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SAP shareholders OK new stock plan to keep execs

The German software giant plans to make 6 percent of its capital available for the new program, which is an effort to ebb the flow of executive to competing firms.

Kim Girard
Kim Girard has written about business and technology for more than a decade, as an editor at CNET News.com, senior writer at Business 2.0 magazine and online writer at Red Herring. As a freelancer, she's written for publications including Fast Company, CIO and Berkeley's Haas School of Business. She also assisted Business Week's Peter Burrows with his 2003 book Backfire, which covered the travails of controversial Hewlett-Packard CEO Carly Fiorina. An avid cook, she's blogged about the joy of cheap wine and thinks about food most days in ways some find obsessive.
Kim Girard
2 min read
German software giant SAP's shareholders today approved a new stock program intended to provide its top executives American-style options.

The plan will make 6.25 million shares, or 6 percent of the company's capital, available to about 120,000 "top performers" and high-level executives, SAP said. A four-year vesting period is planned.

Shareholders approved SAP's stock plan changes by a 99 percent majority vote today at a general meeting held in Mannheim, Germany. The new program, previously reported by CNET News.com, will go into effect during the first quarter of the year, SAP said.

The stock issue has been a long-standing disadvantage for SAP, contributing to both hiring and retention problems within the German company's American headquarters in Philadelphia. More than 50 executives have left the company's American division in recent months, lured by SAP's U.S.-based rivals, start-ups and other firms that can offer lucrative stock packages.

Just last week, John Milana, chief financial officer at SAP America, resigned, joining a list of senior executives who have left the company over the past year, including former SAP America president Jeremy Coote. SAP is also now suing 27 ex-employees who left the company for rival Siebel Systems, claiming Siebel attempted to "injure SAP's business."

Over the past several years, SAP, under a program called Star, had awarded its top executives bonuses based on the company's stock performance. But for many, the bonuses were not enough. Today's vote is a coup for SAP, as it has not been common practice among European companies to grant stock options to employees due to certain regulatory issues.

The new option and convertible bond program, called the SAP AG 2000 Long-term Incentive Plan, will be launched alongside the Star bonus plan "to attract, retain and motivate senior managers and top performers," SAP said in a statement.