TRAVEL & ENTERTAINMENT POLICY

I.        Purpose

To establish and identify appropriate standards and controls to minimize the cost of business travel and entertainment expenses, while adequately meeting the needs of traveling employees conducting company business and for all company related expenses.

II.     Applicability

This policy applies to all employees of adidas.

III.   Policy

It is the policy of this company to reimburse employees for all necessary business travel and entertainment expenses incurred while conducting company business.  Travelers will use the Corporate American Express Cards to pay for T&E expenses whenever possible.  Expenses are to be within the established company guidelines and will be reimbursed with proper documentation.

The company recognizes that employees who travel to represent the company’s business interests sacrifice the comforts of home and some of their personal time.  In return, the company makes efforts to provide comfortable and secure accommodation for lodging, meals, and travel for employees.  However, these items are not intended to be perquisite and the company reserves the right to deny reimbursement for expenses that are considered lavish, extravagant or inappropriate.

IV.  Expense Procedures

A.     Expense Reports for travel and entertainment expenses

Employees must submit expense reports for travel and entertainment costs within 15 days of completion of travel.  The expense reports must be properly documented with receipts attached.  Receipt requirements are explained in the Captura expense submission procedure manual.

To comply with IRS regulations, a detailed business purpose must be included on every Expense Report.

 

When a group of employees is traveling together, the senior ranked employee present should be responsible for any entertainment and business meal expenses.

 

Cash Advances: Some employees may require cash advances for traveling.  This is considered exceptional and is not to be the norm.   If cash is required where AX card is not accepted, an employee may withdraw cash advance from the Corporate AX card.  A cash advance fee of 4% maximum will be reimbursed and a receipt is necessary.

 

Non-Travel Related Expenses: Certain non-travel related expenses (such as office supplies, subscriptions, training/seminars, and other general & administrative expenses) may be recorded on an employee’s Expense Report.  These charges should be submitted on expense reports separately from business travel related expense reports.  Small single purchases such as the purchase of muffins or bagels for breakfast meetings, etc…should be expensed by the senior employee involved.  This is much more time and cost effective than submitting a Check Request.  The employee has the responsibility to indicate the nature of these expenses and to properly code the expenses so that they can be properly allocated.  In no case may non-travel related expenses be higher than the individual’s dollar approval limit.

 

B.     Travel Arrangements

 

1.      adidas and Piedmont have collaborated to ensure the most effective way to handle Company travel arrangements.  All adidas employees are required to utilize adidas Travel (aT) for company travel including airfare, hotel and car rental reservations being made at the expense of adidas.  Failure to utilize aT may result in non-reimbursable expenses.

2.      For questions or concerns about Travel Policy, contact Michael Burke at 2424.

3.      A travel profile will be used to secure your preferred travel accommodation.  A completed travel profile must be on file with the travel department before any reservations can be made on an employee’s behalf.  All traveling employees should work with the travel personnel to make sure that profile information is kept up to date.

Also, a photocopy of each employee’s passport should be kept on file with the travel department.  This will help should an employee’s passport be lost or stolen. The travel department will work with employees to keep visa information up to date.

4.      aT  provides the following services to adidas and its employees:

a)      Air travel reservations and tickets.

b)      Train and other commercial carrier reservations and tickets.

c)      Hotel and car rental reservations.  Hotel reservations are to be guaranteed with employees’ credit cards.

d)      Passport/Visa assistance.

e)      Personal Travel – Corporate discounts can be applied to personal travel but a $40 fee is charged by Piedmont Travel.  Please direct inquiries to 800 743-3666.

C.     Air Travel:

1.      Authorization for travel is not required upon initial request.  The travel agent will provide the itinerary requested along with any lower fare alternative.  At that time, the traveler’s supervisor approves the price and authorizes ticketing.

