Governance Information • Feb 21, 2023
Governance Information
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Sound corporate governance is a basic tenet of responsible management at SAP. As a global company with an international shareholder base, we attach particular importance to managing and controlling the Company accountably and transparently to secure long-term value. We believe that our shareholders, business partners, employees, and the financial markets reward good corporate governance with the increased trust they place in our Company. This Statement presents the basic facts of corporate governance at the SAP Group in accordance with the German Commercial Code, section 315d in connection with section 289f, and the German Corporate Governance Code (GCGC, or "Code").
SAP is an international software firm with European roots, having the legal form of a European company (Societas Europaea, or SE). Being an SE headquartered in Walldorf, Germany, we are subject to European and German law for SEs in addition to German stock corporation law. SAP SE maintains a two-tier governance structure comprised of an Executive Board which manages the Company, and a Supervisory Board which advises and monitors the Executive Board. In addition, the principle of parity for workforce representatives applies to the Supervisory Board. This principle is stipulated in the SAP SE Employee Involvement Agreement, which governs the participation of SAP's European employees in the corporate governance of SAP SE. The SAP SE Employee Involvement Agreement is published on SAP's Web site at https://www.sap.com/investors/en/governance.html.
Because SAP SE is listed on a German stock exchange, our corporate governance is based not only on the applicable laws and our articles of incorporation which are published on SAP's Web site at https://www.sap.com/investors/en/governance.html, but also on the Code.
Since SAP is also listed in the United States, we are also subject to the rules that apply to non-U.S. companies listed on the New York Stock Exchange (NYSE). These include the requirements, as they apply to foreign private issuers, of the NYSE Corporate Governance Standards, the U.S. Sarbanes-Oxley Act of 2002, and the U.S. Securities and Exchange Commission (SEC). Besides implementing the requirements of the Sarbanes-Oxley Act, section 404, and other Sarbanes-Oxley Act requirements, including conducting an annual audit of our internal control over financial reporting, we comply with the corporate governance standards of the NYSE Listed Company Manual, section 303A, which bind foreign private issuers. The section 303A standards that apply to SAP include the requirement to have an audit committee composed of members who are independent, subject to applicable home country exemptions.
It is a requirement of the German Stock Corporation Act, section 161, that the executive board and supervisory board of a European Company (Societas Europaea, SE) listed in Germany issue not less frequently than annually a declaration stating the extent to which their company has followed and intends in the future to follow the recommendations in the Code. The Executive Board and Supervisory Board of SAP SE published the following declaration of compliance in October 2022.
Pursuant to section 161 of the German Stock Corporation Act, the Executive Board and the Supervisory Board of SAP SE (SAP) declare as follows:
Since the last declaration of conformity of October 2021, SAP has complied with the recommendations set out in the German Corporate Governance Code (the "Code") as amended on December 16, 2019 (published in the Federal Gazette (Bundesanzeiger) on March 20, 2020) with the below exception.
In the future, SAP will comply with the recommendations set out in the Code as amended on April 28, 2022 (published in the Federal Gazette (Bundesanzeiger) on June 27, 2022), with the following exception:
The service contracts for Executive Board members and the remuneration system in place for the Executive Board of SAP provide that in the event of a premature termination of the service contract for Executive Board members due to a change of control (as defined in the service contract for Executive Board members) the tranches already granted under the SAP Long-Term Incentive Program 2020 (LTI 2020) will be disbursed without undue delay. The disbursement will be made pro rata temporis in the proportion which the actual term that was shortened due to the change of control bears to the four-year-term of a tranche plus 50% of the portion which would be forfeited if pro rata temporis aspects alone were considered. In view of the above, we declare, by way of precaution, nonconformity with the recommendation set out in section G.12 GCGC. The reason for the provision described above is that a change of control regularly entails changes within a company that let it appear unjustified to make the disbursement amount from long-term variable remuneration components dependent on the performance of the company and its share price after the change of control. In addition, SAP is convinced that the intended linkage of the remuneration to sustainable and long-term development is not lost due to this provision since the Executive Board members, during their term of service, cannot expect a change of control to later occur.
Walldorf, October 2022
Christian Klein Luka Mucic
For the Executive Board For the Executive Board
For the Supervisory Board
Prof. Dr. h. c. Hasso Plattner
The Executive Board, which has seven members at the time of issuance of this Corporate Governance Statement, bears sole responsibility for the management of the Company. It has a duty to exercise its management powers in the interest of the Company and in pursuit of the sustained growth of corporate value. It closely cooperates with the Supervisory Board for the benefit of the Company and is responsible for developing SAP's strategy in close consultation with the Supervisory Board, and for implementing it. In addition, the Executive Board ensures compliance throughout the Group with the requirements of the law, the articles of incorporation and our internal global policies, and maintains an adequate and effective internal control system and risk management system, which also comprise a compliance management system geared to the Company's risk situation.
The members of the Executive Board are appointed and removed by the Supervisory Board. In accordance with the recommendation in the Code, the SAP Supervisory Board limits the first term of office of Executive Board members to three years. In addition, the Supervisory Board decided to likewise limit the term of office of reappointments to three years in general. SAP SE's articles of incorporation require that the Executive Board have at least two members. The Supervisory Board may determine a higher number of members of the Executive Board and approves the Executive Board's election of the chief executive officer(s) (CEO(s)).
Information about the current composition of the Executive Board of SAP SE and the allocation of portfolios of responsibility is available on SAP's Web site at
https://www.sap.com/investors/en/governance/executive-board.html as well as in SAP's Integrated Report for the relevant fiscal year. On SAP's Web site, we also publish, inter alia, biographies of the Executive Board members, information about their task-specific qualifications, as well as when their current terms of office will expire.
