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SAP Raises Salaries of co-CEOs, Starts New Compensation Plan

SAP AG, whose shares this month reached their highest level in 11 years, increased the salaries of co-Chief Executive Officers Jim Hagemann Snabe and Bill McDermott.

For 2011, McDermott received 6.57 million euros ($8.7 million) and Snabe was paid 5.49 million euros, the company said today in a statement. That’s an increase of 49 percent for McDermott and of 42 percent for Snabe. The salaries of both CEOs included 950,000 euros in share-based bonuses for both 2010 and 2011.

SAP has gained 27 percent this year in Frankfurt trading as technology companies benefit from demand for applications that allow consumers and companies to access data via smartphones and tablet computers. Snabe said this month that SAP, which has more than 54,000 employees and is based in Walldorf, will extend a stock-based compensation program to all workers.

SAP needs to retain top-performing employees as it plans to boost annual revenue with the help of cloud-computing software, mobile applications gained through its Sybase acquisition and the Hana technology, which enables processing of large amounts of data on the fly.

The company will pay between 460 million euros and 500 milion euros this year for the new employee bonus program which also ties compensation to the share price, SAP Chief Accountant Christoph Huetten said at a press conference in Frankfurt today. The company paid 69 million euros in share-based compensation in 2011, according to Huetten.

Virtual Shares

Employees will be allocated virtual shares at the beginning of each year. The company’s financial performance will then determine how many will be paid out at the end of the financial year, according to the statement.

“We want the employee to feel as though he’s a shareholder and feels invested in the performance of the company,” Huetten said.

SAP, whose biggest rival is Oracle Corp., today reiterated its 2015 targets for more than 20 billion euros in annual revenue and a 35 percent operating margin.

The company’s shares dropped 1 percent to 52.98 euros as of 1:50 p.m. in Frankfurt trading.

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