2.      All domestic air travel will be by coach/economy class only (see First Class/Business Class exceptions.)  Employees are expected to accept flights that utilize the lowest fare route.  Common sense is to be the guide in determining which fare/route makes most sense to the company economically.  A connecting flight and/or alternate airports may be required to obtain the lowest fare.  Flight times, layover times, and meeting times will be considered in arranging the most economical travel schedule.  Consider the cost of parking and transportation when making this decision.  Travelers are to remain flexible and use a sensible window of time for departures and arrivals.  Advanced planning is expected in order to maximize fare discount requirements.  Saturday night stay-overs are encouraged, providing the cost benefit is present after lodging, transportation, and meals.

3.      The traveler is given a $100 leeway to choose a more comfortable or convenient flight.  The traveler’s supervisor is authorized an additional $100 of approval.  Any flight requested that is above $200 more than the least expensive alternative must be approved by the managing director.

4.      All international flights require approval from the managing director.

5.      All single destination domestic flights above $1500 and multiple destination flights above $2000 require approval from the managing director.

6.      Flight selection based solely upon frequent flyer programs is prohibited.  Purchasing upgradeable fares when penalty and non-refundable fares are available is prohibited.  If an individual chooses to purchase a ticket with benefits derived from a bonus program, the company does not reimburse the employee for the normal cost of such flights.

** adidas will not be dictated by Frequent Flyer programs.  Continued abuse of this policy will result in having the frequent mileage reverted to the company.

7.      For international air travel in excess of 6 hours, business class is permitted but must first be approved by your supervisor and/or travel administrator.  Employees are encouraged to use frequent flier mileage that has been accumulated on business travel to upgrade flights.

8.      Travel by air charter is prohibited unless properly authorized by your supervisor, travel administrator, and the controller.

9.      First Class/Business Class exceptions include:

a)      Business class travel on international travel of more than 6 hours

b)      An employee traveling on adidas business with an athlete who endorses adidas might be required to travel in first/business while escorting the athlete.  Common sense should be used in determining these trips.

10.  Trip cancellation can be divided into two categories.

a)      Refundable airline tickets should be returned to your travel agent to be processed for a refund.  The unused ticket should not be filed in an expense report.  The refund will process directly to your Amex account from the airline and you should not be reimbursed by adidas.  If necessary you can call Amex and hold the charge until the refund is processed.

b)      Non-refundable airline tickets should be returned to your travel agent.  The agent will fill out a check request so AP can pay you for the ticket.  Do not file an unused ticket in an expense report.  The ticket will be held and used in exchange for your next trip.  Each traveler is covered with $200,000 in traveler insurance on each trip arranged by aT.  This coverage takes effect from the time you leave your home until you return to your home.  It also carries $1,250 in coverage for checked baggage items and $500 for carry-on items.  This insurance is only applicable on tickets issued by aT on the American Express Corporate Travel Account.

11.  Airport check-in time for domestic flights is generally one hour prior to departure and two hours for international departures.  Check-in times can vary radically due to increased security.  Please check the Internet for check-in information.

D.     Lodging:

1.      All hotel reservations must be made through aT.  You are expected to utilize hotels with negotiated rates.

2.      At check-in, the employee should ask if there are any special rates in effect.  Hotel rates can change dramatically overnight.  It does not hurt to ask for the hotel’s best rate, in some cases they may be running a special or weekend rate that is better than the corporate rate.

3.      Standard room accommodation will be provided.  Employees will be asked to pay back the company for any costs related to an upgrade in room accommodation.  Like all of the travel policy, common sense is to prevail.

4.      In choosing a hotel site, the distance to the business destination, airport, restaurants, etc…should be considered.  An additional $50 above preferred hotel rate is allowable if location will eliminate the necessity of renting an automobile.

5.      aT will guarantee hotel rooms on the employee’s credit card.  This means that the employee is responsible to notify the hotel in the event of travel plan changes.  Most hotels require cancellation notice by 4:00PM on the day of scheduled arrival or earlier.  aT will indicate the specific hotel cancellation policy on your itinerary.  An employee who has not notified the hotel of a cancellation may not expense the no-show charge for reimbursement.

