SAP Execs to Get Options

In an attempt to stop a management brain drain at the U.S. subsidiary of SAP AG, the German software vendor's shareholders last week approved a plan to start offering stock options to senior executives and other "top performers."
The lack of a stock-option program has caused SAP fits since early last year, when executives at SAP America Inc. in Newtown Square, Pa., began leaving in droves to join U.S.-based vendors that could offer lucrative stock incentives.
For example, Siebel Systems Inc. in San Mateo, Calif., has hired more than 25 high-level employees away from SAP America. That prompted a frustrated SAP to file a lawsuit charging Siebel with predatory hiring practices last fall.
European companies typically eschew American-style stock-option plans because of fears among shareholders that their ownership stakes will be diluted as employees exercise the options they get. As recently as November, SAP co-CEO Hasso Plattner said at a press conference that European shareholders "wouldn't stand for that kind of dilution."
But SAP said more than 99% of the shareholders who voted at a special meeting in Germany last week approved the new plan, which is scheduled to take effect later this quarter.
The plan lets SAP issue either stock options or convertible bonds to employees. A total of up to 6.25 million shares of SAP's stock, amounting to about 6% of its outstanding shares, can be offered under the new program.