CORPORATE GOVERNANCE REPORT INCLUDING THE STATEMENT ON CORPORATE GOVERNANCE IN ACCORDANCE WITH SECTION 289f AND SECTION 315d HGB

Effective implementation of the principles of corporate governance is an important aspect of PUMA’s corporate policy. Transparent and responsible corporate governance is a key prerequisite for achieving corporate targets and for increasing the Company’s value in a sustainable manner. The Administrative Board and the Managing Directors work closely with each other in the interests of the entire Company to ensure that the Company is managed and monitored in an efficient way that will ensure sustainable added value through good corporate governance. In the following the Administrative Board and the Managing Directors report on the corporate governance at PUMA SE in accordance with Section 3.10 of the German Corporate Governance Code. This section also includes the Statement of Compliance in accordance with Art. 9(1)c(ii) of the SE Regulation (SE-VO) and Section 22(6) of the German SE Implementation Act (SEAG), in conjunction with Section 289f and Section 315d HGB.

Under Art. 9(1)c(ii) of the SE Regulation (SE-VO) and Section 22(6) of the German SE Implementation Act (SEAG), in conjunction with § 161 AktG the Administrative Board of a listed German SE is required to issue a statement at least once a year stating whether the German Corporate Governance Code has been and is being observed and which of the Code’s recommendations have not been or are not being applied and why. The Administrative Board of PUMA SE issued the following statement of compliance on November 9, 2017:

STATEMENT OF COMPLIANCE PURSUANT TO SECTION 161 AKTG FOR 2017

Pursuant to Art. 9 p. 1 c) (ii) of the SE Regulation (SE-VO) and Section 22 p. 6 of the German SE Implementation Act (SEAG), in conjunction with Section 161 AktG PUMA SE’s Administrative Board declares that PUMA SE has been and will be in compliance with the recommendations issued by the Government Commission on the German Corporate Governance Code (the Code) (code version dated May 5, 2015 and February 7, 2017), since the last Statement of Compliance from November 9, 2016 in consideration of the particulars of PUMA SE’s single-tier system described under item 1 with the exceptions mentioned under item 2 and where it is not in compliance, explains why not.

1ST PARTICULARS OF THE SINGLE-TIER CORPORATE GOVERNANCE SYSTEM

According to Art. 43 – 45 SE-VO, in conjunction with Sections 20 et seq. SEAG, under the single-tier system, the management of the SE is the responsibility of a single company organ, the Administrative Board (see Para. 7 of the Code’s Preamble). The Administrative Board manages the Company, determines the Company’s basic business strategies and monitors the implementation of said strategies by the Managing Directors. The Managing Directors manage the Company’s business, represent the Company in and out of court and are bound by instructions from the Administrative Board.

Basically, PUMA SE takes those parts of the Code that used to apply to the Supervisory Board and applies them to the Administrative Board and takes those parts of the Code that used to apply to the Board of Management and applies them to its Managing Directors. The following exceptions apply with respect to the legal framework for the single-tier system:

In derogation of No. 2.2.1 s. 1 of the Code, the Administrative Board must submit the annual financial statements and the consolidated financial statements to the Annual General Meeting, Section 48 p. 2 s. 2 SEAG.
In derogation of Nos. 2.3.1 s. 1 and 3.7 p. 3 of the Code, the Administrative Board is responsible for convening the Annual General Meeting, Sections 48 and 22 p. 2 SEAG.
The duties of the Board of Management listed in Nos. 4.1.1 (Corporate Governance), 4.1.2 in conjunction with 3.2 half-sentence 1 (Development of the Company’s Strategic Orientation) of the Code are the responsibility of the Administrative Board, Section 22 p. 1 SEAG.
The powers of the Board of Management governed by Nos. 2.3.2 s. 2 (Proxy Bound by Instructions), 3.7 p. 1 (Statement on a Takeover Bid) and 3.7 p. 2 (Conduct during a Takeover Bid), as well as 3.10 (Corporate Governance Report), 4.1.3 (Compliance) and 4.1.4 (Risk Management and Controlling) of the Code shall be the responsibility of PUMA SE’s Administrative Board, Section 22 p. 6 SEAG.
In derogation of Nos. 5.1.2 p. 2 s. 1 and 2 of the Code, Managing Directors, unlike members of the Board of Management, are not subject to a fixed, maximum term of office, Section 40 p. 1 s. 1 SEAG.
In derogation of Nos. 5.4.2 s. 2 and 5.4.4 of the Code, members of the Administrative Board may be appointed as Managing Directors, provided that the majority of the Administrative Board continues to consist of non-executive Managing Directors, Section 40 p. 1 s. 2 SEAG.

