SAP America named Christopher Larsen as president and Eric Rubino as chief operating officer of the subsidiary. Larsen replaces former president Jeremy Coote, who left his position at SAP in March to join front office market leader Siebel Systems. In the past, current SAP America chief executive Kevin McKay held the role of chief operations officer.
Both Larsen and Rubino have been at SAP America for most of the decade. The company said that both executives were instrumental in the development of mySAP.com, which allows customers to integrate applications with Internet services.
SAP, the largest business software maker, has struggled to boost its profits, which fell 64 percent in the third quarter partly because of lower licensing fees in the United States. As president, Larsen will be responsible for overseeing all field operations, including sales and consulting for all the industry business sectors. As chief operating officer, Rubino will be responsible for infrastructure and support services, which include customer support, strategic alliances, application hosting, legal counsel and contracts administration.
The company, based in Germany, also said it plans to issue a new stock option plan called the SAP 2000 Long Term Incentive Plan (LTI Plan). The plan will consist of two key programs--stock options and convertible bonds--that are competitive in the U.S. marketplace and are in compliance with the German legislation on corporate regulatory issues. The participants of the new plan include members of the SAP executive board, members of the executive boards of SAP's affiliates, and selected senior managers and top performers of SAP, the company said.
While it has not been common practice among European companies to grant stock options to employees due to certain regulatory issues, it also hasn't been altogether illegal, said analysts. Some of the regulatory laws have changed in recent years and aren't as stringent.
In recent months, SAP has seen top management leave the company to join United States-based technology companies, which are known to offer hefty stock options to executive employees. Last month, SAP said it is in a lawsuit against Siebel, alleging it unfairly hired 27 key SAP employees in an attempt to "injure SAP's business."
Paul Wahl, the former head of SAP America who left the company to join a start-up, ended up joining his former colleague, Coote, in May to work for Siebel. The lawsuit also included a list of executives and managers who were hired away from SAP during the past year, including the company's senior vice president of Latin American sales, the senior vice president for New Dimension products, the vice president for corporate communications, and a host of others from the sales, products and technology units.
Jim Shepherd, an industry analyst at Boston-based AMR Research, said SAP's plans to offer any type of stock option program at a time when recruiting competition is escalating is a necessary one.
"The fact is that a very large number of their employees are U.S.-based, and if you are a U.S.-based high tech firm it's hard to compete without having stock options as a competitive weapon," said Shepherd. "It's going to be increasingly important worldwide in order to attract and retain employees. SAP can't afford to be at a disadvantage [when it comes to recruitment]."
Included as the second program of the LTI plan is the issuance of convertible bonds, which can be converted to SAP shares within a defined period, the company said. The total number of SAP shares underlying the stock options and convertible bonds to be issued to participants by the company may not exceed 6.25 million.
The LTI plan requires approval from shareholders, the company said. SAP said it will hold a meeting in Mannheim, Germany, on Jan. 18 to finalize plans.