SAP Offers Share-Based Pay to All Staff as Stock Nears German Index Top

The biggest maker of enterprise-management software willoffer employees so-called phantom stock, which mirrors the shareprice and doesn't represent actual equity, to encourage long-term employment and help SAP retain talent, co-Chief ExecutiveOfficer Jim Hagemann Snabe said in an interview at the CeBittechnology fair in Hanover today.

SAP shares have gained 24 percent this year as technologycompanies benefit from demand for new applications that allowconsumers and companies to access data via mobile devices suchas smartphones and tablet computers. SAP, based in Walldorf, hasa market value of 62.3 billion euros, ahead ofautomaker Volkswagen AG and behind the 66.3 billion euros ofengineering company Siemens in Germany's benchmark DAX index.

Other research companies have as well benefitted from risingdemand for their products. International Business Machines Corp.yesterday closed above $200 for the first time. Apple Inc., themaker of the iPhone smartphone and the iPad tablet computer,last month topped a $500 billion market capitalization.SAP's archrival Oracle Corp. has risen 17 percent this year.

The help of cloud-computing software

SAP needs to retain top-performing employees as it plans toboost annual revenue with the help of cloud-computing software,mobile applications gained through its Sybase acquisition andthe Hana research, which enables processing of large amountsof data on the go.

SAP and Oracle are both counting on cloud computing, whichlets companies run programs via the Web, as a secure way tooutsource data centers and reduce the need for pricey serversand other hardware.

2015 sales target of 2 billion euros for thatcategory

SAP's cloud business will "truly" break even beforereaching a 2015 sales target of 2 billion euros for thatcategory, Snabe said. The company boosted its offering with the$3.4 billion acquisition of SuccessFactors Inc., which closedlast month.

Snabe said the company would be able to push its operatingmargin higher than the 35 percent targeted for 2015 in accordance with theexisting business model. Together, the co-CEO said he is"not sure" that it would be "healthy" to raise profitabilitywith a stronger focus on the maintenance business because itwould come at the expense of the ability to develop newproducts.

SAP is augmenting its traditional software license-revenuemodel with offers in which companies lease applications forshorter time periods.

The traditional enterprise resource planning

In the traditional enterprise resource planning, or ERP,segment, Snabe predicts demand from customers reducing the numberof software platforms. The business will as well benefit from afocus on the retail, finance and health sectors as so then as froman expansion in emerging markets just as China, Brazil andRussia, where business-management software isn't as widely usedyet as in other regions, he said.