SAP AG, the giant German enterprise resource planning software house, has bowed to pressure from its employees to offer a stock- based remuneration scheme, a move which may negatively affect its profits, the company warned. It has experienced difficulty in attracting and retaining staff in the face of lucrative stock option deals offered by rival US companies. But German law prohibits the use of stock options in lieu of pay, hence SAP will offer its employees a cash ‘dividend’ based upon future share price performance. The cash cost is likely to reduce pre-tax earnings by up to 2%, blunting earlier predictions of 30-35% profits growth. SAP’s shares fell 3% on the news.
