SAP Introduces New Stock Option Program
The trend toward offering employees a piece of the company pie—in the form of stock options—continues as employers seek to recruit and retain talented staff.
Walldorf, Germany-based software and technology services giant SAP AG will begin offering a stock option and convertible bond program in the first quarter of 2000.
The program, named the SAP AG 2000 Long Term Incentive Plan, will augment SAP's existing stock-based compensation package to attract, retain and motivate senior managers and top performers to grow the value of the enterprise and to secure their commitment to the company.
The Long Term Incentive plan requires approval from SAP ordinary and preference shareholders. The company will hold an extraordinary general meeting in Mannheim, Germany on January 18, 2000 to pass a resolution on the establishment of the plan.
The new plan consists of two key programs, stock options and convertible bonds, that are competitive in the United States marketplace and are in compliance with the German legislation on corporate control and disclosure (KonTraG).
The stock option program includes a performance hurdle on the value of the stock options whereby the stock options only have value provided the growth in the SAP preference share price surpasses the performance of a reference index within a defined period. The reference index will be the Goldman Sachs Software Index, a subindex included in Goldman Sachs Technology Index. The index is calculated by Goldman, Sachs & Co.
The second program of the new plan involves the issuance of convertible bonds, which can be converted to SAP preference shares within a defined period.
The total number of shares of SAP preference shares underlying the stock options and convertible bonds to be issued to participants by SAP cannot exceed 6.25 million.
The new stock incentive plan will help SAP attract top managers and retain existing employees, said Dietmar Hopp, co-founder and supervisory board chairman, SAP. In addition, vesting will also help secure the long-term commitment of the participants.
Vesting occurs from the time of bond issuance or stock option granting as follows: 33% after two years, 33% after three years and the remaining balance after four years. The participants include members of the SAP Executive Board, members of the executive boards of SAP affiliates, and selected senior managers and top performers of SAP and its affiliates.
The new stock plan will enhance SAP's current stock-based compensation and incentive programs, the company said. Current programs include the virtual stock option program--the Stock Appreciation Rights Program--which will continue to run in modified form, and the Employee Discount Stock Purchase Plan that allows SAP employees to purchase a certain amount of SAP shares at a discount.