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Adidas Facing Pressure From Major Investor Over Kanye West Scandal

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Adidas is facing demands from a leading investor to disclose findings of a probe into its handling of misconduct allegations against Kanye West, the Financial Times reported.

This comes as shareholder ire over its ill-fated tie-up with its former business partner continues to mount.

Former employees in November accused Adidas of having turned a blind eye to alleged inappropriate behaviour by its former business partner also known as Ye, who was dropped by the German group last year over antisemitic remarks.

The sudden end of the Yeezy brand would wipe out €1.2bn in sales and €500mn in operating profit this year, Adidas warned in February. It said it could post its first net loss in three decades.

Union Investment, Germany’s third-largest asset manager and a top-20 investor in Adidas, will call on the company to reveal the results of its internal investigation at its annual meeting on Thursday, according to a draft of a speech seen by the Financial Times.

Janne Werning, head of ESG at Union Investment will urge Adidas to disclose the results of the investigation “here and now”, stressing that shareholders were entitled to know. He will also demand the company “transparently clean up the scandal”.

Union Investment, alongside Germany’s second-largest investor Deka, has already said it would not support confidence votes over the performance of the executive board and the supervisory board.

Shareholder proxy service Glass Lewis recommended investors not to support the supervisory board.

West, a US rapper and fashion designer, allegedly played pornography to staff in meetings and showed an intimate picture of his ex-wife Kim Kardashian in job interviews.

Rolling Stone magazine reported in November that former employees claimed in a letter that senior managers were aware of West’s “problematic behaviour” and tolerated “years of verbal abuse, vulgar tirades, and bullying attacks.”

In November, Union Investment wrote to Adidas demanding to know when executives and supervisory board members first learned about the misconduct allegations against West. Adidas at the time said it had launched an independent investigation into the allegations.

In the US, the German group is facing a class-action lawsuit from shareholders over its handling of the Yeezy scandal.

In a lawsuit filed last month in the US district court in Oregon, shareholders alleged that the group had long been aware of West’s offensive remarks and harmful behaviour but did neither disclose the risks nor prepare for them.

Adidas late last year replaced chief executive Kasper Rørsted, poaching Bjørn Gulden from smaller rival Puma.

It last week reported better than expected results for the first quarter, with Gulden saying that Adidas had turned the corner in China, where sales had cratered as the brand was hit by a backlash against western companies and the pandemic lockdowns.

Adidas declined to comment, adding it would address Union Investment’s questions at its annual meeting.

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