Information about memberships of the Executive Board members on supervisory boards and comparable supervisory bodies outside the SAP Group is available on SAP's Web site at https://www.sap.com/investors/en/governance/executive-board.html. The Executive Board members assume any side activities, especially Group-external supervisory board mandates, only with the consent of the SAP Supervisory Board's Personnel and Governance Committee. In accordance with the recommendation of the Code, no Executive Board member has more than two mandates in supervisory boards or comparable supervisory bodies in Group-external publicly listed companies or chairs the supervisory board of a Group-external publicly listed company. Furthermore, the SAP Supervisory Board's stipulation is also complied with, pursuant to which no member of the Executive Board may assume more than one mandate in a supervisory board or comparable supervisory body in a Group-external publicly listed company.
When appointing Executive Board members, the Supervisory Board strives for the best possible composition for the Company that is diverse in nature and mutually complementary. Key criteria for selecting suitable candidates for the long-term succession planning are professional and personal skills for the allocable area of responsibility, as well as leadership skills, previous achievements, and industry knowledge. In connection with the long-term succession planning, the Supervisory Board
regularly deals with highly qualified executives who serve as potential candidates for Executive Board positions. The Company developed a comprehensive talent program to promote particularly qualified executives, based on which the Supervisory Board screens candidates for the long-term succession planning.
Furthermore, the Supervisory Board places great value on diversity in the composition of the Executive Board, particularly with regard to gender, educational and professional background, nationality, and age. The Supervisory Board especially aims for an appropriate representation of women on the Executive Board. In this connection, the Executive Board of SAP SE is required by law to include at least one woman and at least one man if it consists of more than three persons. In addition, the Supervisory Board has set the target that the SAP SE Executive Board must comprise as a rule at least two women and two men. The statutory quota, as well as the more ambitious target set by the Supervisory Board, are both met, with the current Executive Board comprising two female Executive Board members.
To foster diversity in the composition of the Executive Board, the Supervisory Board also adopted a Diversity Policy (Diversitätskonzept) which provides that, in relation to its composition, the aspects of gender, educational and professional background, internationality, and age be taken into account in the following manner:
The Diversity Policy for the Executive Board is implemented by the Supervisory Board's and the General and Compensation Committee's appropriately taking into account the aspects set forth in the Diversity Policy when recruiting and selecting suitable candidates for membership in the Executive Board.
In fiscal year 2022, the Diversity Policy was applied in connection with the appointment of Executive Board member Dominik Asam effective March 7, 2023. He is qualified to lead the Board area Finance and Administration by virtue of his distinguished professional expertise and the management roles previously held by him at other globally operating companies, including Airbus, Infineon Technologies, RWE, and Siemens. Moreover, given his many years of professional experience and standing, his
appointment contributes towards a well-balanced age structure of the Executive Board. In addition, his appointment enhances the Executive Board's international composition, since he has international experience due to his professional activities in France for the German and French Airbus Group.
Without prejudice to the overall responsibility of the Executive Board, the individual members have sole responsibility for managing the respective portfolios assigned to them. The individual Executive Board members have portfolios of responsibilities reflecting the rules of procedure and the schedule of portfolios unanimously adopted by the Executive Board in accordance with the articles of incorporation and which are subject to Supervisory Board approval. The Executive Board's rules of procedure are published on SAP's Web site at https://www.sap.com/investors/en/governance.html.
Regardless of their individual portfolio responsibilities, all members of the Executive Board remain fully informed at all times about developments critical to the progress of the Company's business, so that they are always in a position to avert impending harm and implement desirable improvements or expedient changes, for example by convening a meeting of the Executive Board or by informing the CEO.
All decisions of material or fundamental significance are to be made by the full Executive Board. The same applies to all other matters for which the full Executive Board is collectively responsible pursuant to binding provisions of the law, our articles of incorporation, or the Executive Board's rules of procedure. The Executive Board's rules of procedure list categories of decisions that can only be taken by the full Executive Board. These particularly include those transactions requiring the Supervisory Board's approval under the Company's articles of incorporation or under the list of transactions requiring consent determined by the Supervisory Board. The Executive Board's rules of procedure and schedule of portfolios describe Executive Board collaboration in more detail.
Executive Board decisions are generally made at the regular meetings. The Executive Board's rules of procedure provide that a meeting must take place at least once every quarter at which members attend in person and which should deliberate chiefly on matters of strategy. Dates and agendas for Executive Board meetings are set by the CEO. An Executive Board meeting is competent to make decisions only if all members have been invited and at least half of the members participate in the resolution. Executive Board resolutions are made with a simple majority of the votes cast unless provided otherwise in the law or the articles of incorporation of SAP SE.
Pursuant to the Executive Board's rules of procedure, the CEO represents the Company vis-à-vis third parties. Furthermore, the CEO reconciles issues relating to the Executive Board members' portfolios with the Company's overall goals and plans. The CEO also represents the Executive Board in dealings with the Supervisory Board. He or she must obtain the Supervisory Board's consent in cases where the law, the articles of incorporation, or a resolution of the Supervisory Board so require, and regularly provides to the Supervisory Board full and timely reports on strategy (including the sustainability strategy) and the status of its implementation, business planning, profitability, and all aspects of business performance which are material for the SAP Group, including any deviations of actual business performance from plan, as well as on current risks, risk management, and corporate compliance. In doing so, the CEO describes and explains in detail any deviations of business performance from previously established plans and targets.
Each member of the Executive Board must disclose every conflict of interest to the Supervisory Board's chairperson and the CEO without delay and must inform the other members that he or she has done
so. Depending on the nature, duration, and severity of an emerging conflict of interest, the affected Executive Board member will abstain from voting in a related casting of votes, or not participate in a related discussion in the Executive Board, and responsibility for the related topic will be shared with, or shifted to, other Executive Board members.
Furthermore, material transactions between the Company and members of the Executive Board or persons closely associated with them require the approval of the General and Compensation Committee of the Supervisory Board. Material transactions between SAP and members of the Executive Board as well as their related parties are disclosed in SAP's Integrated Report for the relevant fiscal year.