2ND EXCEPTIONS TO THE CODE’S RECOMMENDATIONS

In derogation of No. 3.8 p. 3 of the Code, members of the Administrative Board are provided with D&O insurance with no deductible. The Administrative Board feels that it can dispense with a deductible for members of the Administrative Board, because the D&O insurance is group insurance for people in Germany and abroad and a deductible is fairly unusual abroad.
In derogation of No. 4.2.3 p. 2 s. 6 of the Code the compensation of the Managing Directors does not show the maximum amount limits in total or their variable compensation components. The employment contracts of the Managing Directors were concluded in accordance with the then current version of the Code and are deemed to be proper and correct by PUMA SE.
In derogation of No. 4.2.3 p. 5 of the Code no limits on severance payments for premature termination as a Managing Director due to a change of control have been agreed, because an agreement drawn up in advance would not be able to take into account the specific situation that gave rise to a premature termination or the other circumstances of the individual case of termination.
In accordance with the authorization by the Annual General Meeting on May 7, 2013, pursuant to Section 286 p. 5 HGB, the Company shall not publish the amounts of compensation for individual Managing Directors until the authorization expires (Nos. 4.2.4 and 4.2.5 of the Code). The Managing Directors shall adhere to the authorization when they prepare the annual financial statements. Based on the authorization of the Annual General Meeting and in derogation of No. 4.2.5 p. 3 of the Code the information stated in this section regarding the compensation of the Managing Directors is not included in the Compensation Report.
In derogation of No. 5.4.6 p. 2 s. 2 of the Code, members of the Administrative Board receive performance-based compensation that is not linked to the sustainable success of the Company. The compensation was authorized by the Annual General Meeting on April 14, 2011, it is stipulated in the Articles of Association and is deemed to be proper and correct by PUMA SE.
In derogation of No. 5.4.6. p. 3 of the Code, the compensation of the Administrative Board members is not shown individually. In the opinion of PUMA SE, this is not additional information relevant to the capital market as the respective remuneration regulations included in the Articles of Association are in the public domain.

Herzogenaurach, November 9, 2017

PUMA SE

FOR THE ADMINISTRATIVE BOARD

Jean-François Palus

The Statement of Compliance is available at any time on the Company’s website: http://about.PUMA.com/en/investor-relations/corporate-governance/declaration-of-compliance.

RELEVANT DISCLOSURES OF CORPORATE GOVERNANCE PRACTICES THAT ARE APPLIED BEYOND THE REGULATORY REQUIREMENTS

CORPORATE SOCIAL RESPONSIBILITY

In order to fulfill our ecological and social responsibility as a global sporting goods manufacturer, PUMA has developed groupwide guidelines on environmental management and on compliance with workplace and social standards. PUMA is convinced that only on such a foundation can a lasting and sustainable corporate success be achieved. That is why PUMA is committed to the principles of the UN Global Compact. The PUMA Code of Conduct prescribes ethical and environmental standards with which both employees and suppliers are required to comply. The PUMA Code of Conduct was revised in 2016 and explicitly addresses PUMA’s obligation and commitment in respect of human rights and combating corruption. Detailed information on the Company’s corporate social responsibility strategy can be found in the Sustainability section of the Annual Report or on the Company’s homepage (http://about.PUMA.com under SUSTAINABILITY).

