In the past couple of years, the company has improved board independence and increased diversity. Board terms in Germany are five years, which we think is a long time. The new German governance code recommended an appointment of three years. However, due to some opposition during the consultation, the government commission has decided to remove the recommendation. Nonetheless, we are engaging with the company to see if it will consider the three-year model. A lot of change has happened this year, with new employee reps elected and shareholders reps having seen a decrease in tenure. With all this change, the company is taking the three years tenure on board…
The next significant governance event will be chairperson succession. Hasso Plattner, the current chair and one of the founders, has announced that this will be his last three-year term. The company will communicate its succession intentions a year before Plattner steps down…We believe it would be good for the next chair to be independent.
The CEO, Bill McDermott, announced his departure in October this year, after nearly 10 years as head. He has been replaced by two co-chief executives, Jennifer Morgan and Christian Klein. This arrangement has been used on a number of occasions since the company was founded. Indeed, the initial founders were co-chief execs. SAP believes this arrangement is helpful, given the global scale of its operations. While we are comfortable with the arrangement, we will closely monitor to see if it works as intended.
SAP has not disclosed an official tax policy. We encouraged it to do so and shared some examples of good disclosure. We are also engaging on the companyâ€™s remuneration policy, and have conveyed our views on annual bonus payments, performance targets and inclusion of non-financial targets.
We will continue to engage with SAP and are encouraged by the positive steps it has taken, especially its willingness to continue to adapt good governance practices.