As a global company, SAP is exposed to a broad range of risks across our business operations. Consequently, our Executive Board has established comprehensive structures of an internal control system and risk management system, as well as the internal monitoring of these systems, that enable it to identify and analyze risks early and take appropriate action. Our risk management and internal control systems are designed to identify potential events that could negatively impact the Company, and also include a compliance management system geared to the Company's risk situation (see the next paragraph for more details). They are also intended to provide sufficient assurance regarding the operating effectiveness of our internal controls over our financial reporting, including our non-financial reporting. For more information about our internal control system and risk management system, see SAP's Integrated Report for the relevant fiscal year.
SAP's top priority is to comply with the requirements of the law. That applies not only to the management of the Company by the Executive Board of SAP SE, but also to management activity at all other levels in our Group. The Executive Board introduced the SAP Global Code of Ethics and Business Conduct for Employees (CoEBC) to bring home to our employees the importance of meeting this expectation. The rules set by SAP in the CoEBC are binding on the Executive Board and all employees in every country and represent the standard for all of our dealings involving customers, partners, competitors, and vendors. Its rules are observed by members of the Supervisory Board wherever applicable.
The binding rules in the SAP CoEBC are designed to ensure that all employees stay within the law and act ethically in everything they do for SAP. The rules include, for example, precise instructions on complying with competition law and corruption law, on confidentiality, on conflicts of interest, and on the misuse of inside information. International differences in culture, language, and legal and social systems precluded the adoption of a uniform code of conduct across the entire SAP Group. Instead, SAP framed Group-wide minimum standards in a master code and required each individual company to adopt a similar code of its own. These individual codes of conduct must at least reflect the master SAP code, but they may contain additional rules, and their rules may be more stringent.
The code of conduct for SAP SE, the parent company, is published on the SAP Web site at https://www.sap.com/corporate-en/investors/governance. SAP's Office of Ethics and Compliance (OEC) monitors compliance with the CoEBC and other internal Company policies at all SAP locations worldwide. It regularly reviews these internal policies, revises them if necessary, and delivers compliance training courses for employees in a systematic manner, including determining the main focus areas of the training, defining target groups for the relevant topics, and identifying the employees concerned.
SAP expressly encourages employees to openly address any cases of doubt or suspicion of incorrect behavior in the business environment and to seek help or guidance in this regard. All employees are informed about whom to turn to in such cases. For this purpose, SAP implemented a global
whistleblowing system – Speak Out at SAP – which also allows anonymous reports. SAP employees as well as third parties can report potential compliance incidents through this reporting channel in writing or by telephone. Employees can also report potential incidents to their managers, the local compliance officers, or the OEC.
For more information about our compliance management system, see SAP's Integrated Report for the relevant fiscal year.
Sustainability is a governing principle of, and firmly embedded in, our corporate strategy which is implemented by the entire Executive Board. Non-financial targets are also firmly anchored in our business planning and the compensation system for the Executive Board. The Executive Board's corporate governance therefore is aimed to reach financial as well as non-financial targets by using two key levers:
As the non-financial targets are of great strategic significance for the development and sale of SAP's products as well as for SAP's internal business processes, the sponsorship for sustainability on the Executive Board changed from the Chief Financial Officer to the Chief Executive Officer in 2022. SAP's chief sustainability officer (CSO) reports to the chief strategy officer, who in turn reports to the CEO. The CSO chairs the Sustainability Council which consists of senior executives from across the SAP group and provides strategic guidance on, and cross-company engagement for, SAP's holistic sustainability agenda.
In the Integrated Report, SAP focuses on the economic, social, and environmental topics which SAP has identified as material for itself. For more information about the materiality analysis, our dialogue about these topics with stakeholders, our sustainability management, and other fundamentals of our non-financial reporting, see the section "Further Information on Economic, Environmental and Social Performance" in SAP's Integrated Report. The non-financial topics which SAP focuses on include in particular information security and data protection, ethical business conduct and compliance (see the preceding section for further information on this topic), fairness and inclusion at the workplace, health and safety at work, climate change and air quality, corporate governance, talent development, as well as employee engagement.
Within the framework of the personnel strategy, we have developed global policies applicable across the entire SAP Group to meet the non-financial targets relating to employees, including diversity. In particular, when filling executive positions within the Company, the Executive Board takes diversity into account and particularly aims for women to be appropriately represented. The targets for the quota of women at the two management levels below the Executive Board by June 30, 2027, have been set to 30% at the first management level and 25% at the second management level. Assuming that, by June 30, 2027, the first management level will comprise in total 30 persons, and the second management level 196 persons, these targets correspond to a quota of nine women at the first management level and 49 women at the second management level.
In addition to the above, SAP has voluntarily set itself a target of increasing the overall percentage of management positions held globally by women to 30% by the end of 2023. On December 31, 2022, this share stood at approximately 29.4%.
The compensation system for the Executive Board members complies with legal provisions and the recommendations of the Code. The same is true for SAP's manner of reporting on the Executive Board's compensation. The compensation system for the members of the Executive Board was
presented to SAP SE's Annual General Meeting of Shareholders for approval most recently on May 20, 2020, and accepted by 78.42% of the valid votes cast. The compensation system for the Executive Board members as well as the resolution of the Annual General Meeting of Shareholders on its approval are contained in the invitation to SAP SE's Annual General Meeting of Shareholders held on May 20, 2020, which is published on SAP's Web site at
https://www.sap.com/investors/en/calendar/agm.html. The compensation system is also described in a separate document available on SAP's Web site at https://www.sap.com/investors/en/governance.html.
SAP reports on the Executive Board members' compensation during the preceding fiscal year in the Compensation Report, which – together with the auditor's opinion – is publicly available on SAP's Web site at https://www.sap.com/investors/en/governance.html.
The Executive Board members are obliged to inform the public about any transactions carried out by them or by persons closely associated with them involving SAP shares or other securities issued by SAP SE. Information about such transactions is publicly available on SAP's Web site at https://www.sap.com/investors/en/governance/managers-transactions.html.
