SAP

Integrated
Report
About This Report
Content as current as possible, we have included relevant information
available up to the auditor’s opinion dated February 19, 2020. The
The SAP Integrated Report 2019 presents our full-year financial,
report is available in English and German.
social, and environmental performance in one integrated report
(“SAP Integrated Report”) available at
www.sapintegratedreport.com. Since 2012, we have taken into
Independent Audit and Assurance
consideration the recommendations of the International Integrated KPMG AG Wirtschaftsprüfungsgesellschaft has audited our
Reporting Framework. consolidated financial statements and our combined management
The SAP Integrated Report also serves as our United Nations report (including the information to which our non-financial report
(UN) Global Compact progress report. Since 2018, we have also makes references). Additionally, KPMG has provided assurance on
reported on our contribution to the UN Sustainable Development selected sustainability information in accordance with the
Goals (SDGs). International Standard on Assurance Engagements (ISAE) 3000, a
pertinent standard for the assurance of sustainability reporting.
Basis of Presentation Both the Independent Auditor’s Report and the Assurance Report of
the Independent Auditor for sustainability information are available
Our combined management report is prepared in accordance
in the Independent Auditor's Report section and the Independent
with sections 289, 289a, 289f, 315, 315a, and 315d of the German
Assurance Report section.
Commercial Code and German Accounting Standards No. 17 and
20. The combined management report is also a management
commentary complying with the International Financial Reporting
Concept and Realization
Standards (IFRS) Practice Statement Management Commentary. This report was designed by SAP and created with
Our consolidated financial statements are prepared in SAP S/4HANA software and the SAP Disclosure Management
accordance with IFRS. Our executive management has confirmed application.
the effectiveness of our internal controls over financial reporting.
Our non-financial report is prepared in accordance with sections
289b and 315b of the German Commercial Code, which require us
to report, for both, SAP SE and SAP Group, on social,
environmental, and other non-financial matters. All non-financial
information stipulated in the German Commercial Code, sections
315c and 289c that is relevant to understand SAP’s development,
performance of the business, and the position of the Group and
SAP SE is included in our combined management report. Rather
than repeating this information, our Non-Financial Report (which is
part of this integrated report at http://www.sap.com/investors/sap-
2019-combined-non-financial-report) provides references to the
sections of our combined management report in which the required
disclosures are made.
The social and environmental data and information included in
the SAP Integrated Report is prepared in accordance with the GRI
Standards: Core option. This GRI option indicates that a report
contains the minimum information needed to understand the
nature of the organization, its material topics and related impacts,
and how these are managed. We apply the GRI principles
(sustainability context, stakeholder inclusiveness, materiality, and
completeness) for defining report content. We also report on SDGs
identified as material.
Greenhouse gas data is prepared based on the Greenhouse Gas
Protocol.

Data
All financial and non-financial data and information for the
reporting period is reported utilizing SAP software solutions and
sourced from the responsible business units.
The reporting period is fiscal year 2019. The report encompasses
SAP SE and all subsidiaries of the SAP Group. To make this report

2 About This Report

Key Facts
€ millions, unless otherwise stated 2019 2018 ∆ in %
Revenues
Cloud (IFRS) 6,933 4,993 39
Cloud (non-IFRS) 7,013 5,027 40
Software licenses (IFRS) 4,533 4,647 –2
Software licenses (non-IFRS) 4,533 4,647 –2
Software support (IFRS) 11,547 10,981 5
Software support (non-IFRS) 11,548 10,982 5
Cloud and software (IFRS) 23,012 20,622 12
Cloud and software (non-IFRS) 23,093 20,655 12
Total revenue (IFRS) 27,553 24,708 12
Total revenue (non-IFRS) 27,634 24,741 12
Applications, Technology & Services Segment revenue 23,544 21,753 8
Intelligent Spend Group Segment revenue 3,184 2,629 21
Qualtrics Segment revenue 508 NA NA
Share of more predictable revenue (IFRS, in %) 67 65 4
Share of more predictable revenue (non-IFRS, in %) 67 65 4

Operating Expenses
Cost of cloud (IFRS) –2,534 –2,068 22
Cost of cloud (non-IFRS) –2,228 –1,855 20
Cost of software licenses and support (IFRS) –2,159 –2,092 3
Cost of software licenses and support (non-IFRS) –2,018 –1,962 3
Cost of cloud and software (IFRS) –4,692 –4,160 13
Cost of cloud and software (non-IFRS) –4,247 –3,817 11
Total cost of revenue (IFRS) –8,355 –7,462 12
Total cost of revenue (non-IFRS) –7,655 –6,969 10
Research and development (IFRS) –4,292 –3,624 18

Profits and Margins

Cloud gross margin (in % of corresponding revenue, IFRS) 63.5 58.6 8
Cloud gross margin (in % of corresponding revenue, non-IFRS) 68.2 63.1 8
Software and support gross margin (IFRS, in %) 86.6 86.6 0
Software and support gross margin (non-IFRS, in %) 87.4 87.4 0
Cloud and software gross margin (in % of corresponding revenue, IFRS) 79.6 79.8 0
Cloud and software gross margin (in % of corresponding revenue, non-IFRS) 81.6 81.5 0
Gross margin (in % of total revenue, IFRS) 69.7 69.8 0
Gross margin (in % of total revenue, non-IFRS) 72.3 71.8 1
Applications, Technology & Services Segment gross margin (in % of corresponding revenue) 74 73 1
Intelligent Spend Group Segment gross margin (in % of corresponding revenue) 70 69 1
Qualtrics Segment gross margin (in % of corresponding revenue) 78 NA NA
Operating profit (IFRS) 4,473 5,703 –22
Operating profit (non-IFRS) 8,208 7,163 15
Operating margin (in % of total revenue, IFRS) 16.2 23.1 –30
Operating margin (in % of total revenue, non-IFRS) 29.7 29.0 3
Free cash flow 2,276 2,844 –20

Key Facts 3
€ millions, unless otherwise stated 2019 2018 ∆ in %
Net liquidity (net debt) –8,286 –2,493 232
Days sales outstanding (DSO, in days) 71 70 1
Equity ratio (total equity in % of total assets) 51 56 –9
Effective tax rate (IFRS, in %) 26.7 27.0 –1
Effective tax rate (non-IFRS, in %) 26.2 26.3 –1

Order Entry
New cloud bookings 2,268 1,814 25
Contract liabilities/Deferred income – current (IFRS) 1) 4,266 3,028 41
Orders – number of on-premise software deals (in transactions) 52,584 58,530 –10
Share of software orders greater than €5 million (in % of total software order entry) 32 29 10
Share of software orders less than €1 million (in % of total software order entry) 35 39 –10

Key SAP Stock Facts

Earnings per share, basic (in €) 2.78 3.42 –19
Earnings per share, basic (non-IFRS, in €) 5.11 4.35 17
Dividend per share2) (in €) 1.58 1.50 5
Market capitalization1) (in € billions) 147.81 106.80 38

Employees and Personnel Expenses

Number of employees 1), 3) 100,330 96,498 4
Personnel expenses per employee – excluding share-based payments (in € thousands) 131 115 14
Women working at SAP (in %) 33.5 33.0 0
Women in management1) (total, in % of total number of employees) 26.4 25.7 3
Employee Engagement Index (in %) 83 84 –1
Business Health Culture Index (in %) 80 78 3
Leadership Trust Index (LTI, as NPS) 59 60 –2
Employee retention (in %) 93.3 93.9 –1

Customer
Customer Net Promoter Score4) –6.0 –5.0 20

Environment
Net greenhouse gas emissions (in kilotons) 300 310 –3
Total energy consumption (in GWh) 955 919 4
Total data center electricity (in GWh) 338 318 6
1)
Numbers based on at year-end.
2)
Numbers are based on the proposed dividend and on level of treasury stock at year-end.
3)
Full-time equivalents
4)
Due to changes in sampling, Customer NPS is not fully comparable to the prior year's score.