COMPLIANCE MANAGEMENT SYSTEM

Compliance with laws and internal regulations and values are of key importance for PUMA’s corporate governance. For this reason, PUMA has introduced a compliance management system (CMS) to identify, control and monitor compliance risks at an early stage. By developing policies as well as advising and training employees, the CMS aims to prevent potential financial losses or reputational damage from the company and to prevent misconduct.

The Code of Ethics of the PUMA Group sets out the principles governing our actions and values. In addition to the general principles of conduct described as well in the PUMA Code of Conduct, among other things, the policy contains rules on the handling of conflicts of interest, personal data, insider information and prohibits anti-competitive behavior as well as corruption in any form. The Code of Ethics is an integral part of every employment contract. In order to further reduce the risk of misconduct, the PUMA Code of Ethics is accompanied by concrete guidelines governing selected risk areas in detail.

With the help of various measures such as risk-based face-to-face trainings and e-learnings, the employees of the PUMA Group are familiarized with the relevant legal regulations and internal guidelines and trained. In the past financial year, training was provided in particular in the areas of anti-corruption and antitrust law. In 2017, all PUMA employees were instructed by the CEO of PUMA SE to complete an e-learning course on the Code of Ethics as well as on the fight against bribery and corruption. The clear tone from the top led to 99% of PUMA employees successfully completing the e-learning on the Code of Ethics and 98% successfully completing the e-learning on the fight against bribery and corruption.

The Administrative Board and the Managing Directors have overall responsibility for the proper functioning of the CMS. They are supported by a compliance organization consisting of a Chief Compliance Officer and compliance officers in the most important Group companies. The Audit Committee of the Administrative Board of PUMA SE is regularly informed about the current status of the implementation of the compliance structures and serious compliance violations. The Chief Compliance Officer works closely with the Legal Department and Internal Audit. In addition, regular meetings of the PUMA SE Risk & Compliance Committee are held. This consists of a fixed circle of executives including the Managing Directors of PUMA SE. Among other things, the committee analyzes and evaluates compliance risks and defines and adopts appropriate measures (policies, training courses, etc.).

A whistleblower hotline operated by an external provider is available to PUMA employees throughout the Group, to whom unethical, illegal or criminal activities can be reported – if desired, anonymously as well. In addition to the complaint system for PUMA employees, there is a worldwide hotline for external whistleblowers from the supply chain.

DESCRIPTION OF THE WORKING PRACTICES OF THE ADMINISTRATIVE BOARD AND THE MANAGING DIRECTORS

PUMA SE has a single-tier management and control structure. According to Articles 43 – 45 SE-VO, in conjunction with Sections 20 et seqq. SEAG, under the single-tier system, management of the SE is the responsibility of a single body, the Administrative Board. The Managing Directors manage the Company’s daily business. Another corporate body is the Annual General Meeting.

The Administrative Board of PUMA SE manages the Company, determines the Company’s basic business strategies and monitors the implementation of said strategies by the Managing Directors. It appoints and dismisses the Managing Directors, decides on the compensation system and establishes the compensation. In accordance with the Articles of Association, the Administrative Board consists of at least three members. It currently consists of six members according to the Articles of Association of the Company. At least one independent member of the Administrative Board must have expertise in the areas of finance, accounting or auditing. The members of the Administrative Board are appointed at the Annual General Meeting, a third of them pursuant to the German Codetermination Act based on binding nominations by employee representatives. The members of the Administrative Board are appointed for a period up to the close of the Annual General Meeting that adopts the resolution approving the actions of the Administrative Board for the financial year 2021 and for a maximum of six years after the respective Administrative Board member was appointed. Administrative Board members may be reappointed.

The Administrative Board had eight members until the Annual General Meeting on April 12, 2017. One member died on March 12, 2017. The Administrative Board has consisted of six members since April 12, 2017. Further information on the members of the Administrative Board can be found in the Notes to the Consolidated Financial Statements (last chapter).

