Share-Based Payments

SAP's most important assets are its employees, whose innovation and entrepreneurial thinking will drive our continued success. Various stock-based payments, which complement the existing compensation system, are additional incentives for employees, managers, and top performers. Our incentive plans are well-balanced, transparent, and focused on the long term. These aspects help ensure that SAP remains an attractive employer now and in the future for qualified, ambitious new recruits as well as for experienced industry professionals.

Japanese business people discussing

Share-based payments

A. Cash-Settled Share-Based Payments

A1. Cash-settled plans granted to SAP employees (except for employees of SFSF and Ariba)
1.1 LTI Plan (LTI 2015) and Employee Participation Plan 2015 (EPP 2015) and LTI Plan (LTI 2015)
1.2 Stock Option Plan 2010 (SOP 2010)

A2. Cash-settled plans granted to employees of SFSF and Ariba
2.1 Restricted Stock Unit Plan 2013 (RSU 2013)
2.2 SuccessFactors Cash-Settled Awards Replacing Pre-Acquisition SuccessFactors Awards (SFSF Rights)
2.3 Ariba Cash-Settled Awards Replacing Pre-Acquisition Ariba Awards (Ariba Rights)

B. Equity-Settled Share-Based Payments

Share Matching Plan (SMP)
  • A. Cash-Settled Share-Based Payments
  • A.1. Cash-settled plans granted to SAP employees (except for employees of SFSF and Ariba)
  • 1.1. Employee Participation Plan 2015 (EPP 2015) and LTI Plan (LTI 2015)

    SAP implemented two new share-based payments in 2012: an Employee Participation Plan (EPP) 2015 for employees and a Long Term Incentive (LTI) Plan 2015 for members of the Executive Board and the Global Managing Board.

    The plans are focused on SAP’s share price and the achievement of two financial key performance indicators (KPIs): non-IFRS total revenue and non-IFRS operating profit, which are derived from the Company’s 2015 financial KPIs. Under these plans, virtual shares, called restricted share units (RSUs), are granted to participants. Participants are paid out in cash based on the number of RSUs that vest.

    Starting in 2012, the RSUs will be granted and allocated at the beginning of each year through 2015, with EPP 2015 RSUs subject to annual Executive Board approval. Participants under the LTI Plan 2015 have already been granted a budget for the years 2012 – 2015.

    The RSU allocation process will take place at the beginning of each year based on SAP’s share price after the publication of its preliminary annual results for the last financial year prior to the performance period.

    At the end of the given year, the number of RSUs that finally vest with plan participants depends on SAP’s actual performance for the given year, and might be higher or lower than the number of RSUs originally granted. If both KPIs achieve at least a defined 80% threshold, the RSUs vest. Depending on performance, the vesting can reach a maximum of 150% of the budgeted amount. If one or both of those KPIs do not achieve the defined threshold of 80%, no RSUs vest and RSUs granted for that year will be forfeited.

    Under the EPP 2015, the RSUs are paid out in the first quarter of the year after the one-year performance period, whereas the RSUs for members of the Executive Board/Global Managing Board under the LTI Plan 2015 are subject to a three-year-holding period before payout, which occurs starting in 2016.

    The plans include a “look-back” provision, due to the fact that these plans are based on reaching certain KPI levels in 2015. If the overall achievement in 2015 is higher or lower than represented by the number of RSUs vested from 2012 to 2014, the number of RSUs granted in 2015 can increase or decrease accordingly. However, RSUs that were already fully vested in prior years cannot be forfeited. For the EPP, the application of the “look-back”-provision is subject to approval by the Executive Board in 2015.

    Basic Accounting Principles in Connection with the Employee Participation Plan and LTI Plan 2015

    The final financial effect of each tranche of the EPP 2015 and the LTI Plan 2015 will depend on the number of vested RSUs and the SAP share price, which is set directly after the announcement of the preliminary fourth quarter and full-year results for the last financial year under the EPP 2015 (of the respective three-year holding period under the LTI Plan 2015), and thus may be significantly above or below the budgeted amounts.

    Less
  • 1.2. Stock Option Plan 2010 (SOP 2010)

    2010 to 2013 Tranches

    Under the SAP Stock Option Plan 2010, we granted members of the Senior Leadership Team / Global Executives, SAP’s Top Rewards (employees with an exceptional rating / high potentials) between 2010 and 2013 and only in 2010 and 2011 members of the Executive Board cash-based virtual stock options, the value of which depends on the multi-year performance of the SAP share.

    The grant-base value is based on the average fair market value of one ordinary share over the five business days prior to the Executive Board resolution date.

    The virtual stock options granted under the SOP 2010 give the employees the right to receive a certain amount of money by exercising the options under the terms and conditions of this plan. After a three-year vesting period (four years for members of the Executive Board), the plan provides for 11 predetermined exercise dates every calendar year (one date per month except in April) until the rights lapse six years after the grant date (seven years for members of the Executive Board). Employees can exercise their virtual stock options only if they are employed by SAP; if they leave the Company, they forfeit them. Executive Board members’ options are non-forfeitable once granted – if the service agreement ends in the grant year, the number of options is reduced pro rata temporis. Any options not exercised at the end of their term expire.

    The exercise price is 110% of the grant base value (115% for members of the Executive Board) which is €39.03 (€40.80) for the 2010 tranche, €46.23 (€48.33) for the 2011 tranche, €49.28 for the 2012 tranche, and €59.85 for the 2013 tranche.