4 Key Facts
Contents

About This Report ........................................................................................................................................................................................................... 2

Key Facts ......................................................................................................................................................................................................................... 3

Contents 5
To Our Stakeholders 7
Letter from the Co-CEOs................................................................................................................................................................................................ 8
SAP Executive Board .................................................................................................................................................................................................... 10
Investor Relations ......................................................................................................................................................................................................... 12
Report by the Supervisory Board ................................................................................................................................................................................ 15
Compensation Report ..................................................................................................................................................................................................23
Responsibility Statement ............................................................................................................................................................................................ 44
Independent Auditor’s Report .....................................................................................................................................................................................45

Combined Group Management Report 51

General Information About This Management Report...............................................................................................................................................52
Strategy and Business Model ......................................................................................................................................................................................54
Performance Management System ........................................................................................................................................................................... 60
Products, Research & Development, and Services....................................................................................................................................................67
Security, Data Protection, and Privacy ....................................................................................................................................................................... 71
Customers .....................................................................................................................................................................................................................74
Employees and Social Investments............................................................................................................................................................................. 75
Energy and Emissions ................................................................................................................................................................................................. 80
Financial Performance: Review and Analysis ............................................................................................................................................................ 83
Corporate Governance Fundamentals ...................................................................................................................................................................... 101
Business Conduct ....................................................................................................................................................................................................... 103
Risk Management and Risks ...................................................................................................................................................................................... 105
Expected Developments and Opportunities ............................................................................................................................................................. 126

Consolidated Financial Statements IFRS 131

Notes ..................................................................................................................................................................................................................... 138
Section A – Customers .............................................................................................................................................................................................. 141
Section B – Employees............................................................................................................................................................................................... 147
Section C – Financial Results..................................................................................................................................................................................... 156
Section D – Invested Capital ...................................................................................................................................................................................... 164
Section E – Capital Structure, Financing, and Liquidity........................................................................................................................................... 175
Section F – Management of Financial Risk Factors ................................................................................................................................................. 182
Section G – Other Disclosures ................................................................................................................................................................................... 197
Management’s Annual Report on Internal Control over Financial Reporting in the Consolidated Financial Statements ...................................211

Further Information on Economic, Environmental, and Social Performance 212

About This Further Information on Economic, Environmental, and Social Performance ..................................................................................... 213
Connectivity of Financial and Non-Financial Indicators ........................................................................................................................................... 214
Materiality ................................................................................................................................................................................................................... 221
Stakeholder Engagement.......................................................................................................................................................................................... 223
Sustainability Management and Policies ................................................................................................................................................................. 224
Our Contribution to the UN Sustainable Development Goals ................................................................................................................................ 226
Human Rights and Labor Standards ........................................................................................................................................................................ 228
Sustainable Procurement ......................................................................................................................................................................................... 230
Waste and Water........................................................................................................................................................................................................ 232

Contents 5
Public Policy ............................................................................................................................................................................................................... 234
Memberships ............................................................................................................................................................................................................. 235
Non-Financial Notes: Social Performance ............................................................................................................................................................... 236
Non-Financial Notes: Environmental Performance..................................................................................................................................................237
GRI Index and UN Global Compact Communication on Progress ......................................................................................................................... 242
Task Force on Climate-Related Financial Disclosure (TCFD) ................................................................................................................................ 247
Management’s Acknowledgement of the SAP Integrated Report 2019 ................................................................................................................ 248
Assurance Report of the Independent Auditor regarding Sustainability Information .......................................................................................... 249

Additional Information 251

Five-Year Summary ................................................................................................................................................................................................... 252
Glossary (Abridged) .................................................................................................................................................................................................. 256
Financial Calendar and Addresses ........................................................................................................................................................................... 268
Financial and Sustainability Publications ................................................................................................................................................................. 269
Publication Details ..................................................................................................................................................................................................... 270

6 Contents
To Our Stakeholders
Letter from the Co-CEOs................................................................................................................................................................................................ 8
SAP Executive Board .................................................................................................................................................................................................... 10
Investor Relations ......................................................................................................................................................................................................... 12
Report by the Supervisory Board ................................................................................................................................................................................ 15
Compensation Report ..................................................................................................................................................................................................23
Responsibility Statement ............................................................................................................................................................................................ 44
Independent Auditor’s Report .....................................................................................................................................................................................45

To Our Stakeholders 7
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Letter from the Co-CEOs

– Cloud revenue continued to be the major growth driver, growing

Dear Fellow Shareholders, 40% (non-IFRS).
Thank you for your commitment to and belief in SAP. As the – We increased our operating profit by 15% (non-IFRS), with
company’s new co-CEOs, we appreciate that SAP thrives when we margin improving by 0.8pp (non-IFRS).
put our customers, shareholders, and communities at the center of – With increased efficiency in cloud delivery, cloud gross margin
all that we do. increased 5pp in 2019.
We are proud of all that SAP has accomplished in 2019 and are – Our flagship suite, SAP S/4HANA, had a record year, growing to
laser-focused on continued innovation at scale, integration across approximately 13,800 customers across 25 industries.
our portfolio, and strong customer success and adoption of our Our stock posted an all-time high in December 2019, and again
solutions. For nearly 50 years, SAP has grown because we have the in early 2020. Our share price grew by 38.4% last year, out-
market’s best engineering talent, a global footprint across every performing the German DAX index, which increased by 25.5%.
industry in more than 180 countries, and a deep understanding of We are pleased that our shareholders continue to participate in
how businesses must operate in today’s global landscape. Never our growth, with a proposed annual dividend of €1.58 per share for
has that heritage been more valuable. 2019, representing an increase of 5.3%. Further, we intend to return
The year 2019 showed once again that SAP can deliver both an additional €1.5 billion to shareholders through a share buyback
reliable financial returns and strong underlying growth – and we program. The share buyback program, in addition to the attractive
take great pride in this continued growth story: regular dividend policy, is an important element in delivering value
– We delivered 12% growth in total revenue, our highest growth to our shareholders, and together they show our disciplined
rate since 2015. approach to capital allocation.

8 Letter from the Co-CEOs

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

We spent our first 100 days as co-CEOs listening to our – We are launching the Climate 21 program at SAP to build
stakeholders and understanding their perspectives, and we are now analytical and transactional capabilities into our core business
acting on what we have heard. Our first step was to align our applications, to help our customers both understand and
customer-facing organization to simplify and improve the minimize the carbon footprint of their products and operations.
experience of our customers. We are also unifying our engineering – Our solutions help eradicate modern slavery from supply chains
teams across the entire portfolio into one team with one set of and help customers move away from single-use plastics to
priorities. This will allow us to focus relentlessly on accelerating the sustainable, alternative materials. Our software is used to predict
integration of our Intelligent Enterprise and driving SAP’s next wave and prevent disasters, eliminate gender inequality, and educate
of organic innovations. We will continue to be the partner that people who have never had the opportunity to enter a
enables customers to rewrite their business models, redefine their classroom.
industries, and leapfrog their competition. – We are committed to becoming carbon neutral by 2025, and we
Our acquisition of Qualtrics this past year makes SAP the leader have reduced our net carbon footprint for the past five years,
in the Experience Management (XM) category. The Qualtrics XM despite strong growth.
Platform is enabling our customers to listen, understand, and act on – We will continue to support all aspects of diversity in our
the core experiences of business: customer, employee, brand, and business. We are proud that SAP is at the top of the Forbes
product. Our vision for XM is resonating with our customers – as America’s Best Employers for Diversity list, reflecting our
Qualtrics has expanded our customer base to over 11,450 industry-leading metrics, including roughly 34% women in our
customers in 2019 and has only just begun to penetrate our workforce today and nearly 27% women in leadership positions.
installed base. – We also strive to have a positive impact in the communities
Leading in the experience economy also means putting an even where we work and live: Our SAP One Billion Lives program
greater focus on ensuring superior experiences for our own inspires a closer collaboration between social enterprises,
stakeholders, which is why we aim to increase our Customer Net corporations, and consumers to accelerate wider social change.
Promoter Score by three to five points in 2020. We believe the In 2019, SAP employees around the world dedicated more than
changes we have already begun making will improve and harmonize 270,000 hours of service to causes important to them.
how our customers experience SAP. The same holds true for our In closing, we want to thank you for your trust and confidence.
own workforce – we announced a new vision in 2019 that shifts HR Between us, we have called SAP home for nearly four decades –
from traditional, often transactional human capital management and we ascended to the role of co-CEOs with deep humility, a
(HCM) to human experience management (HXM) – to go upstream profound reverence for our past, and an unbridled optimism for our
in the employee lifecycle to transform the human experience at future. It is an honor to write the next chapter of SAP alongside
work. Our own Employee Engagement Index reflects our approach, 100,000 of the most talented colleagues in the technology industry.
remaining above industry benchmarks at 83%. In 2020 and beyond, the best for SAP is yet to come.
We also remain prouder than ever that our enduring vision is to
help the world run better and improve people’s lives. We lead our Sincerely,
industry on issues ranging from sustainability to diversity and
inclusion – such as with our Autism at Work program. But that’s just Jennifer Morgan and Christian Klein
the start of how we serve our world: Co-CEOs, SAP SE

Letter from the Co-CEOs 9

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

SAP Executive Board

Christian Klein Jennifer Morgan

Co-CEO and Chief Operating Officer Co-CEO

Adaire Fox-Martin Luka Mucic

Global Customer Operations Chief Financial Officer

10 SAP Executive Board

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Jürgen Müller Michael Kleinemeier

