareholders’ Meeting or unless the Supervisory Board has given its approval.

In making their decisions, the Executive Board and the Supervisory Board are obliged to act in the best interests of the shareholders and of the Corporation.

Page 77: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Adidas (XV)

The “Transparency” section requires the fair disclosure of corporate information which arisen within the Corporation’s field of activity. The Executive Board and the Investor Relations Department should ensure a continuous and transparent dialogue between the Corporation and the financial community.

Page 78: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Adidas (XVI)

The Corporation treats all shareholders equally with respect to quality and quantity of information provided. Material information will be disclosed to the shareholders and the public at large nationally and globally. Major changes in the shareholder structure shall be reported without delay.

The shareholdings, including options and derivatives, held by individual Executive Board and Supervisory Board members are reported if these directly or indirectly exceed 5% of the shares issued by the Corporation.

Page 79: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Adidas (XVII)

The “Reporting and Audit of Financial Statements” section obliges the publication of various types of Financial Statements by Adidas.

In the course of the year, three Interim Reports are published in addition thereto.

The Consolidated Financial Statements and Interim Reports are prepared in accordance with International Financial Reporting Standards (IFRS).

Page 80: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Adidas (XVIII)

For corporate legal purposes (calculation of dividend, shareholder protection), Annual Financial Statements of the Adidas are prepared according to national regulations (German Commercial Code), which also form the basis for taxation.

The Executive Board draws up and submits the Annual Financial Statements and the Management Report for the preceding fiscal year to the auditors and the Supervisory Board.

Page 81: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Adidas (XIX)

The Supervisory Board agrees with the auditor that the Chair of the Supervisory Board or the chairman of the Audit and Accounts Committee will be informed immediately of any grounds for disqualification or impartiality occurring during the audit, unless such grounds are eliminated.

The Supervisory Board arranges for the auditor to report without delay on all facts and events of importance for the tasks of the Supervisory Board which arise during the performance of the audit.

Page 82: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Adidas (XX)

The Supervisory Board arranges for the auditor to inform the Supervisory Board and/or note in the Auditor’s Report if, during the performance of the audit, the auditor comes across facts which show a misstatement by the Executive Board and the Supervisory Board on the German Corporate Code.

The Consolidated Financial Statements are publicly accessible within 90 days of the end of the financial year. Interim Reports are publicly accessible within 45 days.

Page 83: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Reebok (I)

Reebok International, Ltd. “engages in the design, marketing, and distribution of sports, fitness, and casual products, including footwear, apparel, equipment, and accessories.

It offers its products under various brand names, including Reebok, Rockport, CCM, JOFA, KOHO, The Greg Norman Collection, Ralph Lauren, and Polo.

Page 84: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Reebok (II)

The company's Reebok brand business includes its sports licensing business, including products designed and marketed under its license agreements with the National Football League and National Basketball Association

The Reebok brand focuses on three product lines: Rbk, Performance, and Classic. Rbk product line features street footwear, apparel, and accessories.

Page 85: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Reebok (III)

Performance line includes apparel and footwear designed for basketball, running, fitness, football, soccer, tennis, and other sports.

Classic lifestyle product line includes footwear and apparel products, as well as classic reinterpretations. Reebok also has licensees for eyewear, watches, and heart rate monitors; and licensees in the United States for children's apparel, team uniforms, socks, and jogging strollers.

Page 86: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Reebok (IV)

The Rockport brand products include casual, dress, and performance shoes. The Ralph Lauren Footwear's product line features traditional classics, as well as dress and casual silhouettes.

The Greg Norman Collection includes woven, play dry outerwear, and sweaters. The company also offers hockey skates, sticks, helmets, and hockey-related apparel, as well as recreational skates and the Roger Edwards line of lifestyle apparel.

Page 87: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Reebok (V)

It’s licensed and branded activewear lines include fleece wear, pants, shirts, T-shirts, polo shirts, turtlenecks, and outerwear and headwear embroidered with various teams' logos.