The size and composition of the Supervisory Board are governed by the articles of incorporation and by the SAP SE Employee Involvement Agreement. Both of these documents are published on SAP's Web site at https://www.sap.com/investors/en/governance.html. The Supervisory Board of SAP SE currently has 18 members comprising equal numbers of representatives of the shareholders and the employees. According to the articles of incorporation, both the shareholders' representatives and the employees' representatives are elected or appointed for a term of up to five years. In addition, the Supervisory Board has voluntarily set the maximum time period for a term of office of shareholders' representatives to four years. Reappointments are permissible.
Information about the members of the Supervisory Board is published on SAP's Web site at https://www.sap.com/investors/en/governance/supervisory-board.html as well as in the SAP Integrated Report for the relevant fiscal year. There you will also find information about the memberships of Supervisory Board members in other supervisory boards and comparable supervisory bodies. On SAP's Web site, we also publish biographies of the Supervisory Board members, as well as information regarding their professions, length of service on the Supervisory Board of SAP SE, and the expiry of their current term of office.
Based on the recommendations in the Code, the Supervisory Board has defined the following objectives for its own composition as a general guideline, from which it may deviate in individual circumstances while providing the underlying rationale:
– Length of service on the Supervisory Board should generally be limited to a period of 12 years.
When preparing its proposals to the Annual General Meeting of Shareholders for the election to the Supervisory Board, the Supervisory Board takes into account the objectives it has set for its own composition as described above. It believes that, as a whole, it fulfills all of these objectives:
The three Supervisory Board members Aicha Evans, Jennifer Li, and Qi Lu have international experience due to their non-German origin as well as their professional activities outside of Germany. Furthermore, Dr. Gunnar Wiedenfels also has international experience due to his professional activity as Chief Financial Officer of Warner Bros. Discovery, Inc., New York, United States. As such, the Supervisory Board has met its own target of having at least three members on the shareholder representatives' side with international experience due to their origin or occupation.
Pursuant to the objectives the Supervisory Board has set for its own composition, no Supervisory Board member is an employee, consultant, or director of an SAP competitor.
The regular age limit of 75 years set by the Supervisory Board is met, except in the case of the Supervisory Board's chair.
The objective to generally limit length of service to 12 years, which the Supervisory Board introduced in October 2021, is met as well, except in the case of Hasso Plattner, as he has served on the Supervisory Board already since 2003.
The Supervisory Board determines once a year whether it has an appropriate number of independent members. Such determination was made most recently by the Supervisory Board at its meeting on October 27, 2022. It concluded there that all of its shareholder representative members serving on the Supervisory Board in fiscal year 2022 (that is, Hasso Plattner, Aicha Evans, Gesche Joost, Jennifer Li, Bernard Liautaud (until his resignation as of the close of the General Meeting of Shareholders in 2022), Qi Lu, Gerhard Oswald, Friederike Rotsch, Rouven Westphal, and Gunnar Wiedenfels), and thus more than half of the shareholders' representatives in accordance with the Code, are or were independent in the meaning of the Code during their service on the Supervisory Board in fiscal year 2022. Thus, the Supervisory Board at the same time meets its objective of at least five independent shareholders' representatives, as well as the recommendation of the Code that the chairpersons of the Supervisory Board, the Audit and Compliance Committee, and the committee in charge of the executive board members' compensation be independent from the company and its executive board.
Furthermore, at the above-mentioned meeting, the shareholder representative members determined that, in their assessment and also taking SAP SE's ownership structure into account, five shareholder representative members (and thus more than half of them) constitute a suitable number of independent members among the shareholders' representatives. At the same time, they determined that, also taking into account the ownership structure of SAP SE, the Supervisory Board's shareholder representative side comprises an appropriate number of independent members in the meaning of the Code.
The independence assessment of the Supervisory Board's shareholder representative side was based on the standards and criteria of independence of the Code. The shareholder representatives' personal and business dealings with the Company and the Executive Board were assessed, which did not result in any evidence for a lack of independence.
Hasso Plattner has served on the Supervisory Board of SAP SE for more than 12 years. As such, his tenure exceeds the length of service on the Supervisory Board specified in the Code as an indicator for a lack of independence. This was also the case with Bernard Liautaud until his resignation from the Supervisory Board in May 2022. Nonetheless, the shareholder representatives came to the conclusion that the above-mentioned members continue to be independent (in the case of Bernard Liautaud, until his resignation in May 2022), for the following reasons:
– Hasso Plattner and Bernard Liautaud are not financially dependent on their membership of the Supervisory Board of SAP SE.
In case the chairperson is not considered as independent pursuant to the guidelines of major proxy advisors and/or large institutional investors, the Supervisory Board of SAP SE may appoint a lead independent director (LID) from among its members who fulfill such independence criteria. The LID shall, as a rule, be a member of the Audit and Compliance Committee, the Personnel and Governance Committee, and the Nomination Committee. In addition, he or she has the right to participate as a guest in the meetings of the other committees of the Supervisory Board. The LID also has the right to convene meetings of the Supervisory Board, put items on the agenda of Supervisory Board meetings, and address matters relating to environmental, social, and governance topics. The LID shall ensure that the interests of investors and other stakeholders are taken into account by the Supervisory Board, and be available for discussions with shareholders and other stakeholders regarding all topics that fall in the responsibility of the Supervisory Board. For more information, see the Supervisory Board's Rules of Procedure, which are published on SAP's Web site at
Hasso Plattner is not considered as independent pursuant to the guidelines of major proxy advisors and large institutional investors due to his long tenure on the SAP Supervisory Board. For this reason, the Supervisory Board appointed Friederike Rotsch as LID in fiscal year 2022, as she meets such independence criteria. She also chairs the Personnel and Governance Committee and is a member of the Nomination Committee and the Audit and Compliance Committee. For more information about the LID's activities in fiscal year 2022, see the Supervisory Board's report which is included in SAP's Integrated Report for 2022.
