SAP Chief McDermott’s Pay Surpasses $10 Million After Cloud Push

  • CEO makes twice what German blue-chip chiefs earn on average
  • Robust cloud computing and license sales boosted bonus

SAP SE Chief Executive Officer Bill McDermott got a million-dollar raise last year and earns nearly double the average German blue-chip CEO after helping the software maker boost cloud-computing and software-license sales.

McDermott’s pay rose by 1.2 million euros ($1.4 million) to 9.28 million euros last year, compared with the 8.09 million euros he earned in 2014, according to SAP’s annual report released on Tuesday.

That’s a bit less than the 9.68 million euros that Daimler AG CEO Dieter Zetsche, the best-paid CEO in Germany’s 30-stock DAX Index, earned last year. Among the 21 Dax companies that had reported, CEOs earned an average of 4.9 million euros in 2015, according to a study by corporate risk and HR adviser Willis Towers Watson released March 14.

SAP executives’ bonuses are pegged to targets for cloud and software license growth, operating margin increase and software bookings adjusted for currency effects, according to the report. SAP last year posted nearly 12 percent growth in cloud and software revenue, though its operating margin shrank compared with 2014 as it signed up customers for software rentals, which spread the proceeds over more time compared with traditional license sales.

SAP on March 24 said it extended McDermott’s contract until 2021 and did the same for three other board members.

The CEO’s bonus last year increased to 2.74 million euros, from 2.04 million euros, though he could have earned 3.37 million euros had his numbers reached a best-case scenario, SAP reported. Shares of SAP gained 26 percent last year, making it the ninth-best performer in the DAX, according to Bloomberg data.

SAP earlier today proposed a quarterly dividend of 1.15 euros a share, in line with average analyst estimates.

In addition to his bonus, McDermott was paid 1.15 million euros in salary, the same as the prior year. He also got 1.26 million euros in additional compensation including insurance, dual household maintenance expenses and use of company planes; and 4.13 million euros in long-term stock compensation.

At SAP rival Oracle Corp., co-CEOs Mark Hurd and Safra Catz earned $56.9 million each in fiscal 2015.

SAP Chief Financial Officer Luka Mucic and board member for technology Bernd Leukert each earned 3.85 million euros in total pay last year.

The company ended the year with 76,986 employees, compared with 74,406 at the end of 2014. The company last year cut more than 2,000 jobs, following a similar reduction in 2014.

SAP, which makes business software applications and databases that run companies’ finance, manufacturing and human resources systems, has been using acquisitions to increase its share of fast-growing cloud-computing market for software delivered as a rented service. It’s also outpacing competitors including Oracle Corp. and IBM in software licenses customers install on their own computers.

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