    Monetary benefits will be capped at 100% of the exercise price (150% for members of the Executive Board).

    Basic Accounting Principles in Connection with the SOP 2010 Plan

    According to International Financial Reporting Standards (IFRS) accounting rules, compensation expenses related to rights are recorded over the vesting period (3 and for members of the Executive Board 1 year(s) respectively) and fair value is revised at every reporting date until the last payment occurs.

    Less
  • A.2. Cash-settled plans granted to employees of SFSF and Ariba
  • 2.1. Restricted Stock Unit Plan 2013 (RSU 2013)

    We maintain share-based payment plans that allow for the issuance of restricted stock units (RSU) to retain and motivate executives and certain employees of the SuccessFactors and Ariba businesses, which we acquired in 2012.

    Under the RSU 2013 Plan, we granted a certain number of RSUs throughout 2013 representing a contingent right to receive a cash payment determined by the market value of the same number of SAP AG American Depository Receipts on the New York Stock Exchange and the number of RSUs that ultimately vest. Granted RSUs will vest in different tranches, either:

    • Over a one-to-three year service period only, or
    • Over a one-to-three year service period and upon meeting certain key performance indicators (KPIs).


    The number of RSUs that could vest for SuccessFactors employees under the performance-based grants was contingent upon a weighted achievement of performance milestones for the fiscal year ended December 31, 2013 related to:

    • Specific indicators of cloud subscriptions and support revenue (80%) and
    • Profit contribution of such specific indicators of cloud subscriptions and support revenue (20%).


    Depending on performance, the number of RSUs vesting could have ranged between 80% and 140% of the number initially granted.

    The number of RSUs that could vest for Ariba employees under the performance-based grants was contingent upon achievement of performance milestones for the fiscal year ended December 31, 2013 related to specific indicators of growth in cloud subscriptions and support revenue. The KPI targets included a minimum threshold for at least 50% vesting. If performance against the KPI targets had not exceeded the minimum threshold, no RSUs would have vested. Additionally, the number of RSUs that can vest is capped at 200% of the number originally granted.

    The RSUs are paid out in cash upon vesting.

    Basic Accounting Principles in Connection with the RSU Plan 2013

    The final financial effect of the RSU 2013 will depend on the number of vested RSUs and the SAP share price at time of vesting.

    Less
  • 2.2. SuccessFactors Cash-Settled Awards Replacing Pre-Acquisition SuccessFactors Awards (SFSF Rights)

    In conjunction with the acquisition of SuccessFactors in 2012, under the terms of the acquisition agreement, SAP exchanged unvested Restricted Stock Awards (RSAs), Restricted Stock Units (RSUs), and Performance Stock Units (PSUs) held by employees of SuccessFactors for cash-settled share-based payment awards of SAP (SFSF Rights). RSAs, RSUs, and PSUs unvested at the closing of the acquisition were converted into the right to receive at the originally agreed vesting dates, an amount in cash equal to the number of RSAs and RSUs held at the vesting date multiplied by US$40.00 per share.

    Basic Accounting Principles in Connection with SuccessFactors replacing awards

    These awards are accounted for as a cash-settled award under IFRS 2 because the obligation to the employee will ultimately be settled in cash only.

    Less
  • 2.3. Ariba Cash-Settled Awards Replacing Pre-Acquisition Ariba Awards (Ariba Rights)

    The terms of the acquisition agreement under which SAP acquired Ariba in 2012 required SAP to exchange unvested Restricted Stock Awards (RSAs) and Restricted Stock Units (RSUs) held by employees of Ariba for cash-settled share-based payment awards of SAP (Ariba Rights). RSAs and RSUs unvested at the closing of the acquisition were converted into the right to receive an amount in cash equal to the number of RSAs and RSUs held at the vesting date multiplied by US$45.00 per share in accordance with the respective vesting terms.

    Basic Accounting Principles in Connection with Ariba replacing awards

    These awards are accounted for as a cash-settled award under IFRS 2 because the obligation to the employee will ultimately be settled in cash only.

    Less
  • B. Equity-Settled Share-Based Payments
  • 1. Share Matching Plan (SMP)

    Under the Share Matching Plan (SMP) implemented in 2010, SAP offers its employees the opportunity to purchase SAP AG shares at a discount of 40%. The number of SAP shares an ¬eligible employee may purchase through the SMP is limited to a percentage of the employee’s annual base salary. After a three-year holding period, such plan participants will receive one (in regards to the 40th anniversary in 2012: five) free matching share of SAP for every three SAP shares acquired. The terms for the members of the Senior Leadership Team (SLT)/ Global Executives are slightly different than those for the employees.

    Members of the SLT/Global Executives do not receive a discount when purchasing the shares. However, after a three-year holding period, members of the SLT/Global Executives receive two (in regards to the 40th anniversary in 2012: five) free matching shares of SAP stock for every three SAP shares acquired. This plan is not open to members of the SAP Executive Board.

    Basic Accounting Principles in Connection with SMP

    In accordance with IFRS 2, the discount granted at purchase date is immediately recognized as a compensation expense. As the bonus shares will be equity-settled at vesting date, their fair value is measured at grant date without subsequent remeasurement. Compensation expense related to bonus shares is recorded over the vesting period using the fair value at grant date.

    Less