E.      Ground Transportation:

1.      The use of a rental car must be justified as an economic requirement and not as a matter of personal convenience.  Autos may be rented when:

a)      Public or private transportation is not an alternative.

b)      Company provided transportation is not available.

c)      Lack of accommodation near a facility requires the use of an automobile.

2.      Adidas has arrangements with several rental car companies.  The travel department will determine the best rates for your proposed rental.  Like hotel, car rental rates can vary dramatically and be different from city to city.  It is always best to ask for the best deal possible at the counter.

3.      As a general rule, an intermediate or smaller model should be used whenever possible.  When three or more employees are traveling together, a full size car is permissible.  Employees are urged to use upgrades and award certificates towards the rental of cars.

4.      Adidas is self-insured on comprehensive insurance coverage.  Travelers are advised to refuse insurance coverage offered by car rental companies to cover the collision damage deductible, medical expense, or personal death benefits since such coverage would be duplication and a non-reimbursable expense.  International auto insurance is now available with the implementation of the AX program.  Travelers should decline insurance on international rentals when paying with American Express.  Anyone traveling without an Amex card should accept CDW coverage from the rental agency.

5.      Expenses in the operation of rental cars that are reimbursable include:

a)      Gasoline

b)      Oil

c)      Toll charges

d)      Reasonable parking charges

6.      Expenses in the operation of rental cars that are NOT reimbursable include:

a)      Refueling charges (for not returning the rental car with a full tank of gas) are not reimbursable unless sufficient reason for not refueling can be given.

b)      Pre-paid fuel charges are not reimbursable.  Most travelers do not use the entire tank of gas.

7.      One-way rentals with drop-off charges should be avoided.  If a one-way rental if absolutely necessary, the travel department will research for the best value.

8.      Rental cars are for business use only and should not be used for personal use.  adidas insurance does not cover a rental car used by an employee for personal use.  The employee will be responsible for any additional insurance coverage and/or any damage to the vehicle.

9.      Personal vehicles used for business use required a detailed log with date, mileage and business purpose of the trip.  Currently adidas reimburses the employee 29 cents per mile.  This rate is subject to change.  The company assumes no responsibility for personal autos used for company business.

10.  Personal vehicles should not be used for extended trips as the mileage charge and the time spent driving are not economical to the company.

11.  Personal mileage may not be charge for commuting back and forth to work.  It is the employee’s responsibility to get him/herself to and from work.

12.  The company does not assume any responsibility for parking or traffic violation tickets the employee gets while on company business.

13.  Whenever possible, public transportation should be used to avoid renting cars.  Hotel shuttle buses, taxis, etc…are reimbursable expenses.

 

F.      Groups, Meetings, and Training:

1.  A group is considered when 10 or more people traveling to a common destination for a common purpose.  Special negotiations and costs savings are available for group travel and meetings.  There is power in volume.  One person in the group should be chosen to work with aT to secure the best group rates.

2.  The senior most ranked employee at a group function will be responsible for the charges.  All group functions need prior supervisor approval.

G.     Meals:

1.  All employees incurring expenses for business meals where business is discussed must record the attendees and their business relationship, in addition to the business purpose, subject discussed and benefit derived.  This is an IRS requirement.  Employees are expected to dine in quality, comfort, and convenience but to exercise discretion in respect to cost.

2.  adidas will reimburse employees for out-of-town business meal expenses (breakfast, lunch, and dinner) actually incurred and supported by adequate receipts.  When dining with another adidas employee, the senior employee is responsible for payment.