Chief Technology Officer SAP Digital Business Services

Stefan Ries Thomas Saueressig

Chief Human Resources Officer SAP Product Engineering

SAP Executive Board 11

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Investor Relations

Stock Markets on the Rise – SAP announced it had taken a stake in the Company. SAP stock
remained strong at this new share price level in May and June, and,
Remains Most Valuable DAX Company buoyed by an upbeat industry environment, clearly outperformed
The global economic environment remained difficult in 2019, all relevant comparator indexes, hitting new records. This trend
characterized by fears of a recession, the ongoing Brexit tug-of-war, continued until July 3, pushing the share price to an interim high of
the political crisis in Italy, and the trade dispute between the United €124.38.
States and China. Despite the nervousness, a general hope for July then brought a turn in direction fueled by fears of recession
amicable conflict resolution prevailed. Enjoying the predominately and continuing escalations in the trade dispute between the United
positive mood on global stock markets, SAP stock gained 38.4%, States and China, which also impacted SAP’s business in Asia. In
once again outperforming the benchmark indexes DAX 30 and addition, presentation of our second-quarter results on July 18
NASDAQ 100, which grew 25.5% and 38.0%, respectively. With a failed to fully meet market expectations, particularly with respect to
market capitalization of €147.8 billion, SAP continues to be the most margin development, causing SAP stock to close the day down
valuable DAX company by far. 5.6% at €113.32. The share price continued to drop throughout the
month, reaching a low of €104.00 at the beginning of August.
SAP Stock Climbs to New All-Time High Industry sentiment remained generally negative in September, such
After closing at €86.93 on the Xetra trading system at the end of that SAP stock was unable to benefit from speculation about
2018, the SAP share price fell to €84.31, its lowest level for the year, interest rate cuts or the market upswing that month.
on January 3. In the first few months of 2019, SAP stock traded The fourth quarter moved primarily on expectations of a
parallel to the DAX, which profited from improved domestic and conciliation in the pervasive trade dispute between the United
global economic prospects as well as a persistently weak euro. SAP States and China, which were partially fulfilled when the two
stock dipped briefly at the end of January following publication of countries signed a Phase 1 trade agreement on December 15.
our full-year results for 2018, as shareholders were disappointed Global stock markets reacted favorably to the news. In addition,
that profitability was below market expectations. Publication of our SAP surprised the markets on October 11 with changes in the
proposed dividend of €1.50 per share on February 21, however, soon Company’s leadership and strong preliminary results for the third
gave SAP stock new momentum, and on March 21, our stock quarter. SAP stock advanced 10.2% in response, closing the day at
passed the €100 mark again for the first time since October 2018. € 115.68. SAP’s new cloud partnership with Microsoft announced
On presentation of our results for the first quarter on April 24, on October 21 provided further momentum: SAP stock continued
the price of SAP stock climbed 12.5% to a temporary all-time high to grow in line with the market trend, reaching a new all-time high of
of €114.62 – its greatest single-day performance in more than a €124.72 on December 16. The next day, a negative analyst
decade. The stock markets rewarded SAP not only on our excellent commentary caused the share price to slip 3.3% to €120.56. SAP
quarterly figures and raised earnings forecast through to 2023, but stock ultimately ended the reporting year on December 30 up
they also acknowledged that a prominent U.S.-based investor had 38.4% at €120.32.

12 Investor Relations
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Continued Dialog with Investors Key Facts About SAP Stock/SAP ADRs
SAP is continuously engaged with the investment community Listings
through a number of channels. Over the course of the year, Germany Berlin, Frankfurt, Stuttgart
members of the Executive Board of SAP SE and the Investor
United States (ADRs) New York Stock Exchange
Relations (IR) team discussed our strategy and business
IDs and symbols
development with institutional investors, analysts, and private
investors worldwide. WKN/ISIN 716460/DE0007164600
Once again an essential part of our global IR program, we held a NYSE (ADRs) 803054204 (CUSIP)
Capital Markets Day at the New York Stock Exchange in February
Reuters SAPG.F or .DE
2019. With more than 120 financial analysts and investors in
attendance, the Executive Board discussed the details of SAP’s Bloomberg SAP GR
strong position in the market and how SAP technologies help Weight (%) in indexes as at 12/31/2019
customers run at their best. The Executive Board also discussed the
DAX 30 10.00
business model and charted the future course of the Company. SAP
Prime All Share 8.54
customers New Era Cap, Verizon Communications, and JetBlue
presented their perspectives on how the intelligent enterprise CDAX 9.84
supports their respective business. This year, we further enhanced HDAX 9.11
our dialogue for the financial community with a Special Capital
Dow Jones STOXX 50 3.22
Markets Day held at our Hudson Yards offices in New York City in
November, highlighting our strategic vision, details on operation Dow Jones EURO STOXX 50 4.87
excellence programs, and future capital allocation.
In addition, we hosted events during the year for buy-side Return on SAP Common Stock —
analysts in Walldorf (Germany), and New York City (USA). At the WKN 716460/ISIN DE007164600
SAPPHIRE NOW conference in Orlando, Florida, we hosted events
Percent, unless otherwise stated
for investors and financial analysts. Members of the Executive
Board together with the IR team participated in more than 25 Initial investment €10,000
conferences worldwide. We continued our dialogue with socially
Date of investment 12/31/2009 12/31/2014 12/31/2018
responsible investors (SRI), providing them with insights into our
environmental, social, and corporate governance policies. SAP Period of investment 10 years 5 years 1 year

representatives engaged with retail shareholders at multiple events. 1)

Value as at 12/31/2019 (in €) 36,736 20,652 13,841
The IR team and the Treasury team also maintained regular
Average annual return 13.9 15.6 38.4
communication with the debt investor community.
We provide a wide range of information about SAP and its shares Performance comparators
online. Our communications channels include our Twitter feed DAX 30 Performance —
8.3 6.2 25.5
@sapinvestor and the quarterly SAP INVESTOR magazine. total return index
Shareholders can reach the IR team directly by telephone hotline REX General Bond —
1.5 0.6 1.3
total return index
and by e-mail at [email protected]. We also publish an overview of
S&P 500 Composite —
the latest analyst consensus in collaboration with Vara Research. 14.0 11.1 31.8
total return index
We provide a Webcast for all key investor events at which
S&P North American
members of our Executive Board speak, and we post all relevant 19.1 20.8 44.5
Technology Software Index
presentations on the Investor Relations Web site. 1) Assuming all dividends were reinvested
Source: Bloomberg

Return on SAP ADRs — 803054204 (CUSIP)

Percent, unless otherwise stated

Initial investment US$10,000

Date of investment 12/31/2009 12/31/2014 12/31/2018

Period of investment 10 years 5 years 1 year

Value at 12/31/20191) (in US$) 28,841 19,238 13,460

Average annual return 11.2 14.0 34.6

Performance comparators
S&P 500 Composite —
11.2 9.4 28.9
total return index
1) Assuming all dividends were reinvested
Source: Bloomberg

Investor Relations 13
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Dividend Increased to €1.58 Shareholder Structure

We had a very successful year in 2019, as customers continue to Applying the definition accepted on the Frankfurt Stock
turn to SAP to support them in their journey to become intelligent Exchange, which excludes treasury stock from the free float, as at
enterprises. We believe our shareholders should share greatly in this December 31, 2019, the free float stood at 86%
success, therefore it is our policy to pay a dividend totaling 40% or (December 31, 2018: 85.5%).
more of IFRS profit after tax.
At the Annual General Meeting of Shareholders, the Executive
Board and the Supervisory Board of SAP SE will recommend
increasing the total dividend for fiscal year 2019 by more than 5%
to €1.58 per share (2018: €1.50). This represents a payout ratio of
56% (2018: 44%).