Furthermore, the Supervisory Board adopted a Profile of Skills and Expertise (Kompetenzprofil), which is available on the SAP Web site at https://www.sap.com/investors/en/governance/supervisoryboard.html. This profile comprises the general personal requirements applicable to each Supervisory Board member as well as the Company-specific and professional requirements to be fulfilled by the Supervisory Board as a whole in order to properly perform its duties in our capital-markets oriented, globally active IT company. This means that the Company-specific and professional requirements stated in the Profile of Skills and Expertise do not have to be met by each member of the Supervisory Board individually, but that it is sufficient if the knowledge, skills, and professional experience contributed by each of the Supervisory Board members combine to cover the totality of the Companyspecific and professional requirements stated in the Profile of Skills and Expertise.
These requirements include, among others, experience and expertise in research and development in the software and IT sector, knowledge of structured innovation processes, substantial experience in the software and IT sector in both development and sales, knowledge of international markets, customers
and competitors, product expertise, and consumer market experience. The Supervisory Board as a whole should also have experience and expertise in accounting and auditing, including sustainability reporting and auditing, business planning, corporate finance and capital markets, business processes and business process optimization, business strategy development and implementation, change management and M&A processes, international personnel planning and management (particularly in the area of executives), supervisory and committee work, management of large organizations, Company-internal organization and processes, corporate governance, and crisis management, as well as sustainable management, environmental, social and governance matters (ESG), and corporate social responsibility (CSR).
When preparing its proposals to the General Meeting of Shareholders for the election to the Supervisory Board, the Supervisory Board not only takes into account the objectives described in the preceding section which it has set for its own composition, but it also aims at fulfilling the Profile of Skills and Expertise for the entire body. The Supervisory Board of SAP SE believes that, as a whole, it fulfills all of the requirements in the Profile of Skills and Expertise: The Supervisory Board members as a group possess the knowledge, ability, and expert experience required to properly perform their duties. Not only are they familiar in their entirety with the IT sector, they also have extensive knowledge in various professional areas and many years of international experience, and thus bring a broad range of skills and experience to their Supervisory Board roles.
The Supervisory Board's assessment of the status of implementation of the Profile of Skills and Expertise by its members is summarized in a qualification matrix which was resolved by the Supervisory Board and is attached to this Corporate Governance Statement as an appendix.
Pursuant to the German Stock Corporation Act, at least one member of the supervisory board must have expertise in the area of accounting, and at least one additional member of the supervisory board must have expertise in the area of auditing. Pursuant to the Code, expertise in the area of accounting means distinct knowledge of and experience in applying accounting principles and internal control and risk management systems, and expertise in the area of auditing means distinct knowledge of and experience in auditing. In addition, pursuant to the Code, accounting and auditing also include sustainability reporting and auditing. Furthermore, according to the Code, the chairperson of the audit committee should have such expertise in at least one of the two areas. Pursuant to the Code, the audit committee chair should also be independent from the company and its executive board as well as a controlling shareholder. In addition, the audit committee chair should not at the same time chair the entire supervisory board. Furthermore, due to SAP's stock exchange listing in the United States, SAP must also meet the requirements of the Sarbanes-Oxley Act, according to which the audit committee must comprise at least one financial expert (Audit Committee Financial Expert).
These requirements are met, because with Jennifer Li and Gunnar Wiedenfels, the chairperson and one additional member of the Audit and Compliance Committee have proven expertise in the areas of accounting and auditing, including sustainability reporting and auditing. Jennifer Li's expertise is based on her previous activity as long-standing CFO of Baidu Inc., a company listed on NASDAQ, as well as her various positions held within the global finance organization of the U.S. company General Motors, including the position of CFO of General Motors China. In addition, she has ample experience as a current and previous member of boards of directors of various publicly listed companies worldwide. In all of these positions, she has assumed responsibility for the accounting and auditing of the companies concerned, be it in a management role or a controlling role as non-executive member of the relevant board of directors. Through her current mandate on the board of directors of the Swiss listed company ABB and her previous activity on the board of directors of the U.S.-listed company Flex Ltd., she has gathered experience with these companies' sustainability reporting and auditing. The expertise of Gunnar Wiedenfels is based on his activity as CFO of Warner Bros. Discovery, Inc., a U.S.-listed
company, as well as his previous activity as CFO of ProSiebenSat.1 Media SE, a publicly listed former DAX company, and, prior to that, his various positions held in the finance organization of ProSiebenSat.1 Media. In all of these positions, he has assumed responsibility for the accounting of the companies concerned and was involved in their audits. Furthermore, he is thoroughly acquainted with the accounting and auditing of SAP in his capacity as member and former chair of the Audit and Compliance Committee of the SAP Supervisory Board. Both this mandate, and his activity as CFO of Warner Bros. Discovery, Inc., have allowed him to build expertise in the area of sustainability accounting and reporting as well, given that he supervises the non-financial reporting and auditing of SAP, and that, in his role as CFO, he is responsible for and presents the sustainability reporting of Warner Bros. Discovery, Inc. during the audit by the board of directors and the external auditor.
As set out above in the section "Objectives for Composition and Independence of Shareholder Representatives,", the chairperson of the Audit and Compliance Committee, Jennifer Li, is independent in the meaning of the Code and does not at the same time chair the entire Supervisory Board. Furthermore, due to her distinct professional experience described above, she also qualifies as an independent financial expert (Audit Committee Financial Expert) in the meaning of the Sarbanes-Oxley Act. In addition, Gunnar Wiedenfels, who is also a member of the Audit and Compliance Committee, fulfills these requirements as well.
The Supervisory Board places great value on diversity with regard to its composition and aims for women to be appropriately represented.
The Supervisory Board of SAP SE is subject to a statutory minimum quota of 30% for female and male representatives. In fiscal year 2022, the 18-member Supervisory Board comprised eight women from January 1 until the end of the Annual General Meeting of Shareholders on May 18, 2022. Following the election by the 2022 Annual General Meeting of Shareholders of Jennifer Li as successor to Bernard Liautaud, the quota of women on the Supervisory Board stood at nine out of 18 members from the end of the 2022 Annual General Meeting of Shareholders on May 18, 2022, until year end 2022. Thus, the percentage of women on the Supervisory Board met the minimum quota of 30% during the entire fiscal year 2022, and with 50% as of the close of the 2022 Annual General Meeting of Shareholders, even exceeded it significantly.
