Leading shareholder advisors have called on SAP investors to oppose the supervisory board of Europe's largest technology company in a dispute over management pay. Institutional Shareholder Services (ISS) took issue with the supervisory board's unwillingness to acknowledge any need to improve its remuneration system despite shareholder dissent.
The move comes ahead of SAP's annual meeting on Wednesday and follows successes that ISS has had recently in lobbying against excessive management pay. Last month, shareholders rejected German reinsurance group Munich Re's pay policy, and energy group BP cut its CEO's 2016 pay package by 40 percent after a shareholder revolt. ISS said in a note to SAP shareholders that a vote against signing off the actions of the supervisory board was "warranted due to the clear lack of oversight and good governance exercised".
The payout to Bill McDermott, SAP's American CEO - 15.6 million euros ($17 million) for 2016 - ranks at the top end of German corporate pay, but does not stand out alongside SAP's main US competitors. With the help of stock options, McDermott's maximum annual pay could, however, reach a maximum of 41 million euros.
Maximum executive pay levels were inappropriately high, said Hans-Christoph Hirt, head of investor and governance advisor Hermes EOS. "We will vote against the approval of the supervisory board because we have significant concerns about the remuneration system and these have been ignored by the supervisory board," he told German weekly Der Spiegel.
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