CORPORATE GOVERNANCE

Principles of Corporate Governance Amended
We last updated our Principles of Corporate Governance (Principles) in October 2006 to reflect amendments to the German Corporate Governance Code (Code). We incorporated all of the Code’s new recommendations and one further suggestion from the Code into SAP’s Principles.

Recommendations
The declaration of implementation issued on October 27, 2006 by our Executive Board and Supervisory Board reports that we deviate from four Code recommendations. Since October 2006, we adhere to the recommendation in section 5.4.3 of the Code in that our Supervisory Board members are to be elected individually. The 2006 Annual General Meeting of Shareholders resolved to alter the Supervisory Board compensation package and amend the Articles of Incorporation accordingly, in accordance with the recommendation in section 5.4.7 in the Code, and the required entry in the commercial register was made in December. In consequence, the compensation package now affords recognition of the additional responsibilities of the chairperson and deputy chairperson of the Supervisory Board and of members of its committees.

As noted, new recommendations were added to the Code in 2006. They chiefly concern the publication of legally required details of executive board members’ remuneration in a compensation report, the content of that compensation report, and the publication of details of the remuneration and benefits granted to supervisory board members. We began complying with these requirements in 2005. In this annual report, the compensation report again forms part of the corporate governance report. We have included in our Principles the recommendations in the Code concerning the type and scope of details published about executive and supervisory board members’ compensation. This year’s compensation report therefore provides all legally required details about compensation as well as all details of Executive Board and Supervisory Board members’ compensation as recommended by the new version of the Code.

Suggestions
We welcome the suggestion in the Code, introduced in June 2006, according to which the chairperson of the general shareholders’ meeting should be guided by the fact that an ordinary general meeting lasts four to six hours at most. The suggestion is in the interests of SAP and the shareholders because it enables the meeting to be conducted appropriately and efficiently. In October 2006, we therefore incorporated this suggestion into our Principles.

There are two Code suggestions to which we do not adhere:

We do not appoint Supervisory Board members at different times, as suggested by the Code. It holds block votes for all shareholder representatives on the Supervisory Board and they have equal terms of office. If a Supervisory Board seat becomes vacant during the regular period of office, by-elections are held for the remainder of the regular period of office. This is convenient because memberships are elected and work together.

We have not agreed to pay Supervisory Board members performance-oriented compensation based on SAP’s long-term success as suggested in the Code, section 5.4.7 (2). We are not convinced the long-term success of SAP is the right basis for Supervisory Board compensation or increases Supervisory Board members’ motivation toward SAP. At SAP, variable remuneration is linked to the dividend and governed by our Articles of Incorporation. We believe that this thus ensures transparent, appropriate remuneration for Supervisory Board members that does not conflict with their legal responsibilities.

U.S. Regulatory Requirements
Because we are listed on the New York Stock Exchange (NYSE), we are subject to U.S. securities laws and to U.S. Securities and Exchange Commission and NYSE rules. We therefore continued to adhere to relevant U.S. laws and rules relating to corporate governance standards. Notably, we implemented the requirements of the NYSE Corporate Governance Standards regarding the composition of the audit committee and prepared for the assessment of the internal control structure as required by the U.S. Sarbanes-Oxley Act, section 404.