G.L. Bajaj Institute of Management & Research.

PGDM Institute
Approved by A.I.C.T.E., Ministry of HRD, Govt. of India
Plot No. 2, Knowledge Park-III, Greater Noida
PGDM BATCH-2022-24

Compensation Benefits & Reward Management –

Assignment

SUBMITTED TO: SUBMITTED BY:

Ms. Prachi Agarwal Sejal Agarwal
PGDM22324
“D”
 ASSIGNMENT-1
Q. Identify any one organization and write an article after critically analyzing
its compensation structure (Benefits, insurance, attractive pay policies, perks,
incentives, etc.)

Adidas is a global sportswear brand that is known for its high-quality athletic
footwear, clothing, and accessories. With its presence in over 160 countries, the
company has become one of the largest and most successful sportswear companies
in the world. It has a global workforce of over 60,000 employees, and it is one of
the largest sports brands in the world. Adidas has a comprehensive compensation
structure that includes base salary, bonuses, and other benefits. In this article, we
will take a closer look at the compensation structure of Adidas.

Base Salary:
The base salary at Adidas is competitive and is determined by the employee's level
of experience, job title, and the country in which they are employed. The company
offers a transparent salary structure, which means that employees are aware of the
salary range for their position. The base salary is reviewed regularly, and
employees are given an opportunity to negotiate their salary during performance
reviews.

Bonuses:
Adidas offers several types of bonuses to its employees. The most common bonus
is the performance bonus, which is based on an employee's individual and team
performance. The amount of the performance bonus varies depending on the
employee's level and the company's performance. In addition to the performance
bonus, Adidas also offers other bonuses such as the signing bonus, retention bonus,
and project completion bonus. In case of 100% target achievement, the target
amount of the Performance Bonus corresponds to 25% of the target direct
compensation of the respective Executive Board member.
Benefits:
Adidas offers a comprehensive benefits package to its employees. The benefits
package includes health insurance, life insurance, disability insurance, retirement
plans, and paid time off. The company also offers employee discounts on Adidas
products, fitness center discounts, and other perks such as on-site childcare
facilities and free parking.
Pension Benefits:

Pension benefits serve to provide contributions for adequate private retirement

pensions. Executive Board members appointed after January 1, 2021, are not
granted benefits under a company pension scheme. Instead, they receive a so-
called pension allowance in the form of an adequate lump-sum amount, which is
directly paid out to the Executive Board members annually. The pension allowance
equals a maximum amount of 50% of the individual fixed compensation.

The pension assets on the virtual pension account at the beginning of the respective
calendar year yield a fixed interest rate of 3% p.a., however for no longer than until
the pension benefits first become due. Entitlements to the pension benefits become
vested immediately. Entitlements to pension benefits comprise pensions to be
received upon reaching the age of 65, or, on application, early retirement pensions
to be received upon reaching the age of 62, or disability and survivors’ benefits.

Stock Options:
Adidas offers stock options to its employees as a part of their compensation
package. The stock options are designed to provide employees with a sense of
ownership in the company and to align their interests with the company's
performance. The stock options are granted to employees based on their job level
and performance.
Performance-based incentives:
Adidas has a performance-based incentive program that rewards employees for
achieving specific goals and targets. The program includes both short-term and
long-term incentives, such as bonuses and stock options.
Long-Term Incentive Plan 2021/2025 (‘LTIP 2021/2025’)
The LTIP 2021/2025 aims to link the long-term performance-related variable
compensation of the Executive Board to the Company’s performance and thus to
the interests of the shareholders. Therefore, the LTIP 2021/2025 is share-based. It
consists of five annual tranches (2021 to 2025), each with a term of five years.
Each of the five annual LTIP tranches consists of a performance year and a
subsequent lock-up period of four years.

LTIP 2021/2025: Annual LTIP Tranches

 1 Performance year: Determination of LTIP target amount in case of 100%

target achievement.
 2 Determination of the degrees of target achievement, LTIP Pay-out Amount
payable following approval of the consolidated financial statements for the
past performance year and investment in adidas AG shares. Start of lock-up
period.
  3 Lock-up period.
 4 Lock-up period.
 5 End of lock-up period effective 31.12.

Fixed compensation:
The fixed compensation consists of an annual fixed salary. In principle, it is paid in
twelve equal monthly instalments and generally remains unchanged during the
term of the service contract. The fixed compensation corresponds to 35% of the
target direct compensation of the respective Executive Board member.

TOTAL ANNUAL COMPENSATION AND MAXIMUM COMPENSATION

The notional maximum total annual compensation of an individual Executive
Board member can be derived from the fixed compensation, the capped variable
performance-related compensation components, the other benefits, and the pension
benefits. The percentage of the fixed compensation components (fixed
compensation, other benefits,1 and pension benefits) amounts to approximately
41% of the target total annual compensation. Based on a 100% target achievement,
the percentage of the Performance Bonus amounts to approximately 21% and the
percentage of the LTIP Bonus amounts to approximately 38% of the target total
annual compensation.

CONCLUSION:
Adidas has a competitive compensation structure that includes base salary,
bonuses, benefits, and stock options. The company offers its employees a
transparent salary structure and regularly reviews salaries to ensure they remain
competitive. In addition to monetary compensation, Adidas also offers other perks
such as employee discounts, fitness center discounts, and on-site childcare
facilities. Overall, the compensation structure at Adidas is designed to attract and
retain top talent while rewarding high performance.