The company distributes its products to athletic specialty stores and other retail shops, as well as to sporting goods stores, department stores, and shoe stores. Reebok was founded in 1979 by Paul Fireman.

Page 88: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Reebok (VI)

The company is headquartered in Canton, Massachusetts” (Yahoo, 2005b).

Reebok was listed on the New York Stock Exchange since Dec 3, 1986.

Page 89: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Reebok (VII)

In order to facilitate more transparency regarding the rights of the shareholders, the administration and the supervision, the Reebok International Ltd issued the Corporate Governance Policies (Reebok, 2005), the latest version being revised on February 2004.

The Policies detailed the “Board and Committee Operations”, ”Board Composition“, “Leadership Development” and “Stock Ownership”.

Page 90: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Reebok (VIII)

The “Board and Committee Operations” section names the Audit, Board Affairs, Management Development and Compensation, and Executive as the three Standing Committees of the Board.

The Chairman of the Board will review Committee assignments and chairmanships on an annual basis in consultation with the Board Affairs Committee and make recommendations to the Board taking into account the expertise, experience and desires of individual Board members.

Page 91: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Reebok (IX)

A blend of rotation of committee assignments and continuity of membership seems appropriate. It sets the condition of Committee Meetings that the Chairman of each Committee, in consultation with the Chairman of the Board and Committee members, will determine the frequency and length of the meetings of the Committee.

In accordance with NYSE listing requirements, the Audit Committee shall meet at least four times per year.

Page 92: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Reebok (X)

The Chairman of each Committee, in appropriate consultation with management, will develop the Committee’s agenda. Regarding the selection of Agenda Items for Board Meetings, the Chairman of the Board will establish the agenda for each Board meeting.

Each Board member is free to suggest the inclusion of items(s) on the agenda. It also governs how and when board Materials be distributed, attendance at meetings, management involvement with the Board, meetings of non-employee Directors and access to outside advice.

Page 93: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Reebok (XI)

The “Board Composition” section directs the size of the Board, independence of Board And Committee Members, limitation of Service on other Boards of Directors, Board Membership Criteria, selection Of New Director Candidates; Nomination of Directors for Election, resignation of Directors Who Experience a Change in Circumstance and Board Compensation.

Page 94: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Reebok (XII)

The “Leadership Development” section oversees the Board’s performance and reporting to the Board, Chief Executive Officer Performance Evaluation, Director Orientation and Continuing Education.

The Board Affairs Committee is responsible for reviewing the Board’s performance and reporting to the Board.

This review should be of the Board’s contribution as a whole and individual Director contributions and should specifically review areas in which the Board and/or management believes a better contribution could be made.

Page 95: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Reebok (XIII)

An evaluation of the performance of the Chief Executive Officer should be made annually by the Management Development and Compensation Committee based on objective and subjective criteria such as performance of the business, accomplishment of long-term strategic

objectives, management development, etc.

Page 96: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Reebok (XIV)

This review should be of the Board’s contribution as a whole and individual Director contributions and should specifically review areas in which the Board and/or management believes a better contribution could be made.

An evaluation of the performance of the Chief Executive Officer should be made annually by the Management Development and Compensation Committee based on objective and subjective criteria such as performance of the business, accomplishment of long-term strategic objectives, management development, etc.

Page 97: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Reebok (XV)

Management is responsible for developing a director orientation program that will familiarize a new director with the Company and its business, its financial statements and operations, its strategic direction and its culture.

Management will also recommend to the Board and the Board Affairs Committee such continuing education programs and information that will keep directors informed about the Company’s business and the directors’ duties.

Page 98: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Findings and Discussions --- Reebok (XVI)

The “Stock Ownership” section supervises the Director Share Ownership.

The Board recognizes that alignment of the interests of Board members with those of shareholders is desirable and therefore believes that, after an appropriate phase-in period, all Directors should own Reebok stock with a market value of at least four times their annual retainer.

Page 99: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Conclusion (I)

Corporate governance is fundamentally a set of relationships between a company’s management, its board, its shareholders and other stakeholders.

Corporate governance also provides the structure through which the objectives of the company are set and the means of attaining those objectives and how performances are being determined.

