For Corporate Boards, a Global Search

Western companies, especially tech multinationals like SAP and Nokia, have begun looking to Asia's emerging markets for their next board leaders

Saul Loeb/AFP/Getty Images

by Aaron Ricadela

• View Slide Show

In its nearly four decades of existence, SAP (SAP) has been a bastion of German business. The country's largest technology company employs more than 15,000 at home and is the eighth-largest component of Germany's benchmark DAX-30 stock index.

But SAP is quickly globalizing. In April, the company's highest-ranking American, Bill McDermott, joined SAP's executive board, the equivalent of a U.S. board of directors. On July 1, the company named José Duarte of Portugal head of European sales. In May 2009, Léo Apotheker, a German-born de facto Frenchman who resides in Paris, takes over as chief executive.

Yet even bolder steps are planned. Within the next few years, SAP plans to appoint an Indian or Chinese director to its board, the first time in the company's history an executive who isn't from the West would have a hand in governance. "In the next three to five years, definitely somebody from India or China will be on the board," says CEO Henning Kagermann, sipping tea during a late June interview at SAP's Palo Alto (Calif.) office. "At the end of the day, for our executive board, someone from those two countries could complete it."

Kagermann won't name candidates, but SAP has rising stars in those regions. India Chief Executive Rajan Das moved to Mumbai from Silicon Valley a year ago, and Shang-Ling Jui, the president of SAP's China Labs, was born in Taiwan but holds German citizenship. "We have a few guys who could make it," says Kagermann, who'll step down as CEO in May 2009. Finding the right fit could make SAP even more compelling to customers in India, its fastest-growing market, where revenues are doubling each year, and China, where sales are climbing 50% annually.

Trend Toward Emerging-Market Directors

In an era when manufacturing, customer service, and increasingly, the bulk of new sales are coming from Asia, a growing number of U.S. and European companies are starting to look east to India, China, and other emerging markets for their next generation of board leadership. Goldman Sachs (GS), which is investing in Indian industry, on June 29 named steel magnate Lakshmi Mittal a director. Finland's Nokia (NOK), the largest seller of mobile phones to India, in May 2007 added Lalita Gupte, chair of Mumbai's ICICI Venture Funds (IBN), to its board. And Infosys Technologies (INFY) co-founder N.R. Narayana Murthy joined the board of Dutch consumer products maker Unilever (UL) last year. Novartis (NVS), Procter & Gamble (PG), and Deere (DE) are among the handful of other U.S. and European companies that have recruited Chinese and Indian natives to their boards.