To foster diversity, the Supervisory Board further adopted a Diversity Policy (Diversitätskonzept) which provides that, in relation to its composition, the aspects of gender, educational and professional background, internationality, and age be taken into account in the following manner:
shareholders' representatives. Similarly, age-related targets for the employee representatives cannot be implemented, either, as these representatives are elected by the employees.
The Diversity Policy for the Supervisory Board is implemented by the Nomination Committee's appropriately taking into account the aspects set forth in the Diversity Policy when recruiting and selecting suitable shareholders' representatives. As the election of the employee representatives by the European employees is solely governed by the SAP SE Employee Involvement Agreement, the Diversity Policy is not applicable in this respect.
In fiscal year 2022, the requirements of the Diversity Policy were taken into account in connection with the elections of Jennifer Li, Gunnar Wiedenfels, and Rouven Westphal by the General Meeting of Shareholders. In particular, Jennifer Li fulfills the requirements of the Profile of Skills and Expertise with respect to educational and professional background, as she has distinct expertise in the areas of accounting and auditing as well as sustainability reporting and auditing, as described above in the "Financial Expertise" section. Furthermore, she has gathered ample experience in the areas of company strategy as well as supervision, monitoring, and corporate governance by virtue of her current and previous activities as member of the boards of directors of various publicly listed companies worldwide. In addition, as former CFO of Baidu, a technology company, and CEO of Baidu Capital, the IT venture capital arm of Baidu, as well as through her many years of investment activity in technology ventures, she has gathered knowledge and experience in the area of innovation, research and development in IT technology, as well as expertise in the areas of company strategy, supervision, monitoring, and corporate governance. She also meets the Diversity Policy criterion of international origin and experience. Rouven Westphal, with his experience as a business consultant and co-founder of technology start-ups, as well as his many years of investment activity as a member of the executive board of the Hasso Plattner Foundation and as managing director of Hasso Plattner's private investment office, also fulfills the requirements of the Profile of Skills and Expertise, as he has special expertise in the areas of software industry, finance and accounting, and company strategy. Gunnar Wiedenfels also fulfills the requirements of the Profile of Skills and Expertise, as he has distinct expertise in the areas of accounting and auditing as well as sustainability reporting and auditing, as described above in the "Financial Expertise" section. Through these activities as well as in his capacity as member and former chair of the Audit and Compliance Committee of the SAP Supervisory Board, he has also gathered wide experience in the areas of company strategy as well as supervision, monitoring, and corporate governance. Furthermore, the minimum quota of 30% women on the Supervisory Board, as prescribed by law and targeted by the Diversity Policy, continues to be met and, following the elections of Jennifer Li, Gunnar Wiedenfels, and Rouven Westphal as Supervisory Board members at the 2022 Annual General Meeting of Shareholders, is even exceeded at 50%.
The work of the Supervisory Board is governed by German and European as well as U.S. laws, the articles of incorporation of SAP SE, the Code, and the Supervisory Board's own rules of procedure which are published on SAP's Web site at https://www.sap.com/investors/en/governance.html.
The Supervisory Board of SAP SE appoints, advises, and monitors the Executive Board. It seeks regular, full and timely reports from the Executive Board on strategy and the status of its implementation, business planning, profitability, and all aspects of business performance which are material for the SAP Group, including any deviations of actual business performance from plan, as well as on current risks, risk management, and corporate compliance. Furthermore, it is entitled to inspect and examine all of the Company's books, writings, and assets at any time. The Executive Board involves the Supervisory Board in decisions on matters of fundamental importance for the Company. Accordingly, the Supervisory Board has reserved to itself the approval of certain types of transactions of fundamental importance, as set out in the articles of incorporation and detailed in the Supervisory Board's list of reserved categories of transactions. If the Executive Board intends to conduct such a
transaction, it has to obtain the Supervisory Board's prior consent. To this end, it has to inform the Supervisory Board in a comprehensive and timely manner about the intended measure. The Supervisory Board's decision is usually prepared by the competent committee. In certain cases, the Supervisory Board may also delegate the decision on the consent to the competent committee.
There are at least four ordinary meetings of the Supervisory Board each year, held at the Company's registered office or as otherwise determined in the invitation. Ordinary meetings deliberate on the forthcoming financial reports and other matters arising in connection with the business. Extraordinary meetings are convened when necessary to deliberate on unplanned or unexpected circumstances or transactions and to make decisions as appropriate.
Members of the Executive Board take part in the Supervisory Board meetings when requested by the Supervisory Board or its chairperson. However, as provided in the rules of procedure, the Supervisory Board also meets regularly without the members of the Executive Board, particularly when issues of Executive Board compensation or Executive Board succession planning are discussed. This correspondingly applies to meetings of the Supervisory Board's committees as well.
Ordinary resolutions of the Supervisory Board are adopted by a simple majority of votes cast; absent members can have a member in attendance submit their written votes. For more information about how the Supervisory Board works, see the rules of procedure for the Supervisory Board of SAP SE.
The Supervisory Board reports annually on the work it has done, the work its committees have done, and the work it has done in cooperation with the Executive Board in the preceding fiscal year. The Supervisory Board's report is included in the SAP Integrated Report of the relevant fiscal year.
With respect to training and professional development, the members of the Supervisory Board are adequately supported by the Company by appropriate information and education opportunities. This also includes training opportunities on sustainability topics. The training and development measures offered in past fiscal years are set out in the Report of the Supervisory Board for the respective fiscal year. Furthermore, numerous recordings of training units of previous years are made available to the Supervisory Board members on a dedicated platform. In addition, new Supervisory Board members are introduced to their office at the beginning of their term by way of on-boarding sessions and information leaflets.
