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Business at SAP
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Financial instruments minimize risks
As a global company, SAP is subject to various financial risks.
Every month, the SAP sales companies in each country transfer
to SAP AG, the parent company, a license fee based on their
software and maintenance revenues. Those fees are mainly
paid in local currencies, and, to hedge foreign exchange risks,
SAP sells currencies forward under contracts that generally
run for 12 months. Without exception, all of SAP’s currency
futures transactions relate to underlying business rather than
speculation.
Along with fixed salary, SAP employee compensation
may include elements that vary with the performance of SAP
ordinary shares. The STAR plan is such an element, passing
weighted stock appreciation value on to employees. SAP uses
derivative instruments from independent banks to manage the
associated share-price risk. Each of these contracts is subject
to the Company’s internally stipulated policies concerning the
creditworthiness of the bank concerned. For details about
the use of hedging contracts, see the notes to the consolidated
financial statements. |
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