3.  Receipt and supporting information is required per rules set forth in the Captura submissions procedure manual. 

4.  Snacks are not reimbursable unless they are expensed as a substitute for the regular meals of breakfast, lunch or dinner.  In this instance they should be expensed under the proper category of breakfast, lunch or dinner.  In foreign countries without potable tap water, bottled water is a legitimate expense but should not be purchased from a hotel honor bar.

5.  Alcoholic beverages are an allowable expense at reasonable cost consumed in moderate amounts:

a)      Prior, during or immediately after a meal.

b)      When entertaining customer or supplier.

c)      In association to a planned employee group function, it is suggested that a group supervisor be present at group functions.  An employee should not approve an expense report from a group function that he/she has attended. Expense reports should be sent to senior attendee’s supervisor.

Employees are expected to use sound judgement when consuming alcohol.   adidas strongly discourages abuse of this privilege.  Also, common sense should be used – extravagant wines, etc…are not reimbursable.

 

H.  Entertainment:

1.  To be reimbursable, entertainment expenditures in whatever form (theater, golf, etc…) must be essential to the transaction of company business.  It must present a clearly demonstrable business purpose and be part of, immediately precede or follow a bona fide business discussion.   In the case of business meals, the expense must be taken under circumstances considered to be conductive to a business discussion.

 

    Concerning business entertainment with only employees in attendance, it is suggested that a supervisor be present.  An attendee cannot approve an expense report from that group function.  All expense reports associated with a group function should be approved by the senior attendee’s supervisor.  

2.  The following information is required on the expense report in support of the entertainment expense: date, place, cost, nature (meal, golf, etc…) and business purpose of the entertainment, the name and company of each customer entertained and the names of participating adidas employees.  Receipts must be included with the expense report.  Tips should be shown on receipts.  Each receipt should be listed separately and should be equal to the amounts entered in the expense report.

3.  Spouse Expenses – Travel expenses for a spouse or guest are only reimbursable if the trip is made at adidas’ request as a benefit to the company or as a participant in a company planned event.  Spouse expenses will not be reimbursed unless travel has been approved in advance by the employee’s supervisor.  Expenses incurred by a spouse are subject to the same policies and procedures as an employee.  Employees at their own expense may have their spouse or family accompany them on business trips providing their presence does not interfere with company business or increase travel expenses (i.e. hotel, meal, flight cost, size of rental car, etc…).  Baby-sitting expenses are reimbursable only when the employee’s spouse is involved in the entertainment of a customer or in approved business travel.

4.    Entertaining at home – The expense of entertaining a customer in the home of an employee, will be reimbursed to the extent of the out-of-pocket purchase and preparation cost of the major food and beverages.  It must be consumed by eligible participants only when it is a substitute for business entertainment that would occur whether in or outside of the home.  The employee should expect to absorb a modest amount of home entertainment expenses.  Expense report should include the guest list as well as standard reimbursement information.

I.     Miscellaneous Expenses:

1.    Gifts and Contributions:  The giving of gifts in any form, excluding advertising and promotional giveaway items is not an allowable nor a reimbursable expense except:

a)    In the event of death or serious illness to an employee or appropriate associate.

b)   In the event of employee transfer or promotion.

c)      In unusual and compelling circumstances in which prior approval from your supervisor has been given.

Expensed gifts must be fully explained on the expense report.  Gifts not discussed by this policy, given to adidas employees will not be reimbursed.

2.    Telephone expenses – adidas will provide telephone credit cards to employees requiring them.  Long distance calls for business purpose should be so charged and reported on the expense report.  However, in the case of employees who make frequent long distance calls from their home, economy dictates that the calls are made by direct dialing.  Such calls should be circled and identified as business calls on the employee’s monthly phone bill, their total amount entered under telephone expense on the expense report and the home phone bill attached.

a)      When an employee is traveling and visiting other adidas facilities, the employee should try and make as many phone calls as possible at the adidas facilities.  Long distance and international calls from hotel rooms are very expensive and are not reimbursable unless a calling card is used.

b)   An employee also has the privilege of making personal calls home at company expense while traveling.  Again, common sense should prevail as to the number and length of the private phone calls.  Best practice suggests 15 minutes per day for personal long distance to be enforced by the approving manager.

c)      Local coin paid calls and telegrams are to be reported for reimbursement on the expense report.

d)      Air phone usage is not reimbursable except in extreme emergency.  A supervisor must approve these charges.

