Nike (NKE)

Recommendation of the Board

The Board of Directors recommends a vote AGAINST the Proposal for the following reasons:

The Board of Directors understands the need and desire for transparency and accountability on all matters including Company charitable contributions, and appreciates the proponent raising this important issue. However, the Board believes that this proposal is unnecessary because the Board reviews NIKE’s charitable giving programs to be consistent with the best interests of shareholders. Furthermore, NIKE already produces a corporate responsibility report that outlines the Company’s charitable giving programs, so producing the report called for in this proposal would be an unproductive use of Company resources.

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The Board believes that prudent and targeted charitable contribution programs can improve the quality of life for our employees and consumers in the communities in which we do business, and also enhance shareholder value over the long-term. The Board also believes that there is a direct connection between NIKE’s charitable giving and the benefits to the Company and its shareholders.

In general, NIKE’s charitable giving is focused on three principal areas:

1. NIKE supports charitable giving programs where there are substantial employee populations in the US, Europe, and elsewhere. One such program is the NIKE Matching Gift Program, in which the Company matches employee volunteer hours and cash donations to tax-exempt charitable organizations. In the U.S., this comprises over 40 percent of NIKE’s cash charitable giving. By supporting the worthy civic commitments of our employees, we improve the quality of life in the communities in which we do business, encourage volunteerism by employees, attract and retain dedicated employees, and enhance employee loyalty to the Company. It is part of the reason that in employee surveys 84 percent of NIKE employees would recommend the Company as a good place to work. Such charitable activities also improve NIKE’s local brand image, generate tremendous goodwill, and improve the local business climate for the Company.

2. NIKE makes charitable gifts to promote public participation in sports and recreation globally. Our business rests on a worldwide interest in health and fitness. Advocating a culture of sport, access to recreation, and participation in sports activities not only benefits public health, it also enhances the NIKE brand image, creates emotional connections with potential consumers, and benefits the Company and its shareholders.

3. The Company also contributes to the NIKE Foundation, which works in partnership with governments, global agencies such as the World Bank, and local community leaders to advance health and fitness for women in selected developing countries. Young women comprise the majority of workers manufacturing NIKE products across 49 countries. The Company believes that programs that seek to improve the health and well being of young women will benefit families and communities, improve their economic opportunities, and enhance their morale, productivity, and participation in the workforce.

The Board of Directors approves the general categories in which NIKE contributes and receives regular reports on the ways these principles of giving have been applied. The Board contends that charitable donations of $37 million are not excessive in relation to NIKE’s global revenues, given the fact that NIKE’s U.S. taxes do not support public services in foreign communities where our products are made. Further, the Board firmly believes that the Company’s charitable giving programs have resulted in tangible benefits to the Company as described above, and will enhance shareholder value over the long term.

In addition, the report sought by the proponent would duplicate much of what the Company already reports. NIKE issues a corporate responsibility report that describes, among other things, NIKE’s general

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charitable contribution programs and the overall amount of contributions. This report, first issued for fiscal 2001, will be available for fiscal 2005 and 2006 later this year at www.nikebiz.com. The Board believes that describing NIKE’s charitable programs and guiding principles provides more context and is more instructive than a list of donations. Moreover, detailed descriptions of every individual donation (for example, a donation of several t-shirts or shoes to a local charitable group) would involve an unnecessary and time-consuming expenditure of administrative cost and effort, which would produce no corresponding meaningful information or benefit to our shareholders.

Accordingly, the Board of Directors recommends a vote AGAINST the shareholder proposal. Holders of Class A Stock and Class B Stock will vote together as a single class on Proposal 2. If holders of a majority of the shares of Common Stock vote on the proposal, Proposal 2 will be adopted if the votes cast in favor of the Proposal exceed the votes cast against the proposal. Accordingly, abstentions and broker non-votes will have no effect on the results of the vote.

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