Capital Stock Unchanged

SAP’s capital stock as at December 31, 2019, was
€1,228,504,232 (2018: €1,228,504,232). It is issued as
1,228,504,232 no-par shares, each with an attribute value of €1 in
relation to capital stock. According to the German Stock Exchange
(Deutsche Börse), shares of SAP were among the most traded
German stock in 2019. *15% of institutional investors (marked yellow) are classified as socially
responsible investors (SRIs)

14 Investor Relations
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Report by the Supervisory Board

Dear Shareholders, Articles of Incorporation, or the Supervisory Board’s list of

transactions requiring its consent were carefully examined and
In the following, we would like to inform you about the work of
discussed with the Executive Board.
the Supervisory Board in the fiscal year 2019.
The CEO, and subsequently the Co-CEOs, were in continuous
Collaboration Between the Supervisory Board contact with the Supervisory Board chairperson, which meant that
and the Executive Board the chairperson was always informed without delay of all important
events that were significant for assessing SAP’s situation and
In the past fiscal year, the Supervisory Board advised the
progress or for the management and governance of the Company.
Executive Board on an ongoing basis with regard to the
Moreover, the chairperson of the Supervisory Board met regularly
management of the Company and kept the Executive Board’s global
with the CEO, and subsequently the Co-CEOs, to discuss SAP’s
management of the Company under observation and scrutiny for
strategy, planning, business performance, risks, risk management,
legal compliance, adherence to proper accounting principles,
compliance, and other key topics and decisions. The chairperson of
business focus, and expediency. We were directly involved when the
the Supervisory Board was thus in a position to inform the
Executive Board made any decision of fundamental importance to
members of the Supervisory Board between meetings.
SAP.
We regularly received full and timely reports from the Executive Supervisory Board Meetings and Resolutions
Board, both from members in person and in written documents.
In 2019, the full Supervisory Board of SAP SE held four ordinary
This ensured that we were always up-to-date, even between
meetings and five extraordinary meetings at which it deliberated
meetings, on the Company’s strategy, planning, business
and resolved on all matters of relevance to the Company. These
performance, risks, risk management, compliance (in other words,
meetings were regularly held in the form of physical meetings but in
adherence to laws, to the Company's Articles of Incorporation, and
some cases in the form of telephone conference meetings. We also
to internal policies), and on transactions of special significance for
adopted five resolutions by correspondence vote. In the fiscal year,
SAP. In its reports, the Executive Board also informed us in
no Supervisory Board member attended only half or less of the
particular where business deviated from plan or target, and why. In
meetings of the Supervisory Board and of the committees to which
addition, the Supervisory Board members can use the SAP Digital
the member belonged. One shareholder representative on the
Boardroom solution to check on business performance at any time.
Supervisory Board was only able to attend 13 of the 19 meetings of
Offering maximum transparency, the digital decision and analysis
the Supervisory Board or its committees to which he belongs,
cockpit allows us to call up comprehensive metrics in real time and
particularly due to the fact that several of these meetings were
generate analyses as and when required.
called at very short notice. The Supervisory Board member in
The content and scope of the Executive Board’s reports to us
question nevertheless participated in the resolutions passed at
fully met our requirements for them. The Executive Board came to
these meetings by means of voting instructions submitted
Supervisory Board meetings for discussion of the agenda items. We
beforehand. The table included in this chapter provides an overview
questioned and probed the Executive Board to satisfy ourselves
of all the members’ attendance at the Supervisory Board’s plenary
that the information it gave us was plausible. All transactions
sessions and committee meetings during fiscal year 2019.
requiring approval by the Supervisory Board whether by law, the

Report by the Supervisory Board 15

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Meeting Participation of SAP Supervisory Board Members During Fiscal Year 2019
Plenum Committees All Meetings

Participa-
Supervisory Board Members Meetings Participation Meetings Participation Meetings Participation
tion in %

Prof. Dr. h.c. Hasso Plattner 9 9 12 12 21 21 100%

Pekka Ala-Pietilä 9 6 10 7 19 13 68%

Panagiotis Bissiritsas 9 9 24 24 33 33 100%

Martin Duffek (until May 15, 2019) 3 3 7 7 10 10 100%

Aicha Evans 9 9 15 14 24 23 96%

Diane Greene 9 9 4 4 13 13 100%

Andreas Hahn (until May 15, 2019) 3 3 6 6 9 9 100%

Prof. Dr. Gesche Joost 9 9 7 7 16 16 100%

Margret Klein-Magar 9 9 15 15 24 24 100%

Monika Kovachka-Dimitrova (since May 15, 2019) 6 6 4 4 10 10 100%

Lars Lamadé 9 9 11 11 20 20 100%

Bernard Liautaud 9 7 12 12 21 19 90%

Gerhard Oswald (since January 1, 2019) 9 9 21 19 30 28 93%

Christine Regitz 9 9 15 15 24 24 100%

Dr. Friederike Rotsch 9 9 22 22 31 31 100%

Dr. Erhard Schipporeit (until May 15, 2019) 3 3 7 7 10 10 100%

Robert Schuschnig-Fowler (until May 15, 2019) 3 3 4 4 7 7 100%

Dr. Sebastian Sick (until May 15, 2019) 3 3 7 7 10 10 100%

Heike Steck (since May 15, 2019) 6 6 4 3 10 9 90%

Pierre Thiollet (until May 15, 2019) 3 3 2 2 5 5 100%

Christa Vergien-Knopf (since May 15, 2019) 6 6 4 4 10 10 100%

Gunnar Wiedenfels (since May 15, 2019) 6 6 11 11 17 17 100%

James Wright (since May 15, 2019) 6 6 13 13 19 19 100%

Ralf Zeiger (since May 15, 2019) 6 6 6 5 12 11 92%

The Supervisory Board and its committees also convened wholly together with Bernd Leukert his early departure from the Executive
or partly without the Executive Board as necessary in 2019 to Board effective March 31, 2019. At the same time, we extended
deliberate on items that pertained to the Executive Board or Michael Kleinemeier’s Executive Board appointment to
required internal discussion among Supervisory Board members December 31, 2020. In our extraordinary meeting on April 5, 2019,
alone. This was the case in five of the seven plenary sessions, in we dealt with Robert Enslin’s resignation from the Executive Board.
three of the eight General and Compensation Committee sessions, The Executive Board informed us of the resulting changes to the
and in two of the 10 Finance and Investment Committee sessions. In Executive Board portfolios, which included Jennifer Morgan and
addition, the shareholder representatives and the employee Adaire Fox-Martin assuming responsibility for the Cloud Business
representatives independently discussed individual agenda items Group and SAP’s global sales organization, respectively. When we
as required prior to the adoption of resolutions in plenary sessions. met on July 25, 2019, we extended both Jennifer Morgan’s and
The Supervisory Board addressed the following key topics during Adaire Fox-Martin’s Executive Board appointments to
the year: April 30, 2025. At the end of September 2019, SAP’s CEO of nearly
10 years, Bill McDermott, decided to leave SAP and thus the
Changes on the Executive Board, and Executive Board before the regular end of his contract. The
Compensation Topics Supervisory Board therefore held an extraordinary meeting on
The Supervisory Board’s work and deliberations in 2019 were October 10, 2019, to discuss the timing and modalities of Bill
predominated by several personnel changes on the Executive McDermott’s departure from the Executive Board, and resolved on
Board. At our meeting on February 20, 2019, we mutually agreed the contractual terms in relation to the early termination of his

