May 10, 2017 / 9:52 AM / 3 years ago

SAP chairman defends executive pay system

FILE PHOTO: The logo of German software group SAP is pictured in Vienna, Austria, July 25, 2016. REUTERS/Leonhard Foeger/File Photo

MANNHEIM, Germany (Reuters) - SAP (SAPG.DE) said on Wednesday its executive pay system was reasonable, defending management bonuses against the criticism of some shareholders.

“Our executive payment must be seen in comparison with other software companies and must be competitive,” SAP’s co-founder and supervisory board Chairman Hasso Plattner told the company’s annual shareholders’ meeting. “We think we have a reasonable system,” he added.

Leading shareholder advisors have called on SAP investors to oppose the supervisory board of Europe’s largest technology company on the issue of executive pay.

Institutional Shareholder Services (ISS) and Hermes took issue with the board’s unwillingness to acknowledge any need to improve the remuneration system despite shareholder dissent.

The 2016 payout to Chief Executive Bill McDermott of 15.6 million euros ($16.95 million) ranks at the top end of German corporate pay, but does not stand out alongside SAP’s main U.S. competitors.

With the help of stock options, McDermott’s maximum annual pay could reach as much as 41 million euros, which the shareholder advisors say is inappropriately high.

As part of the long-term targets for McDermott’s bonus, SAP’s market value would have to triple in the next four years for the payout to reach its maximum level.

Plattner said that he did not expect SAP to reach that. “But if it would give such a sensational development, I think we should not begrudge Bill. And the our employees,” adding that the shareholders who now criticize the system in such an even would make billions of euros.

Reporting by Harro ten Wolde; Editing by Maria Sheahan

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