SAP shareholders demand clarity on Plattner succession

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The shareholders of the software group SAP are pressing for a succession plan for long-time Supervisory Board Chairman and co-founder Hasso Plattner ahead of the Annual General Meeting. The seventy-seven-year-old SAP overfather, who is still heavily involved in strategizing as “Chief Software Advisor,” had actually planned to retire from the supervisory body in 2022. Last year, however, he announced that he might extend his mandate once again. At the time, he told Handelsblatt that a few more or fewer years were no longer important. He had been approached about this and saw “at least a certain logic in bringing a bit of security and continuity to the company in turbulent Corona times like now.

The announcement was understood internally and on the capital market as a vote of no confidence in Supervisory Board member Gerhard Oswald. The former SAP board member and confidant of co-founder Dietmar Hopp was seen as a possible successor to Plattner.

Shareholders are now demanding clarity. Plattner has rendered outstanding service to SAP, but now it really is time to put the chairmanship of the supervisory board in younger hands, says shareholder representative Markus Golinski of the cooperative fund company Union Investment. “The long overdue change is so demanding and so far-reaching that there is no way around a long-term succession solution.” CEO Christian Klein needs a head of the supervisory board who can accompany him through the entire transition phase, he said. Similar tones come from the savings bank fund company Deka: “It is time to hand over the baton of the Supervisory Board Chairman. We are therefore calling for a comprehensible succession plan for Hasso Plattner and a rejuvenation of the Supervisory Board,” says Deka representative Ingo Speich. Plattner has immense influence via the Supervisory Board and the Strategy and Technology Committees, he said. “We take a critical view of the concentration of power and would like to see an independent chairman of the supervisory board who can accompany the new management team over the next decade.”

It is questionable what role Rouven Westphal plays in Plattner’s considerations. The 48-year-old business economist is expected to be elected to the supervisory board at Wednesday’s annual general meeting as successor to outgoing former Nokia CEO Pekka Ala-Pietilä. Westphal has close ties to Plattner as a board member of the Hasso Plattner Foundation and as managing director of the family office. SAP nevertheless considers the doctor of business administration and former management consultant to be an independent candidate within the meaning of the German Corporate Governance Code. Deka representative Speich nevertheless intends to approve the election, but says: “The closeness to Hasso Platter is obvious and counterproductive, because sufficient independence is not given.”

Shareholders criticize remuneration system

Not for the first time, quite a few shareholder representatives are also voicing clear criticism of the executive board’s compensation, especially the additional compensation of 4 million euros for the executive board approved ad hoc by Plattner with reference to the high Corona burdens, through which CEO Christian Klein alone receives an additional 1.1 million euros in SAP shares. Since the requirements for payment of the short-term bonuses were not met in fiscal year 2020 “probably due to the pandemic,” the supervisory board quickly pulled a corresponding extraordinary clause in the compensation system, criticizes Speich. According to the German Association for the Protection of Security Owners (Deutsche Schutzvereinigung für Wertpapierbesitz), the Supervisory Board is thus undermining the purpose of short-term compensation. The Schutzgemeinschaft der Kleinaktionäre also criticizes the special clause as a “foreign body” that undermines the elimination of short-term compensation. In 2017, SAP had completely overhauled its compensation system after fierce criticism and only narrow approval of the management’s actions by shareholders.

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