16 Report by the Supervisory Board

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

employment contract. In accordance with our succession planning, Supervisory Board sought the support of two external
we also approved the appointment of Jennifer Morgan and Christian compensation experts, who provided the Supervisory Board with
Klein as Co-CEOs effective October 10, 2019, and in the process benchmarks for Executive Board compensation and advised on the
extended the duration of Christian Klein’s appointment contract to Plan’s design. The project group’s proposed Plan details were
match and keep it in sequence with Jennifer Morgan’s. Bill discussed in the General and Compensation Committee’s meetings
McDermott served as a regular member of the Executive Board on April 10, 2019, and July 24, 2019, together with the
from this date onward until his departure on November 15, 2019. At compensation experts, and adopted in several stages, most recently
its ordinary meeting on October 24, 2019, the Supervisory Board in the abovementioned circular resolution in November 2019.
appointed Thomas Saueressig to the Executive Board effective For more detailed information about the STI 2020, the LTI 2016
November 1, 2019. He took on responsibility for the Product Plan, the new LTI 2020 Plan, and the other elements of the
Engineering unit and the Company’s global product development, compensation package for Executive Board members, see the
particularly for SAP’s core product SAP S/4HANA, its supply chain Compensation Report.
solutions, its software for small businesses and midsize companies,
the SAP User Experience organization, the SAP Knowledge and Capital Allocation Policy
Education organization, and SAP Labs Network, as well as the global In 2019, we consulted with the Executive Board on an ongoing
cloud infrastructure and SAP HANA Enterprise Cloud. In an basis with regard to the Company strategy and the Executive
extraordinary meeting on November 19, 2019, the new Co-CEOs Board’s proposals for the future allocation of capital. In three
apprised us of their corporate strategy and the further changes plenary meetings and four meetings of the Finance and Investment
they planned to make step-by-step to the Executive Board Committee, the Supervisory Board met with and in some cases
portfolios in order to improve SAP’s organizational structure, for without the Executive Board, as appropriate, to discuss the
which we gave our approval. All resolutions of the full Supervisory Company’s capital allocation policy. We first discussed this topic in
Board regarding the personnel changes, the ensuing agreements in our April 11, 2019, meeting. On April 24, 2019, the Company
Executive Board appointment contracts, and the necessary announced an updated ambition for 2023 together with a new,
adjustments to the individual Executive Board members’ comprehensive program to accelerate operational excellence, and
compensation resulting from the reassignment of portfolios were scheduled a Special Capital Markets Day for November 12, 2019.
prepared by the General and Compensation Committee, whose The Executive Board also announced in this context that it would
proposed recommendations we discussed in-depth prior to investigate the possibility of a share buyback program. On
approving. July 25, 2019, and October 24, 2019, the Supervisory Board
Besides this, we made several decisions in 2019 regarding discussed the Executive Board’s proposed allocation of resources,
Executive Board compensation – either in the course of our regular taking into account the Company’s strategy. In our extraordinary
deliberations, as developments warranted, or in connection with the meeting on November 4, 2019, we subsequently approved, on
introduction of the new LTI 2020 Plan. At our ordinary Supervisory recommendation of the Finance and Investment Committee, the
Board meeting on February 20, 2019, for example, we determined Executive Board’s plan for an enhanced capital return in 2020. Thus,
Executive Board compensation for 2018 by deciding on the total the Company is authorized to share buybacks and/or the issue of a
target achievement and the payouts for the individual Executive special dividend in an amount of up to €1.5 billion in the financial
Board members under the Short-Term Incentive (STI) 2018 Plan. year 2020. Due to the complexity of the subject matter, the
We also deliberated on Executive Board compensation for 2019 at Supervisory Board solicited advice from a large management
the February meeting: We first defined the key performance consultancy firm when assessing the Executive Board’s proposed
indicators (KPIs) for the STI 2019 and set the target numbers for capital allocation plan. The consultant in question attended the
each KPI and their relative weightings. We then resolved the preparatory meetings of the Finance and Investment Committee on
individual allocation amounts for the 2019 tranche of the LTI 2016. September 11, October 18 and 24, and November 3, 2019.
The Supervisory Board, as required, evaluated the appropriateness
of the Executive Board members’ compensation, and in each case Compliance Matters
found it to be appropriate in terms of amount, structure, objective In 2019, SAP’s compliance department (Ethics and Compliance
criteria, and for each member's responsibilities and tasks. We Office) continued to investigate possible violations of anti-bribery
referred in this regard to an appropriateness certificate obtained laws (including the U.S. Foreign Corrupt Practices Act (FCPA)) with
beforehand from Ernst & Young GmbH. In our meeting on the assistance of an external law firm, and updated the Audit
October 24, 2019, we approved numerous changes to the STI with Committee and the full Supervisory Board on the status of those
effect from fiscal year 2020. At our plenary meetings on investigations frequently throughout the fiscal year, notably at the
July 25, 2019, and October 24, 2019, we also dealt at length with the Audit Committee’s meetings and at the plenary sessions in April,
concept of the new LTI 2020 Plan, which we subsequently adopted July, and October 2019. Among other things, it explained SAP’s
at our extraordinary meeting on November 19, 2019, based on a voluntary cooperation with local authorities, the U.S. Securities and
recommendation that the General and Compensation Committee Exchange Commission (U.S. SEC), and the U.S. Department of
had adopted earlier by circular resolution. The preparatory work for Justice (U.S. DOJ). To gain deeper insight into this matter, the Audit
this new LTI Plan had been executed by a project group that was set Committee had submitted a catalog of questions to the Executive
up in February 2019 following deliberations by the Committee and Board regarding the facts under investigation and the measures
by the plenum. Comprised of members from the Executive Board taken. The Executive Board answered these questions in detail in
and Supervisory Board, the group had been tasked to draw up a the plenary session on October 24, 2019. At the April 11 session, the
proposal for the new LTI plan for 2020. In this connection, the Executive Board also reported on the status of the investigations

Report by the Supervisory Board 17

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

into potential export controls and economic sanctions violations. customers to become intelligent enterprises (Intelligent Enterprise
Currently ongoing, these investigations and likewise being pursued strategy), with particular focus on the experience management
with the assistance the with external lawyers. Management has products from Qualtrics and SAP’s competitive position. In this
made substantial improvements to the Company’s measures for context, the Executive Board explained its further plans for the
complying with anti-corruption legislation and export control laws, abovementioned program to optimize SAP’s business processes. In
and has expanded the compliance teams significantly. The addition, the Executive Board reported on first-quarter results for
Executive Board kept us up to speed on the details of these 2019, using the SAP Digital Boardroom solution.
measures throughout the year.
Extraordinary Meeting in May
Other key topics addressed at our meetings in 2019 notably
The Supervisory Board held an extraordinary meeting
included the following:
immediately following the Annual General Meeting of Shareholders
on May 15, 2019, to welcome the newly-elected members, to elect
Meeting in February (Meeting to Discuss the the Supervisory Board chairperson and deputy chairperson, and to
Financial Statements) decide the membership of its committees.
In the plenary session on February 20, 2019, we discussed with
the Executive Board the results of the 2018 employee survey and Resolution Adopted by Correspondence in July
the Company’s 2018 financial results. The Supervisory Board also By way of correspondence vote in July 2019, we consented, on
dealt in depth with the SAP SE financial statements and the recommendation from the Finance and Investment Committee, to
consolidated financial statements for 2018, the audits conducted by the issuance of bonds up to a volume of €2.5 billion under the
KPMG AG Wirtschaftsprüfungsgesellschaft (KPMG), and the commercial paper program that had been created for this purpose.
Executive Board’s proposed resolution on the appropriation of With this program, the Executive Board has extended SAP’s options
retained earnings for 2018. The auditor attended the meeting and for addressing short-term funding needs.
reported in detail on the audit and its findings for each of the focus
areas that had been agreed between the auditor and the Audit Meeting in July
Committee. The auditor also related the discussions on those Our ordinary meeting on July 25, 2019, was held in San Martin,
matters at the preceding meetings of the Audit Committee. The California, USA, where the newly-comprised Supervisory Board
auditor then discussed the results of the audit with the Supervisory spent several days together. It used this time intensively for
Board and answered our questions. The Audit Committee had discussions and networking, and also had the opportunity to meet
comprehensively prepared all topics in connection with the financial with a number of strategic customers and partners locally. In the
statements and the consolidated financial statements for 2018, and plenary session, we mainly discussed the directors’ and officers’
in particular reported on the form and scope of its examination of group liability insurance policies that we take out from year to year,
the documents relating to the financial statements, which it and resolved adjustments to the rules of procedure for the
recommended we approve. The Supervisory Board approved the Executive Board, the Supervisory Board, and several of the latter’s
audit. There were no findings from our own examination, so we gave Committees. In addition, we updated the list of transactions and
our consent to the SAP SE and consolidated financial statements business management measures for which the Executive Board
for 2018. We checked and endorsed the Executive Board’s proposal must obtain the Supervisory Board’s consent. The Executive Board
to appropriate retained earnings in accordance with the Audit then gave us an account of business in the second quarter of 2019
Committee’s recommendation. We then discussed in detail the and performance in the first half year. Referring to the Executive
annual budget for 2019 as presented to us by the Executive Board, Board’s reports, we discussed with the Executive Board the
and approved same. The Executive Board also reported on its measures to be taken and their implementation. Thereafter, one of
priorities for 2019 and its strategy for Cloud ERP, SAP’s cloud-based Qualtrics’ founders gave us a deep dive into Qualtrics products and
solution for enterprise resource planning. Following these reports, their application areas for SAP.
we decided on the (further) resolutions we would propose for the
agenda of the Annual General Meeting of Shareholders in May 2019. Resolutions Adopted by Correspondence in
This notably included our recommendation to the Annual General August
Meeting of Shareholders concerning the auditor to elect for 2019, On August 30, 2019, we consented by way of correspondence
which followed the recommendation of the Audit Committee to us. vote to a long-term R&D collaboration agreement between SAP SE,
We were also informed about SAP’s donation activities. Thereafter the Technical University of Munich, and the Free State of Bavaria.
we discussed corporate governance matters and resolved to
restrict the maximum amount of time a member can serve on the Meeting in October
Supervisory Board in future to 12 years. It had not been our practice At our meeting on October 24, 2019, the Executive Board
in the past to set a time limit in absolute figures. reported on business performance in the third quarter. On
recommendation from the Finance and Investment Committee, we
Meeting in April consented to the financing of a new Sapphire Ventures fund
When we met on April 11, 2019, an analyst from Royal Bank of (“SAPPHIRE Ventures Fund V”) and approved the release of further
Canada presented his perspective of SAP. We also looked at the capital for existing Sapphire Venture funds. The total volume
capital market’s expectations of SAP, particularly with regards to committed for both investments was €1.55 billion. The Executive
SAP’s business model and its financial reporting approach. We then Board also explained the planned changes in Executive Board
discussed in-depth with the Executive Board its strategy to enable responsibilities resulting from the appointment of the new Co-

