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March 3, 1999

SAP US PRESIDENT RESIGNS TO JOIN SIEBEL SYSTEMS

By CBR Staff Writer

By Siobhan Kennedy

The president of SAP AG’s US subsidiary, Jeremy Cootes, resigned yesterday leaving his position with the German software giant to take up the role of VP of North American operations with front office application vendor Siebel Systems Inc. The news came early Wednesday morning, but followed months of speculation about Cootes’ future with the company. As far back as SAP’s user show in Los Angeles last September, sources close to the software vendor said Cootes was on the verge of leaving SAP over disputes about executive pay levels. The rumors were adamantly denied by company officials. But whether his departure is contentious or not, it’s nonetheless bad news for SAP. Cootes is the second senior executive within SAP’s US business operations to resign in the last couple of months. In September, Paul Wahl, the company’s former CEO of North America, unexpectedly resigned to join a security start-up in Silicon Valley (CI No 3,489). He was replaced by Kevin McKay, though many thought the job should have gone to Cootes. Speaking to ComputerWire yesterday, McKay admitted that losing two executives was a blow to SAP. But he denied either left because they were unhappy at SAP, adding that the two had resigned because there are a lot of lucrative opportunities out there right now. Some industry experts agree that Cootes’ departure, after a decade with SAP, was to be expected. Cootes joined the ERP vendor in its Switzerland office in 1988 and became CFO of SAP America in 1994. He was promoted to executive VP for the subsidiary in 1995 and to president in 1996. McKay said Cootes handed in his notice on Monday, citing a unique opportunity as his reason for departure. I was very disappointed, I’ve known Jeremy for over four years and worked very closely with him, he said. Cootes did not specifically mention the position with Siebel, although McKay said he understood Cootes was being offered an attractive compensation package. McKay denied the rumors that Cootes was angry about discrepancies between US and German-based executives, although he did admit that Cootes had issues with the way SAP shares were distributed. Under German law, McKay said SAP is not able to issue stock options to its employees, like an American company can. Instead, SAP set up what it called a stock appreciation right whereby executives benefit financially when the value of the company’s stock increases. Whether that plan was rich enough..maybe we should have upped it. I think he [Cootes] would have liked a little bit more. It’s an issue with every SAP employee. Surprisingly, McKay said SAP will not replace Cootes, since his role as president of North America was effectively terminated when SAP decided to carve up his responsibility between six new general managers, each responsible for a different vertical industry sector. I will assume the role of president and CEO, McKay said, and the six general managers will now report to me, there’s no need to bring in another president the way the company’s now structured. Alex Ott will stay as senior VP of Latin America and will also report to McKay. Joshua Greenbaum, principal of the Berkeley, California based Enterprise Applications Consulting firm said he wasn’t overly surprised about Cootes’ resignation. The way the market is growing in terms of value of the stock options and overall industry growth means there are going to be changes like this. he said. He added that Cootes’ decision to move to Siebel represented a great opportunity for him. Siebel could certainly offer him a greater growth opportunity as well as a much better stock package. Greenbaum, who said he had had numerous dealings with Cootes, added that people like Jeremy like to run their own show as much as possible….he wasn’t content with being second best. However, he said he thought it made sense for SAP, given the current ERP climate, to streamline its US operations into the separate vertical sectors. They’ve given a lot of structural independence to these units…it makes sense to streamline the bureaucratic hierarchy. A spokesperson for Siebel said the company would not comment on the news, although a source close to the software vendor confirmed Cootes had joined Siebel.

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