Meetings of the Administrative Board must be held at least every three months. Meetings must also be held if required for the Company’s well-being or if a member of the Administrative Board demands that a meeting be convened. The Board of Directors held four ordinary meetings and two extraordinary meetings in 2017.

The Managing Directors manage the Company’s business with the goal of creating sustainable value with shared responsibility. They implement the guidelines and targets issued by the Administrative Board. The Board currently consists of three members and has a chairman. The Managing Directors inform the Administrative Board regularly, comprehensively and in a timely manner regarding all company-related issues with respect to planning, business development, the risk situation, risk management and compliance. They provide details on and reasons for deviations of business performance from established plans and objectives. Further information on the Managing Directors can be found in the Notes to the Consolidated Financial Statements (last chapter).

The Managing Directors are required to disclose conflicts of interest to the Administrative Board immediately and inform the other Managing Directors about any such conflicts. They are permitted to carry out additional activities, especially Supervisory Board or similar mandates outside the PUMA Group, only with the prior approval of the Administrative Board. In the past year, Managing Directors of PUMA SE had no conflicts of interest.

The principles of cooperation of the Managing Directors of PUMA SE are laid down in the Rules of Procedure for the Managing Directors, which can be viewed at http://about.PUMA.com under CORPORATE GOVERNANCE.

DIVERSITY CONCEPT

a) Objectives for the composition of the Administrative Board

The Administrative Board of PUMA SE is composed in such a way that its members as a group possess the appropriate knowledge, skills and professional experience necessary for the proper performance of their duties. The composition of the Administrative Board is primarily determined by appropriate qualification, taking into account diversity and the appropriate involvement of women. Based on Section 5.4.1 of the Code, the Administrative Board has set targets for his composition that have been fulfilled. In detail:

The members of the Administrative Board as a group have the experience and knowledge in the field of management and/or monitoring market-oriented companies as well as in the business segments and sales markets of PUMA.
A sufficient number of members have strong international backgrounds.
Including the employees’ representative on the Administrative Board, the Administrative Board has an appropriate number of independent members.
The Chairman of the Audit Committee has specialist knowledge and experience in the application of accounting principles and internal control procedures and is independent.
The members have sufficient time to perform his/her mandate in the Administrative Board.
The Administrative Board prevents potential significant and not only temporary conflicts of interest of its members by regularly monitoring and critically scrutinizing its members’ other activities.
According to Section 1(4) of the Rules of Procedure for the Administrative Board, Administrative Board members may, in principle, not be over 70 years of age and their maximum term of office may not exceed three terms.

b) Profile of skills and expertise

The Administrative Board has determined a competence profile for the entire Board. It stipulates that the members of the Administrative Board as a whole must cover the following professional competencies:

Managing of large or mid-sized international companies
Leadership experience in the sporting or luxury goods industry
International corporate background
Leadership experience with various distribution channels, including eCommerce
Expertise in building strong international brands
Marketing, sales and digital know-how
Financial expertise (accounting, treasury, risk management, corporate governance)
Expertise in serving on the supervisory or administrative boards of publicly listed companies
Experience with mergers & acquisitions
Understanding of the industrial constitution law and advocating the interests of the employees
HR expertise
IT expertise

The Administrative Board of PUMA SE is currently composed in such a way that it has the competence profile as an overall body.

c) Commitments to promote the participation of women in management positions in accordance with Art. 9(1)c(ii) of the SE Regulation (SE-VO) and Section 22(6) of the German SE Implementation Act (SEAG) in connection Section 76(4), Section 111(5) AktG

The Administrative Board has adopted new targets for the proportion of women on the Administrative Board, at the level of the Managing Directors and the two management levels below the Managing Directors. For the Administrative Board of PUMA SE a target of 30% women was set; for the level of the Managing Directors a target of 20% was set, on the condition that PUMA SE has five or more Managing Directors. The Administrative Board adopted targets of 25% for the first management level below the Managing Directors and 30% for the second management level. At Group level, the proportion of women is expected to increase to 30% for the first management level below the Managing Directors and to 40% for the second management level. All implementation deadlines run until October 31, 2021.