18 Report by the Supervisory Board

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

CEOs. We approved these changes. In addition to the above, the May 15, 2019), Christa Vergien-Knopf (from May 15, 2019),
Supervisory Board assessed the independence of its members at James Wright (from May 15, 2019)
regular intervals pursuant to the specifications of the German – People and Organization Committee: Gerhard Oswald (from
Corporate Governance Code (“Code”), using benchmarks we had May 15, 2019, as chairperson), Pekka Ala-Pietilä (from
set at our own discretion. We first ascertained that the Supervisory May 15, 2019), Martin Duffek (until May 15, 2019), Aicha Evans,
Board has a sufficient number of independent members, and Gesche Joost, Monika Kovachka-Dimitrova (from May 15, 2019),
confirmed that the targets set also provide for an appropriate Lars Lamade (until May 15, 2019), Hasso Plattner (until
number of independent shareholder representatives in our opinion. May 15, 2019, as member and chairperson), Christine Regitz
We then ascertained that, taking account of the shareholder (until May 15, 2019), Robert Schuschnig-Fowler (until
structure, the Supervisory Board has a sufficient number of May 15, 2019), Heike Steck (from May 15, 2019), Christa Vergien-
independent members. In accordance with the Code provisions, we Knopf (from May 15, 2019), Ralf Zeiger (from May 15, 2019)
also identified those shareholder representatives whom the – Nomination Committee: Hasso Plattner (chairperson), Pekka
Supervisory Board deems independent; these representatives are Ala-Pietilä, Diane Green (from May 15, 2019), Bernard Liautaud
named in the Corporate Governance Statement , which also – Special Committee: This committee was dissolved effective
includes the Corporate Governance Report. In agreement with the May 15, 2019. Its members were Hasso Plattner (chairperson),
Executive Board, we also adopted for regular publication in Pekka Ala-Pietilä, Lars Lamade, Friederike Rotsch, Erhard
October 2019 the annual Declaration of Implementation of the Schipporeit, and Sebastian Sick.
Code.
Each of the committees was active in 2019 except the
The Work of the Supervisory Board Nomination Committee and the dissolved Special Committee. For
Committees more information about the Supervisory Board committees and
The committees made a key contribution to the work of the their duties, see SAP's Corporate Governance Statement pursuant
Supervisory Board in 2019 and reported on their work to us, to the German Commercial Code, sections 315d and 289f,
including their preparatory work for and decisions made on the published on the SAP public Web site.
relevant agenda items of the subsequent Supervisory Board Besides the matters mentioned above, the committees focused
meetings. In the course of the regular election of new shareholder primarily on the following topics in 2019:
and employee representatives on the Supervisory Board, we
adopted a number of changes to the composition of the – The General and Compensation Committee held five regular
committees. The following committees were in place during the meetings and three extraordinary meeting in 2019, and outside
reporting year: these meetings it passed four resolutions by correspondence. In
particular, the Committee extensively prepared and discussed in
– General and Compensation Committee: Hasso Plattner advance the deliberations of the Supervisory Board and its
(chairperson), Pekka Ala-Pietilä, Panagiotis Bissiritsas (from resolutions on Executive Board compensation within the scope
May 15, 2019), Aicha Evans, Andreas Hahn (until May 15, 2019), of duties assigned to it, or resolved its own resolutions in this
Margret Klein-Magar, Lars Lamade, Bernard Liautaud, Christine regard. This applies in particular for the meetings in January,
Regitz (from May 29, 2019), Friederike Rotsch (from February, April, July, and October 2019, for the correspondence
May 29, 2019), Sebastian Sick (until May 15, 2019), Ralf Zeiger vote in November 2019, and for a correspondence vote and two
(from May 15, 2019) extraordinary meetings in December 2019. At its meeting in
– Audit Committee: Gunnar Wiedenfels (from May 15, 2019, as February 2019, the Committee also deliberated on the annual
member and chairperson), Panagiotis Bissiritsas, Martin Duffek report compiled by SAP’s corporate governance and insider
(until May 15, 2019), Margret Klein-Magar (from May 15, 2019), trading compliance officer. The Supervisory Board’s decisions
Gerhard Oswald (from May 15, 2019), Friederike Rotsch, Erhard with respect to the submission of the declaration of
Schipporeit (until May 5, 2019, as member and chairperson), implementation of the Code and ascertaining the independence
James Wright (from May 15, 2019) of Supervisory Board members were prepared in October 2019.
– Finance and Investment Committee: Friederike Rotsch (from In the fiscal year ended, the Committee also approved the
May 15, 2019, as chairperson), Panagiotis Bissiritsas, Gerhard acceptance of an outside supervisory board seat by an Executive
Oswald, Christine Regitz (from May 15, 2019), Erhard Board member in two cases.
Schipporeit (until May 15, 2019, as member and chairperson), – The Audit Committee held six physical meetings – two of which
Robert Schuschnig-Fowler (until May 15, 2019), Sebastian Sick jointly with the Finance and Investment Committee – and four
(until May 15, 2019), Gunnar Wiedenfels (from May 15, 2019), telephone conference meetings in 2019. At these meetings, the
James Wright (from May 15, 2019) Committee deliberated on the course of business over the
– Technology and Strategy Committee: Hasso Plattner quarter concerned, the accounting processes, the preparation of
(chairperson), Christine Regitz (deputy chairperson), Panagiotis quarterly financial reports, and the quarterly reports to be
Bissiritsas (until May 15, 2019), Martin Duffek (until published. Recurring topics at our meetings included SAP’s risk
May 15, 2019), Aicha Evans, Diane Greene, Andreas Hahn (until management system, internal control system, and compliance
May 15, 2019), Gesche Joost, Margret Klein-Magar (until system (including the existing compliance cases, the status of
May 15, 2019), Monika Kovachka-Dimitrova (from May 15, 2019), the respective SAP-internal investigations, and SAP’s case-
Lars Lamade (from May 15, 2019), Bernard Liautaud, Gerhard related collaboration with authorities). During its physical
Oswald, Heike Steck (from May 15, 2019), Pierre Thiollet (until meeting in February 2019, the Committee focused on the

Report by the Supervisory Board 19

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

financial accounts of SAP SE and the Group for 2018, and we met by telephone conference to prepare a resolution on the
prepared the Supervisory Board's recommendations to the use of a $2.5 billion commercial paper program to sell short-
Annual General Meeting of Shareholders concerning the election term bonds to investors. In October 2019, representatives from
of an auditor and the appropriation of retained earnings. The Sapphire Ventures, LLC. gave the Committee an overview of the
decision on the recommendation regarding the election of the European and U.S. market for venture capital in technology and a
auditor was preceded by a review of the auditor’s independence, status report on the active SAP venture capital funds. In this
qualifications, and quality of work. To this end, the Audit context, the Committee resolved, as reported above, to
Committee obtained regular reports from the auditor on its recommend that the Supervisory Board approve further
internal quality assurance standards and on any material financing for the Sapphire Venture funds. In December 2019, the
findings from internal quality audits, from external quality Committee held a second joint meeting with the Audit
controls via peer review, and from any investigations conducted Committee, at which the Executive Board presented the
by the government or regulators into the auditor's audits. In preliminary 2020 Group annual plan. This meeting was held in
addition, the internal audit department reported on the fiscal preparation for the Supervisory Board’s meeting in
year 2018 for its area, and on its audit plan for 2019. At mid-year, February 2020, at which the full Supervisory Board resolved the
the internal audit department informed the Committee about its 2020 Group annual plan. In the separate Finance and Investment
audit findings to date as well as its plans for the second half of Committee meeting that followed the joint meeting in
2019 and the first half of 2020. We were informed at several December 2019, the members were given a status report on the
meetings about the course and result of the audit of the success of the Company’s acquisitions in 2018, the current
consolidated financial statements and the combined climate for corporate takeovers, and ongoing divestment
management report for 2017 by the German Financial Reporting projects. Further, the Committee approved the sale of a building
Enforcement Panel (Deutsche Prüfstelle für Rechnungslegung). and the land on which it stands to a company whose shares are
Throughout the year, we engaged in detailed discussions about owned by the Supervisory Board chairperson. The sale was
corporate security, with particular focus on additional security negotiated at arm's length; the Supervisory Board chairperson is
measures in the IT environment. The Committee turned its not a member of the Committee and therefore did not vote on
attention in the second half of the year to the revised German the resolution.
auditing standard IDW PS 350 (new version) and the resulting – The Technology and Strategy Committee met four times in
changes to SAP’s combined management report and non- 2019. It discussed the key technology trends in the software
financial report. We also discussed the regulatory requirements industry in the years to come and SAP’s corporate and product
for mandatory rotation of external auditors, and their strategies. At the February meeting, the Executive Board
implications for SAP. Also, in the second half of the year, we reported on the progress made in implementing the Company’s
updated the Committee’s rules of procedure due to the changed Intelligent Enterprise strategy aimed at helping SAP customers
composition and increased number of Committee members. evolve into “intelligent enterprises.” The report focused primarily
The auditor attended all physical meetings and telephone on SAP’s partnerships with hyperscaler cloud providers as
conference meetings of the Audit Committee and reported in- regards SAP Cloud Platform. In addition, the Executive Board
depth on its audit work and on its quarterly reviews of selected updated the Committee on the SAP Customer Experience
software agreements. The Committee discussed the audit focus portfolio, especially the integration of Qualtrics solutions. When
with the auditor in July, and the audit fees with the auditor in it met in April 2019, the Committee reviewed the integration
October 2019. As reported in more detail below, the Committee status of various SAP solutions and discussed the latest
also held two joint meetings with the Finance and Investment innovations in SAP HANA Cloud. In July 2019, the Executive
Committee in February and December 2019 to discuss the Board briefed the Committee members on security risks and
Group annual plan for 2019 and the preliminary Group annual protection measures, and updated them on the status of and
plan for 2020. further plans for the Cloud Business Group. At its meeting in
– The Finance and Investment Committee held six ordinary October 2019, the Committee addressed the master agreements
meetings and four extraordinary meetings in 2019. Two of the with Microsoft with respect to SAP Cloud Platform and
meetings held in February and December 2019 were held jointly discussed SAP’s machine learning portfolio.
with the Audit Committee. Outside these meetings it passed two – The People and Organization Committee held three meetings
resolutions by correspondence. At its February 2019 meeting, in 2019. At its meeting in February, the Committee discussed the
the Committee examined the transactions in 2018 involving SAP University Alliances program. Offered at universities
equity interests, and took a critical look at the Company’s worldwide, this initiative aims to familiarize and inspire students
current process of involving the Supervisory Board on major with the latest SAP innovations and provide next-generation
acquisitions. In the joint meeting with the Audit Committee that talents with the skills and technologies they need for the 21st
followed immediately thereafter, the members of both century, whether at SAP or elsewhere. When we met in July, the
Committees discussed the annual plan for 2019 and voted in Executive Board explained its new, comprehensive program to
favor of recommending its approval to the Supervisory Board. In accelerate operational excellence, the approach behind it, its
April, the Executive Board gave the Committee an overview of implementation, and its impact on employees. We also met in
various investor relations activities. By circular correspondence September, with key topics being India as a growth market, the
vote in May 2019, the Committee approved the sale of assets current challenges there, the talent situation inside and outside
from our healthcare business, which consists of SAP solutions SAP in India, and the business areas and business potential for
for the data management in the healthcare sector. In July 2019, SAP in that country. We also discussed the SAP’s measures to