Page 100: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Conclusion (II)

Discussions about the issue of corporate governance could be dated back to the nineteenth century when limited liability corporations started to emerge.

In last decade, a number of high profile corporate scandals have occurred witnessed that poor corporate governance, including greed; lying; breaches of trust; conflicts of interest; lack of transparency; insider dealings; and fraud by directors and others.

Page 101: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Conclusion (III)

Moreover, these corporate scandals are not restricted to any one country, or any particular business sector which stimulate the necessity in reviewing different perspectives of the good corporate governance framework in this era of globalization.

Page 102: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Conclusion (IV)

For the objective of this study by qualitative case study technique is applied in this study.

Nike, Adidas and Reebok were selected as samples for this study because of their dominance and active involvements in the global sportswear market, and hence their representativeness to the status quo of corporate governance in the global sportswear industry.

Page 103: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Conclusion (V)

And, by retrieving official corporate governance policies and guidelines listed in the official website of Nike, Adidas and Reebok can completely avoided the problem of retrievability, biased selectivity, accessibility and reporting bias, hence, assured the sufficiency, reliability and validity of the data for analysis.

Page 104: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Conclusion (VI)

The result of his study revealed that the World’s prominent sportswear companies are extremely serious in specifying the relationships between a company’s management, its board, its shareholders and other stakeholders.

They have explicitly articulated their intention to build a compact structure through which the objectives of the company are set and the means of attaining those objectives and how performances are being monitored.

Page 105: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Conclusion (VII)

They have also tried to provide proper incentives for the board and management to pursue objectives that are in the interests of the company and its shareholders, and have make available their effort to facilitate effective monitoring and best good corporate governance practices.

Page 106: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Conclusion (VIII)

However, the issue of corporate governance could become more sensitive after Adidas which is listed in DAX (Frankfurt, German) acquired Reebok which is listed in the NYSE (New York, USA) by a total of US$3.8 billion on Aug 3, 2005 (Howard, 2005).

The combined entity, with sales of US$12 billion in the USA market (US$8 billion from Adidas and US$4 billion from Reebok) will close the gap on Nike, which posted US$14 billion in sales during its last fiscal year, ended May 31,2005.

Page 107: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Conclusion (IX)

After the acquisition, both Adidas and Reebok are expected to maintain their own identity under the acquisition, which is expected to close in the first quarter of 2006, pending regulatory approval from the European Union and the Federal Trade Commission.

Page 108: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Conclusion (X)

Since European firms that are listed on a US marketplace must complete their compliance with the Sarbanes-Oxley act within 2005, the difference in the philosophy and practices of corporate governance by Adidas under the German jurisdiction against its subsidiaries Reebok existing under the USA jurisdiction would definitely unlock the inspiration of corporate governance harmonization across different law regimes.

Page 109: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Conclusion (XI)

The link between corporate governance and economic development is likely to become stronger in this era of globalization. Although corporate governance reform could be costly, it ensures sustainability in the long run.

Investment in corporate governance is proving to be the necessary foundation for businesses that inspire confidence among stakeholders, and a healthy business climate may result in higher investment ratings that could possibly lead to sustained economic growth.

Page 110: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Conclusion (XII)

As companies face increasingly demands for "corporate social responsibility," the more sustainable alternative is a pattern of corporate citizenship in which the private sector proactively works to find solutions to common problems.

Page 111: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

A Final Remark

“Corporate Governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The corporate governance framework is there

to encourage the efficient use of resources and equally to require accountability for the

stewardship of those resources.

The aim is to align, as nearly as possible, the interests of individuals, corporations and

society“

Sir Adrian Cadbury in

‘Global Corporate Governance Forum’, World Bank, 2000

Page 112: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

Thank you very much for

your kind attention !

Alex [email protected]

[email protected]

Page 113: Corporate Governance in the Sportswear Industry Alex, YEUNG, wai hon Fu Jen Catholic University, Taipei, Taiwan Nov 1, 2005,. Tokyo, Japan.

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