Regularly every two to three years, the Supervisory Board conducts an investigation of the efficiency of its own work and that of its committees. It assesses the suitability of the Supervisory Board's processes for supervising the management of the Company effectively. The investigation is based on a survey of Supervisory Board members using electronic questionnaires that reflect current requirements of the law and the Code and contain questions addressing all aspects of the Supervisory Board's work. The Supervisory Board then discusses the results in a meeting and decides any necessary improvements. The self-assessment was last conducted in April 2021.
Each Supervisory Board member must disclose any conflict of interest to the Supervisory Board's chairperson without delay. Depending on the nature, duration, and severity of an emerging conflict of interest, the affected Supervisory Board member will abstain from voting in a related casting of votes, not participate in a related discussion in the Supervisory Board or a committee, or, as a last resort in case of a permanent severe conflict of interest which cannot be resolved otherwise, even resign from office. Information about conflicts of interest that emerged in the preceding fiscal year, as well as on how they were dealt with, is available in the Supervisory Board's Report which is published in the SAP Integrated Report for the relevant fiscal year. We report about material transactions between SAP and
members of the Supervisory Board, as well as persons closely associated with them, in SAP's Integrated Report for the relevant fiscal year.
In accordance with the Supervisory Board's rules of procedure and the recommendation in the Code, the Supervisory Board of SAP SE sets up committees to help it work more efficiently and deal with complex issues. The Supervisory Board currently has the following seven committees: the Personnel and Governance Committee, the Audit and Compliance Committee, the Finance and Investment Committee, the Technology and Strategy Committee, the Nomination Committee, the People and Culture Committee, and the Go-To-Market and Operations Committee. Information about the tasks of the committees is available on SAP's Web site at
https://www.sap.com/investors/en/governance/supervisory-board.html.
Generally, committee meetings are convened by the committee's chairperson. The Supervisory Board rules of procedure provide that committees adopt resolutions by a simple majority of votes cast. A committee can adopt a resolution only if two thirds of the members of the committee, and in any case not less than three of its members, participate in its adoption. The Supervisory Board rules of procedure relating to the conduct of meetings and the adoption of resolutions apply to the committees accordingly. In addition, the committees also have their own rules of procedure, which detail fields of responsibility and how committees report to the full Supervisory Board. The committees' chairpersons regularly report to the full Supervisory Board on the committees' work.
A comprehensive description of the committees' work during the preceding fiscal year is available in the Supervisory Board's Report which is published in the SAP Integrated Report of the relevant fiscal year.
Pursuant to the Supervisory Board's rules of procedure, a committee must have not fewer than three members. When selecting committee members, care is taken to ensure they have the required expertise in the relevant fields.
The committees are currently composed as follows:
For more information about the committees' current composition, see SAP's Web site at https://www.sap.com/investors/en/governance/supervisory-board.html.
The Supervisory Board and its committees also deliberate on environmental, social, and governance (ESG) matters. To this end, the Supervisory Board is regularly (at least once a year) briefed by the Executive Board about the SAP group's sustainability strategy and the state of its implementation, which also includes the group-wide climate protection measures. The entire Supervisory Board monitors the implementation of the sustainability strategy and advises the Executive Board in this regard.
In addition, the committees also handle specific ESG topics. In particular, the Technology and Strategy Committee and the Go-To-Market and Operations Committee deliberate on product- and customerrelated topics in connection with SAP's operational sustainability strategy and discuss product innovations in the area of sustainable corporate governance for SAP and its customers. In the People and Culture Committee, all personnel-related topics are discussed, including health and safety at work, talent development, employee engagement, as well as diversity and inclusion, the Personnel and Governance Committee covers all topics related to SAP's corporate governance, while the Audit and Compliance Committee addresses topics arising in connection with SAP's non-financial reporting and auditing. In addition, the Technology and Strategy Committee and the Audit and Compliance Committee deal with matters of IT security.
The Supervisory Board members' compensation is stipulated in the articles of incorporation of SAP SE which are published on SAP's Web site at https://www.sap.com/investors/en/governance.html. The Supervisory Board compensation was most recently changed by a resolution of SAP SE's Annual General Meeting of Shareholders on May 18, 2022. The compensation system for the Supervisory Board members as well as the resolution of the Annual General Meeting of Shareholders on its approval are contained in the invitation to SAP SE's Annual General Meeting of Shareholders held on May 18, 2022, which is published on SAP's Web site at
https://www.sap.com/investors/en/calendar/agm.html. The compensation system is also described in a separate document available on SAP's Web site at
https://www.sap.com/investors/en/governance.html.
SAP reports on the Supervisory Board members' compensation during the preceding fiscal year in the Compensation Report which – together with the auditor's opinion – is publicly available on SAP's Web site at https://www.sap.com/investors/en/governance.html.
The Supervisory Board members are obliged to inform the public about any transactions carried out by them or by persons closely associated with them involving SAP shares or other securities issued by SAP SE. Information about such transactions is publicly available on SAP's Web site at https://www.sap.com/investors/en/governance/managers-transactions.html.
SAP prepares the consolidated financial statements, the combined SAP SE and SAP Group management report, and the interim financial reports (i.e., half-year report and quarterly financial statements) in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, and as required by the German Commercial Code (HGB). The SAP SE annual financial statements relevant for the dividend payment are prepared in accordance with the requirements of the German Commercial Code (HGB). In addition, SAP prepares an annual report on form 20-F in accordance with the requirements of the U.S. Securities and Exchange Commission (SEC).
The consolidated financial statements and the combined management report, the SAP SE annual financial statements, as well as the annual report on form 20-F are publicly accessible on the Company's Web site within 90 days and the interim financial reports within 45 days of the end of the respective reporting period.
In addition, the Executive Board and the Supervisory Board of SAP SE prepare a Compensation Report pursuant to Section 162 of the German Stock Corporation Act about the Executive Board and the Supervisory Board members' compensation in the preceding fiscal year which – together with the auditor's opinion – is published on SAP's Web site at
https://www.sap.com/investors/en/governance.html.
