Compliance Declaration Pursuant to the German Stock Corporation Act, Section 161
The SAP Executive and Supervisory Boards submitted their implementation declaration on October 26, 2007. In the declaration, the Executive and Supervisory Boards declared that SAP intends, as in the past, to follow all of the recommendations in the new version of the Code except as follows:
- No age limits for members of the Executive and Supervisory Boards
- Contracts do not provide for a deductible in directors’ and officers’ liability insurance policies
- A chairperson or member of the Executive Board can become chairperson of the Supervisory Board or chairperson of a Supervisory Board committee
- No consideration of individual performance in the variable remuneration of Executive Board members
We no longer maintain the reservation concerning reward for committee work in the compensation of Supervisory Board members, last recorded in our October 2006 declaration of implementation. The compensation provisions in the SAP Articles of Incorporation were amended by resolution of the Annual General Meeting of Shareholders on May 9, 2006, but because the resolution was challenged in Court, it did not become effective until December 2006, that is, after publication of the implementation declaration in October 2006.
The remaining deviations from the recommendations in the Code are due to the following reasons:
SAP considers the setting of an age limit on Supervisory Board members, as recommended by the Code, an inappropriate restriction of shareholders’ rights to elect the members of the Supervisory Board. Therefore, SAP did not consider or set any age limits at the last election of Supervisory Board members. Similarly, despite the recommendation in the Code, SAP does not set any age limits for members of the Executive Board, because this would generally restrict the Supervisory Board in its choice of suitable Executive Board members.
The Code recommends that if a company takes out a liability insurance policy for its executive and supervisory board members (D&O liability insurance), a suitable deductible be agreed in members’ contracts. We do not believe that the motivation and responsibility that the members of the SAP Executive and Supervisory Boards have for their duties can be improved by such a deductible element. We do not intend to change the current D&O insurance policies, under which no deductible is payable by Executive and Supervisory Board members.
The Code recommends that, as a rule, the former chairperson
of the executive board and members of the executive
board do not become the chairperson of the supervisory
board or chairperson of a supervisory board committee.
SAP cannot rule out the possibility that these kinds of appointments
will take place in the future. It is not currently possible to foresee whether this will be the case as a rule.
Moreover, the chairperson of the Supervisory Board
and chairpersons of Supervisory Board committees are
appointed by the members of the Supervisory Board, who
should be guided solely by the actual qualifications of the
persons standing for election. Historically, our practice in
respect of the appointment of Executive Board members
or chairpersons (chief executive officers) to the chair of
the Supervisory Board has proved worthwhile. However,
we do not intend that such appointments should become
automatic.
Executive Board members’ remuneration takes into account their individual performance and responsibilities. However, SAP does not currently plan to set individualized targets for the purpose of determining Executive Board members’ variable remuneration elements because their areas of responsibility are interrelated in such a way as to prevent or considerably hinder the definition of corporate targets for their individual areas of responsibility. We prefer to encourage the collective responsibility of the Executive Board for the Company, seeing this as a significant factor in its success.
|
Want to learn more? Contact the SAP sales office nearest you. |
|