20 Report by the Supervisory Board

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

win talented employees and the media it currently used to do so. enhance their technical knowledge of artificial intelligence,
During this discussion, the Committee members were given an SAP S/4HANA, and analytics, as well as gain a better understanding
initial look at the structure and curriculum of the new SAP of the individual regions in which SAP operates. Besides this, a
Academy for Engineering training program, which prepares number of presentations were offered focusing specifically on
students for a career in the SAP ecosystem. committee work, for example on audit committee activities.

Regular reports from the committees ensured that we were kept SAP SE and Consolidated Financial
fully informed of all matters covered by the committees and were Reports for 2019
able to discuss them thoroughly.
KPMG audited the SAP SE and consolidated financial reports for
2019. The Annual General Meeting of Shareholders elected KPMG
Corporate Governance as the SAP SE and SAP Group auditor on May 15, 2019. The
SAP’s corporate governance and insider trading compliance Supervisory Board proposed the appointment of KPMG on the
officer monitored our compliance with those recommendations in recommendation of the Audit Committee. Before proposing KPMG
the Code with which we claim to comply in SAP SE’s declaration, to the Annual General Meeting of Shareholders as auditor for the
and reported in full to the General and Compensation Committee. year, the chairperson of the Supervisory Board and the Audit
Detailed information about compliance with the Code, as required Committee obtained confirmation from KPMG that circumstances
by section 3.10 of the Code, is available in the Executive and did not exist that might prejudice or raise any doubt concerning its
Supervisory Boards’ Corporate Governance Statement, which also independence as the Company’s auditor. In that connection, KPMG
includes the Corporate Governance Report. Members of the informed us of the volume of the services that were not part of the
Executive Board and of the Supervisory Board had no conflicts of audit which it had either provided to the Group in the past year or
interest that sections 4.3.3 and 5.5.2 of the Code require to be was engaged to provide in the year to come. The Supervisory Board
disclosed to the Supervisory Board. Some Supervisory Board has agreed with KPMG that the auditor should report to the
members currently have business dealings with SAP or hold senior Supervisory Board and record in the auditor’s report any fact found
positions or material equity in companies that currently have during the audit that is inconsistent with the declaration given by
business dealings with SAP, or had done so in the course of the year. the Executive Board and the Supervisory Board concerning
SAP’s business dealings with these persons or companies are at implementation of the German Corporate Governance Code. KPMG
arm’s length. In the Supervisory Board’s view, especially given the examined the SAP SE financial statements prepared in accordance
limited scope and materiality of those dealings, they did not affect with the German Commercial Code, the consolidated financial
the independence of the Supervisory Board members concerned statements prepared in accordance with International Financial
and do not give rise to any substantial and not merely temporary Reporting Standards (IFRSs) as required by the German
conflict of interest in the meaning of the Code. There were a number Commercial Code, section 315e, and the combined SAP Group and
of transactions involving members of the Executive Board in 2018 SAP SE management report prepared in accordance with the
which were all consistent with industry standards and immaterial. German Commercial Code, and certified them without qualification.
These transactions were approved by the General and The auditor thus confirmed that, in its opinion and based on its
Compensation Committee during the year under review. Other than audit in accordance with the applicable accounting principles, the
those contracts mentioned in this report, the Company made no SAP SE and consolidated financial statements give a true and fair
other contracts with members of the Executive Board or view of the net assets, financial position, and results of operations
Supervisory Board that would have required a resolution of the of SAP SE and the SAP Group. The auditor also confirmed that the
Supervisory Board. combined SAP SE and SAP Group management report is consistent
In connection with the combined SAP Group and SAP SE with the corresponding financial statements and as a whole gives a
management report, the Supervisory Board closely examined the suitable view of the position of SAP SE and the SAP Group and of
Corporate Governance Statement, which also includes the foreseeable opportunities and risks. KPMG also audited SAP’s
Corporate Governance Report. We approved the Statement on internal control over financial reporting and certified without
February 12, 2020, by correspondence vote. qualification that it complies with the applicable U.S. standards. The
auditor stated in its opinion that it considers SAP's internal controls
Training and Professional Development with respect to the consolidated financial statements to be effective
The members of the Supervisory Board engaged in continuous in all material respects. Additionally, it provided assurance on
training and professional development throughout the year, with selected qualitative and quantitative sustainability disclosures
sufficient support from the Company. In July and October 2019, for included in the Integrated Report but outside of the Management
example, in follow-up to the Supervisory Board elections, the Report. All Audit Committee and Supervisory Board members
Company organized a number of information sessions for the received – initially in the form of drafts that were identical to the
newly-elected Supervisory Board members, which reelected final documents – the documents concerning the financial
members also attended. Among other things, the sessions included statements mentioned above, the audit reports prepared by KPMG,
presentations by the internal departments as well a presentation and the Executive Board’s proposal concerning the appropriation of
from an external consultant explaining the corporate governance retained earnings in good time.
fundamentals for European stock corporations, accounting and On February 18, 2020, the Executive Board prepared the
reporting, internal audit, investor relations, risk management, financial accounts of SAP SE and the Group for 2019, comprising
compliance, and cybersecurity. In addition, dedicated training the SAP SE financial statements, the consolidated financial
events in October 2019 enabled the Supervisory Board members to statements, and the combined management report, as well as the