3.      Combined Business and Personal Travel - If an employee combines business with personal travel, the portion of expense constituting the employee’s own reimbursable business expense must be separated and reported as such.  It may not exceed the amount of reimbursable expense which would have been incurred had the trip been made strictly for business purposes.  When auto travel is used for personal reasons, mileage reimbursement may not exceed the economy class airfare, plus local mileage actually incurred.  The cost of most meals, lodging, tolls, etc…en route would not be reimbursable since they would have been avoided had transportation been by air instead of auto.

4.    Individual versus Joint Expenses – the expense report is meant to accurately convey the expenses of individual employees and should not include the expenses of another employee who would otherwise include such expenses on his/her own expense report.

Two possible exceptions:

a)    When an employee incurs an expense for service or accomodation, etc…which is shared by another employee at no increase in cost, the amount in full should be included in the expense report of the employee paying the expense – which should be the senior employee.  An example, a taxi shared by two employees.

b)   When a senior employee puts the costs for other employees on his/her expense reports they must include the names of the other employees.  Example:  Senior employee paying for the cost of a group meal which includes other adidas employees needs to list their names as well as customers, etc.

5.    Seminars and Courses – attendance at trade or professional seminars or courses are to be authorized by the employee’s management.  Enrollment fees should be paid on your AX card and reimbursed through expense report form.  Flyer/brochure and proof of payment must be included on your expense report.

6.    Receipts – Receipt requirements for the various adidas/Salomon departments are outlined in the Captura expense submission manual.  If you are not sure, it is always good to err on the side of caution and provide a receipt.

7.    Reimbursable Expenses: (common sense applies)

c)    Taxi

d)   Parking

e)    Tolls

f)     Phone Calls

g)    Laundry/Dry Cleaning – only on trips of more than 5 days.  Note:  this is an item that requires a lot of common sense, as international hotel laundry charges can be very expensive.

h)    Room Services

i)      Currency Conversion Charges

j)     Telegrams/Telexes/Faxes

k)   Air Freight/Express Mail/Postage

l)      Qualified Gifts

m)  Business Meals

n)    Business Accomodation (Hotel)

o)   Business Transportation

p)   Business Entertainment

q)   Gratuities associated with business expenses

r)     Professional Memberships – pre-approved by department head

s)    In-room Movies – maximum of one per night and only when no other entertainment expense has been charged in the same day.

t)     Airport/airline club fees are reimbursable to adidas America employees only, to a maximum of $275.

8.    Non-reimbursable Expenses (include but not limited to the following list):

a)    Baby-sitting

b)   Pet Care, Kennel Fees

c)    Country Club Dues

d)   Gifts

e)    Personal Entertainment

f)     Luggage

g)    Non-business Magazines and Subscriptions

h)    Traffic or Parking Fines

i)      Haircuts, Massages, Other Personal Beauty Care

j)      “No Show” charges for car rental or hotel rooms

k)    Snacks during working hours

l)      Toiletry Articles

m)  American Express membership rewards fee

n)    Corporate Card Delinquency fee

o)    Additional Airline or Car Insurance

p)    Christmas funds added to association dues

q)    Optional contributions added to annual dues

The basic guideline for expenses when traveling is common sense.  The employee should ask the question, if I were to stay in Portland and be at a business function, would the expense be reimbursable?

9.    Termination of Employment –all travel expenses related to business travel for an employee who is being terminated must be submitted within 30 days of termination notice.  The company accepts no obligation for any expense reports submitted after the 30^th day.