Bloomberg News

SAP Co-CEOs’ Pay Rises 41%, Beating VW’s Winterkorn

March 22, 2013

SAP Increases Co-CEOs Pay 41% to Beat Volkswagen’s Winterkorn

SAP AG co-chief executive officers Bill McDermott, left, is getting 8.78 million euros, while Jim Hagemann Snabe’s compensation totals 8.25 million euros, SAP said in its annual report today. Photographer: Ralph Orlowski/Bloomberg

SAP AG (SAP), Germany’s most valuable company, is paying its co-chief executive officers 17 million euros ($22 million) for 2012, a 41 percent increase from a year earlier, after the business-management software maker boosted revenue and its stock.

Bill McDermott is getting 8.78 million euros, while Jim Hagemann Snabe’s compensation totals 8.25 million euros, SAP said in its annual report today. While about half of the amount is a stock-based bonus to be paid out in 2016, the two executives’ combined remuneration for last year exceeds the 14.5 million-euro for Volkswagen AG (VOW) CEO Martin Winterkorn.

SAP’s shares rose about 50 percent last year, pushing its market value beyond Siemens AG and Volkswagen. Analysts expect net income to grow to 3.7 billion euros this year, more than double the 2010 figure, data compiled by Bloomberg show. The world’s largest enterprise software maker is betting on Web- based programs, applications for mobile devices and its Hana database to beat rival Oracle Corp. (ORCL:US)

SAP, based in Walldorf, Germany, earmarked a total of 32 million euros for its top executives for 2012. The company has a target to increase sales beyond 20 billion euros by 2015, compared with 16.2 billion euros last year.

Volkswagen’s Winterkorn, the highest-paid executive among CEOs on Germany’s DAX Index (DAX), took a cut of almost 3 million euros last year. Daimler AG (DAI)’s Dieter Zetsche made 8.2 million euros, while Siemens’s Peter Loescher received 7.9 million euros.

Corporation Change

SAP shares fell 0.7 percent to 62.51 euros at 3:32 p.m. in Frankfurt, valuing the company at 77 billion euros. SAP missed its profit target for 2012 as it hired thousands of programmers and salespeople, prompting a decline in Snabe and McDermott’s non-share-based compensation for the year.

Yesterday, SAP said it will ask shareholders to approve a change of its legal status from an Aktiengesellschaft to a Societas Europaea, or SE, at next year’s annual meeting. One aim is to speed up decisions on the supervisory board, said a person familiar with the matter, who asked not to be named because the discussions are private.

The SE structure, already adopted by companies including BASF SE (BAS), Allianz SE (ALV) and Puma SE (PUM), was created by the European Commission to simplify regulatory and legal requirements for companies with subsidiaries in more than one European country. Previously, multinationals had to follow each of the EU members’ own legal system where they had a subsidiary.

The change could pave the way for a leaner supervisory board. While SAP has 16 people on that governing body, Allianz and BASF each has 12 members.

Board System

The change is of particular interest to German companies as the SE status allows them to choose between the German two-tier system of management board and supervisory board and the single- tier system adopted elsewhere in Europe with only one board. The legal form also simplifies cross-border mergers and acquisitions.

The move also reflects the growing internationalization of SAP’s business. The German market last year made up 15 percent of SAP’s revenue, compared with 19 percent in 2009, according to data compiled by Bloomberg.

SAP yesterday proposed to lift its 2012 dividend to 85 euro cents from 75 cents a year earlier, when the company also announced a special dividend to commemorate its 40th anniversary.

Oracle, based in Redwood City, California, on March 20 reported profit that missed analysts’ estimates as sales from hardware and new software licenses fell.

To contact the reporter on this story: Cornelius Rahn in Berlin at crahn2@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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