The targets set by PUMA in 2015 have been achieved partially. As only one member of the Administrative Board is a woman, the target for the Administrative Board has not been reached by June 30, 2017. The body of Managing Directors was not extended until June 30, 2017 and continues to consist of Messrs. Gulden, Lämmermann and Sørensen. The target figures of 20% and 30%, respectively, for the first two management levels below the Managing Directors were achieved at Group level, but not at the level of PUMA SE.

In the future, the inclusion of women among the Managing Directors shall be guaranteed in the event of a new appointment, in particular by giving special consideration to women from among several equally qualified applicants. If a position must be filled by outside candidates, special care should be taken to consider properly qualified female candidates. The same applies when filling management positions. In order to include even more women in management positions in the future, PUMA SE is using part-time and half-day models, as well as flexible working hours and the provision of more childcare places to promote a better balance between work and family life.

DESCRIPTION OF THE COMPOSITION AND THE WORKING PRACTICES OF THE COMMITTEES OF THE ADMINISTRATIVE BOARD

The Administrative Board has established four committees to perform its duties and receives regular reports on their work. The principles of cooperation of the Administrative Board of PUMA SE and the duties of the committees are set out in the Rules of Procedure for the Administrative Board, which can be viewed at http://about.PUMA.com under CORPORATE GOVERNANCE.

The Personnel Committee consists of three members. The Personnel Committee is responsible for entering into and making changes to Managing Directors’ employment contracts and for establishing policies for Human Resources and personnel development. The entire Administrative Board decides on issues involving the Managing Directors’ compensation based on recommendations from the Personnel Committee.

The Audit Committee consists of three members. The Chairman of the Audit Committee must be an independent shareholder representative and must have expertise in the fields of accounting and auditing in accordance with Section 100(5) AktG. In particular, the Audit Committee is responsible for accounting issues and monitoring the accounting process, the effectiveness of the internal control system, the risk management system, internal
audits, compliance and the statutory audit of the financial statements, with particular regard to the required independence of the statutory auditors, issuing the audit mandate to the statutory auditors, defining the audit areas of focus, any additional services to be performed by the auditors and the fee agreement. The recommendation of the Administrative Board on the selection of the statutory auditors must be based on a corresponding recommendation by the Audit Committee. Once the Annual General Meeting has appointed the statutory auditors and the Administrative Board has issued the audit assignment, the Audit Committee shall work with the statutory auditors to specify the scope of the audit and the audit areas of focus. The statutory auditors shall attend a meeting to review the annual financial statements and the consolidated financial statements and shall report on the key findings of their audit. They shall also inform the Committee about other services they have provided in addition to auditing services and shall confirm their independence. Each month, the Audit Committee shall receive financial data on the PUMA Group, which will allow the tracking of developments in net assets, financial position, results of operations and the order books on a continual basis. The Audit Committee shall also deal with issues relating to the balance sheet and income statement and shall discuss these with Management. In addition, when the internal audit projects are completed, the Audit Committee shall receive the audit reports, which must also include any actions taken.

The Sustainability Committee consists of three members and is responsible for promoting business sustainability as well as awareness of the need to act fairly, honestly, positively and creatively in every decision made and every action taken.

The Nominating Committee has three members, who may only be representatives of the shareholders on the Administrative Board. The Nominating Committee proposes suitable shareholder candidates to the Administrative Board for its voting recommendations to the Annual General Meeting.

The current composition of the committees can be found in the Notes to the Consolidated Financial Statements (last chapter).

DIRECTORS’ DEALINGS

In the reporting year, the Managing Directors and the members of the Administrative Board have acquired no PUMA shares. No sales were reported to us.

DECLARATION BY THE LEGAL REPRESENTATIVES

Regarding the Affirmation pursuant to Section 315(1)(5) of the German Commercial Code (HGB) (Responsibility Statement/Bilanzeid), please refer to the Notes.

Herzogenaurach, February 9, 2018

THE MANAGING DIRECTORS

Gulden Lämmermann Sørensen