Adidas Hit with Class Action Lawsuit: Shareholders Allege Negligence in Handling Ye Partnership Amid Controversy
Adidas is facing a class action lawsuit from investors who claim that the company’s executives were aware of the problematic behavior of Ye, previously known as Kanye West, for several years before terminating its partnership with the rapper. The lawsuit was filed on Friday, following the termination of the partnership in October due to Ye’s anti-Semitic remarks. The shareholders allege that the company knew about the risks associated with partnering with the rapper in 2018, yet failed to take measures to limit negative exposure.
The suit cites the 2018 report, which discusses the risks involved in partnering with Ye and accuses Adidas of neglecting to acknowledge his extreme behavior while promoting the company’s commitment to having an equitable workplace and its strategic workforce management process, known as ‘People Strategy.’
Adidas first announced its partnership with Kanye West in November 2013, and the first Yeezy shoes were introduced in February 2015. Despite the controversy surrounding the rapper’s remarks on slavery in 2018, the Yeezy brand continued to thrive, generating about 10% of Adidas’ annual revenue in 2020.
Although former CEO Kasper Rorsted and CFO Harm Ohlmeyer are named in the lawsuit, Ye is not named as a defendant. In February, Adidas announced that it expects to suffer a loss of $1.3 billion in sales this year as Yeezy clothes and shoes will not be available.