The consolidated financial statements, the combined SAP SE and SAP Group management report, the SAP SE annual financial statements, and the Compensation Report are audited by an auditor in compliance with German Generally Accepted Standards on Auditing promulgated by the Institut der Wirtschaftsprüfer (IDW). Furthermore, the auditor is engaged to deliver an independent limited assurance of the SAP Group combined non-financial statement including the EU-Taxonomy disclosures as part of the management report, and selected information and figures concerning sustainability performance on the basis of the International Standard on Assurance Engagements (ISAE) 3000.
The Supervisory Board reviews the consolidated financial statements, the combined SAP SE and SAP Group management report, as well as the SAP SE annual financial statements, based on the preparatory report of the Audit and Compliance Committee. Furthermore, the Supervisory Board adopts the Compensation Report based on the preparatory review by the Audit and Compliance Committee. The interim financial reports are discussed by the Executive Board with the Audit and Compliance Committee of the Supervisory Board prior to their publication.
The Audit and Compliance Committee of the Supervisory Board discusses with the auditor the assessment of the audit risk, the audit strategy and planning, as well as the results of the audit. It monitors the audit and each year assesses the quality of the audit, including the performance of the auditor, based on objective indicators. In addition, it verifies the independence of the auditor and examines the additional services rendered by it. The Committee also prepares the Supervisory Board's proposal to the Annual General Meeting for the election of the auditor, makes a recommendation in this regard, engages the auditor, decides on the additional audit focus areas, and negotiates the audit fee with the auditor. During the audit, the chairperson of the Audit and Compliance Committee is in constant contact with the auditor, regularly consults with the auditor regarding the content and the progress of the audit, and reports to the Committee on these topics. The Audit and Compliance Committee consults with the auditor regularly also without the members of the Executive Board, which it has also provided for accordingly in its rules of procedure.
In accordance with the Audit and Compliance Committee's recommendation, the Supervisory Board makes a proposal to the Annual General Meeting of Shareholders concerning the auditor to elect for the current fiscal year. Before recommending candidates for election by the Annual General Meeting, the Audit and Compliance Committee obtains a declaration from the proposed auditor as to whether and which business, financial, personal, or other relationships exist between the auditor, its executive bodies, or lead auditors, and SAP or members of its executive bodies, that could give cause for concern about the auditor's impartiality. The declaration also describes the nature and volume of other services that were provided to SAP in the past fiscal year or have been contractually agreed for the year to come. We provide information on the fees paid to the auditors in the past financial year in the respective current Integrated Report.
At the SAP SE Annual General Meeting of Shareholders held on May 18, 2022, our shareholders elected KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin (KPMG) as SAP SE's and SAP Group's auditor for 2022.
KPMG has been the auditor of SAP's financial statements and consolidated financial statements since fiscal year 2002. It ensures, through an internal rotation procedure, that the audit activities are performed at proper arm's length to the Company. Bodo Rackwitz has signed as auditor responsible for the audit since fiscal year 2018.
Pursuant to the statutory requirements on auditor rotation, fiscal year 2023 is the last year we would have been allowed to engage KPMG with the audit. A selection process was therefore organized in accordance with article 16 of the EU Statutory Audit Regulation (Regulation (EU) No. 537/2014), which concluded at the beginning of 2021. In the interest of legal and planning certainty for both SAP and the future auditor and to thus ensure an adequate onboarding of the new auditor, BDO AG Wirtschaftsprüfungsgesellschaft, Hamburg, Germany, was already elected as the new SAP and SAP Group auditor for fiscal year 2023 at the Annual General Meeting on May 18, 2022, based on a corresponding recommendation and preference by the Audit and Compliance Committee of the SAP Supervisory Board.
Walldorf, Germany, February 21, 2023
Executive Board and Supervisory Board of SAP SE
Appendix: Qualification Matrix of the SAP SE Supervisory Board, as at February 21, 2023
| Tenure | Diversity | Expertise* | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| First elected | Term expires | Gender | Nationality | Innovation, Research & Development |
Software Industry |
Finance and Accounting |
Strategy | Human Resources |
Supervision, Monitoring, Corporate Governance |
Sustainability | |
| Prof. Dr. Hasso Plattner, Chair | 2003 | 2024 | male | German | | | | | | | |
| Lars Lamadé, Vice Chair | 2002 | 2024 | male | German | | | | ||||
| Manuela Asche-Holstein | 2021 | 2024 | female | German | | | | ||||
| Aicha Evans | 2017 | 2024 | female | U.S. American | | | | | | | |
| Prof. Dr. Gesche Joost | 2015 | 2023 | female | German | | | | | | | |
| Margret Klein-Magar | 2012 | 2024 | female | German | | | | | | | |
| Monika Kovachka-Dimitrova | 2019 | 2024 | female | Bulgarian | | | | | | ||
| Peter Lengler | 2021 | 2024 | male | German | | | | ||||
| Jennifer Xin-Zhe Li | 2022 | 2023 | female | Canadian | | | | | | | |
| Dr. Qi Lu | 2020 | 2023 | male | U.S. American | | | | ||||
| Gerhard Oswald | 2019 | 2024 | male | German | | | | | | | |
| Christine Regitz | 2015 | 2024 | female | German | | | | | | | |
| Dr. Friederike Rotsch | 2018 | 2024 | female | German | | | | | | ||
| Heike Steck | 2019 | 2024 | female | German | | | | | | ||
| Helmut Stengele | 2021 | 2024 | male | German | | | | ||||
| Dr. Rouven Westphal | 2021 | 2026 | male | German | | | | | |||
| Dr. Gunnar Wiedenfels | 2019 | 2026 | male | German | | | | | | ||
| James Wright | 2019 | 2024 | male | British | | | | |
*The requirements relating to each field of expertise are set out in detail in the Supervisory Board's Profile of Skills and Expertise.
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