The Work of the Supervisory Board Committees
The work of the Supervisory Board Committees supported us effectively. The General Committee, Compensation Committee, Finance and Investment Committee, Audit Committee, and Technology Committee all convened regular meetings.
Due to the election of new shareholder representatives and employee representatives on the Supervisory Board, there were changes to the committees’ membership. The Compensation Committee grew from three to five members, while the Technology Committee increased from six to seven members.
The duties of the six-strong General Committee include coordinating the Supervisory Board’s work, dealing with corporate governance topics, and allocating virtual stock options to employees under the new SAP SOP 2007. Its chairperson is Hasso Plattner.
The five-member Compensation Committee, also chaired by Hasso Plattner, carries out the preparatory work necessary for the personnel decisions made by the Supervisory Board, particularly with regard to the compensation – including share-based compensation – of Executive Board members and the conclusion of, amendments to, and termination of their employment contracts.
The Finance and Investment Committee, with four members, is responsible for matters related to financing as well as acquisitions and minority investments. Its chairperson was August-Wilhelm Scheer in 2007.
The Audit Committee is responsible for matters relating to financial reporting and auditing as well as risk management. It has four members and is chaired by Erhard Schipporeit. In line with the new and extended recommendations of the Code, compliance as one of the Audit Committee’s supervisory functions has been added to the committee’s rules of procedure for the sake of clarity.
The Technology Committee, which has seven members, regularly reviews the Company’s strategy with regard to the development and deployment of technologies and software. It advises the Executive Board on technological and strategic decisions and on planned investments in research and development. It also monitors the implementation of the Company’s strategy in terms of its technological direction and spending in this area. Hasso Plattner chairs the committee.
German law requires a Mediation Committee, which is responsible solely for drawing up personnel proposals if the required two-thirds majority is not reached when appointing and dismissing Executive Board members. Thus far, SAP has not required action from the Mediation Committee.
A new addition is the Nomination Committee, which the Supervisory Board decided to form at its meeting on October 26, 2007. It is composed solely of shareholder representatives. The Nomination Committee has three members and is chaired by Hasso Plattner. Its task is to define the requirements for SAP Supervisory Board members and suggest suitable candidates for nomination for election at the Annual General Meeting of Shareholders.
More information about the Supervisory Board committees, particularly their members, is available on SAP’s Web site at www.sap.com/about/governance/supervisory.
During 2007, the committees focused on the following topics:
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The
General Committee decided on the allocation of virtual
stock options to employees under SAP SOP 2007 and the STAR
program and on the use of treasury shares to satisfy conversion
and subscription rights attaching to convertible bonds and
stock options respectively that were granted to beneficiaries
of employee stock option plans. It held two meetings in 2007.
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The
Compensation Committee held five meetings. Among other
matters, it deliberated and decided on changes to Executive
Board compensation, stock option allocations to Executive Board
members, and succession planning. The committee also dealt with
the extension of Henning Kagermann’s contract as a member
of the Executive Board and, on behalf of the Supervisory Board,
negotiated the agreement for termination by mutual consent from
April 1, 2007, with former Executive Board member Shai Agassi.
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The
Finance and Investment Committee held three meetings. It
deliberated and decided on various acquisitions and minority
investments. At the May 2007 meeting, the committee focused on
the acquisition of OutlookSoft and decided to recommend this
acquisition to the Supervisory Board. It assessed the
development of the SAP NetWeaver Fund, which was established in
2006 to invest in companies operating in the SAP NetWeaver
technology platform field. It dealt with the reorganization of
SAP’s business in Arabia with two companies in Saudi
Arabia and one in Dubai created especially to take over
software licensing and related services. It also approved a
purchase price range for the Business Objects shares and
thereby enabled the Executive Board to negotiate with the
management of Business Objects S.A. on the basis of a specific
purchase price indication.
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The
Audit Committee met four times. It deliberated on the
SAP AG and consolidated financial statements and the reviews of
SAP AG and SAP Group operations, and the Form 20-F annual
report for fiscal year 2006, the Executive Board’s
proposal for the appropriation of retained earnings, the
progress of risk management in the SAP Group, the examination
of the internal control structure as required by the U.S.
Sarbanes-Oxley Act, section 404, and compliance in the SAP
Group. It discussed the 2006 full-year and quarterly results,
the results of the 2006 audit of the financial statements, and
the auditor’s quarterly reviews of software revenue.
Besides these discussions in the committee meetings, the
Executive Board held telephone conferences with the Audit
Committee before the announcement of the preliminary quarterly
results to inform committee members about the preparation and
auditing of the quarterly financial reports and about the
preliminary quarterly results. The Audit Committee studied
SAP’s progress in business and the quarterly results
regularly throughout 2007. It did work preparatory to the
Supervisory Board’s proposal to the 2007 Annual General
Meeting of Shareholders with respect to the election of an
auditor and, with the auditor, decided on the focus areas of
the audit. The committee also determined the auditor’s
fee and decided how it would be shared among the subsidiaries
to be audited. The auditor attended all Audit Committee
meetings and reported in depth on its audit work and quarterly
reviews of software revenue.
- The Technology Committee held three meetings in 2007. It discussed the key developments in the software industry in the coming years and SAP’s underlying strategy for its product and solution portfolio. It deliberated in detail on the work of the central software architecture group and the state of development of the SAP applications. At one meeting, the committee looked at how the integration of SAP’s recent acquisitions was progressing.
The regular reports from the committees ensured that we received comprehensive information about all matters covered by the committees and were therefore able to discuss and deliberate on these topics thoroughly.
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