Report by the Supervisory Board 21

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

combined non-financial report and submitted them without delay to the Supervisory Board. The Supervisory Board’s opinion of the
the Supervisory Board. Company and the Group coincided with that of the Executive Board
The Executive Board explained the financial statements of as set out in the combined management report. The Supervisory
SAP SE and the SAP Group and its proposal concerning the Board considered the proposal presented by the Executive Board
appropriation of retained earnings at the meeting of the Audit concerning the appropriation of retained earnings. We had regard to
Committee on February 18, 2020 (based on the drafts identical to the requirements of dividends policy, the effects on the liquidity of
the final documents) and at the meeting of the Supervisory Board SAP SE and the Group, and the interests of the shareholders. We
on February 19, 2020. Members of the Executive Board answered also discussed these matters with the auditor. We then endorsed
questions from the Audit Committee and the Supervisory Board. At the Executive Board’s proposal concerning the appropriation of
the Audit Committee meeting, they also explained the Annual retained earnings, in accordance with the Audit Committee's
Report on Form 20-F prepared in accordance with the applicable recommendation. Finally, we approved this present Report.
U.S. standards as well as the combined non-financial report.
After the Executive Board had explained them, the Audit Changes on the Supervisory and
Committee and the Supervisory Board reviewed the financial Executive Boards
statement documents (based on drafts identical to the final
The Supervisory Board mandate of Erhard Schipporeit ended at
documents) along with the combined non-financial report, taking
the close of the Annual General Meeting of Shareholders on
KPMG’s audit reports (or the drafts identical to the final
May 15, 2019. On that day, the Annual General Meeting reelected all
documents) into account. The representatives of the auditor who
other Supervisory Board members standing for election by it, and
attended presented full reports on the audit and the results of the
appointed Gunnar Wiedenfels as a new member to the Supervisory
audit to the Audit Committee and Supervisory Board meetings and
Board. On the employee representatives’ side, Martin Duffek,
explained its audit reports (or final drafts thereof). The auditor also
Andreas Hahn, Pierre Thiollet, Sebastian Sick, and Robert
reported that it had not identified any material weaknesses in SAP’s
Schuschnig-Fowler left the Supervisory Board at the end of the
internal control and risk-management systems for financial
May 15, 2019, Annual General Meeting. Monika Kovachka-Dimitrova,
reporting. Both the Audit Committee and the Supervisory Board
Heike Steck, Christa Vergien-Knopf, James Wright, and Ralf Zeiger
asked detailed questions about the form, scope, and results of the
were elected as their successors and took up their mandates that
audit. The Audit Committee reported to the Supervisory Board on
same day.
its own review of the financial statements of SAP SE and the
Jürgen Müller joined to the Executive Board on January 1, 2019,
SAP Group, its discussions with the Executive Board and with the
and is responsible for the Board area Technology & Innovation.
auditor, and its supervision of the financial reporting process. It
Bernd Leukert and Rob Enslin resigned from the Executive Board
confirmed that as part of its supervisory work, it had addressed the
effective March 31, 2019, and April 5, 2019, respectively. On
SAP Group’s internal control, risk management, and internal
October 10, 2019, the Executive Board members Jennifer Morgan
auditing systems, and found the systems to be effective.
and Christian Klein were appointed as Co-CEOs of SAP. Bill
The Committee also reported that KPMG had told it that no
McDermott left the Executive Board at his own request on
circumstances had arisen that might give cause for concern about
November 15, 2019, after previously stepping down as CEO on
KPMG’s impartiality, and informed us about the services KPMG had
October 10, 2019. Thomas Saueressig was appointed to the
provided that were not part of the audit. The Committee reported
Executive Board effective November 1, 2019, and oversees SAP’s
that it had examined the auditor's independence, taking the non-
product development.
audit services it had rendered into consideration, and stated that in
the Committee’s opinion the auditor possessed the required degree
The Supervisory Board would like to sincerely thank its
of independence and expertise.
members, as well as the Executive Board members who
The Audit Committee and the Supervisory Board satisfied
relinquished their functions in the year under review, for their
themselves that KPMG had conducted the audit properly. In
invaluable contribution to the success of the Company.
particular, they concluded that both the audit reports and the audit
The Supervisory Board also thanks the current members of the
itself fulfilled the legal requirements. On the basis of the report and
Executive Board and all SAP employees for their great commitment
the Audit Committee’s recommendation, the Supervisory Board
and dedication in 2019.
approved the audit and, since there were no findings from our own
examination, we gave our consent to the SAP SE financial
statements, the consolidated financial statements, and the For the Supervisory Board
combined management report, as well as the combined non-
financial report pursuant to the German Commercial Code,
sections 315b and 289b. The financial statements and combined Professor Hasso Plattner
management report were thus formally adopted upon approval by (Chairperson)

22 Report by the Supervisory Board

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Compensation Report
Note: This compensation report is part of the audited management report. The amount of performance-based compensation depends
primarily on SAP’s performance against predefined financial target
values (Key Performance Indicators, KPIs) and on the SAP share
Compensation for Executive and price, and is subject to hurdles and caps. These KPIs and their
Supervisory Board Members target values as well as their weighting are set by the Supervisory
Board each plan year and are aligned to the SAP budget for that
This compensation report describes the compensation system,
year.
outlines the criteria that apply to the compensation for Executive
The Supervisory Board sets the individual total target
Board and Supervisory Board members for the year 2019, and
compensation for each Executive Board member, comprised of the
discloses the amount of compensation. In addition, it discloses an
fixed compensation element and the two performance-based
outlook of the changes to the compensation system for the year
elements. This target compensation is benchmarked based on
2020.
SAP’s global strategy, market position, business performance and
future prospects of economy, and the compensation paid at
Compensation for Executive Board comparable national and international companies. The Supervisory
Members Board also considers the compensation systems applicable for the
rest of the Company, comparing Executive Board pay with the pay
Compensation System for 2019 of SAP executives and non-executive SAP employees. The
The compensation for Executive Board members is intended to performance-based elements each correspond to a target
reflect the demanding role of Executive Board members leading a achievement of 100% of all KPIs. The Supervisory Board reviews,
global company in a rapidly evolving sector. The compensation level assesses, and sets these compensation targets, in its first meeting
is aimed to be competitive to support SAP in the global market for of each fiscal year (February 20, 2019, for 2019). The Supervisory
highly skilled executives, especially in the context of the software Board is of the opinion that this approach ensures that the
industry. It is our goal that our Executive Board compensation compensation is appropriate.
provides sustainable incentive for committed, successful work in a The compensation system is designed to support the growth in
dynamic business environment. value for the Company over the long term. The long-term incentive
The Supervisory Board – supported by its General and element therefore has significant weighting, making up about two-
Compensation Committee – determines the compensation for each thirds of the Co-CEOs’ compensation target, and more than 50% of
Executive Board member based on their individual role and each Executive Board member’s compensation target.
performance in its first regular meeting of each fiscal year. For more In the case of any extraordinary, unforeseeable events, the
information about the work of the Supervisory Board and its Supervisory Board is entitled, at its reasonable discretion, to adjust
committees, see the Report by the Supervisory Board. As pictured the performance-based compensation before payout upwards or
below, the compensation contains performance-based elements downwards in the interest of SAP. No corrections to the payout
and non-performance-based elements: amounts paid in May 2019 were made.
The individual elements of SAP’s Executive Board compensation
are described in more detail below.
Compensation
Non-Performance-Based Compensation
Non-performance-based compensation
Fixed Compensation
Fixed compensation The fixed compensation is paid monthly in 12 equal installments
in the Executive Board member’s home currency 1).
Fringe benefits Fringe Benefits
The contractually guaranteed fringe benefits mainly comprise
additional benefits such as insurance contributions, benefits in kind,
Performance-based compensation
expenses for maintenance of two households, use of aircraft, and
STI tax gross-ups according to local conditions.
Short-term incentive

LTI
Long-term incentive

1)
Home currency is the currency of the Executive Board member’s primary place of
residence.

Compensation Report 23
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Performance-Based Compensation Long-Term Incentive

Short-Term Incentive The purpose of the long-term, multi-year performance-based

compensation (Long-Term Incentive, LTI) is to reward the annual
achievement of the non-IFRS constant currency operating profit, to
ensure long-term retention of our Executive Board members
Financial KPIs 2019
(Retention), and to reward them for a long-term SAP share price

100% performance (Performance) as compared to its main peer group

(Peer Group).
The LTI 2016 plan came into effect on January 1, 2016. It is a
40% New cloud bookings
(at constant currency) virtual share program with a term of four years per tranche.
Under the plan, a new LTI tranche is granted annually. Each grant
35% Cloud and software revenue growth
starts with determining a grant amount in euros. This grant amount
(non-IFRS, at constant currency)
is based on the Executive Board members’ contractual LTI target
25% Operating margin increase amount and the operating profit target achievement (non-IFRS, at
(non-IFRS, at constant currency)
constant currency) for the previous year. Taking this target
achievement into account, the grant amount can be adjusted
upwards or downwards in the range of 80% to 120% of the
Target achievement contractual LTI target amount. The 2018 operating profit target
0% if weighted achievement is below a 75% hurdle achievement was 101.9%. Considering this, the Supervisory Board
set the grant amount of the 2019 tranche at 101.9% of the
0% 75% to 140% contractual LTI target amount.
This grant amount is converted into virtual shares (Share Units),
so that Executive Board members participate in further share price
STI compensation developments. The grant price is the arithmetic mean of the XETRA
closing prices of SAP stock on the 20 trading days following
STI target achievement (%) x STI target amount (€)
publication of SAP’s fourth-quarter results. The grant date of the
2019 tranche was February 20, 2019.
All Share Units granted in this way, comprising 60%
The short-term, one-year performance-based compensation Performance Share Units (PSUs) and 40% Retention Share Units
(Short-Term Incentive, STI) is determined based on a set of financial (RSUs), have a vesting period of approximately four years, during
targets (KPIs). which the Executive Board member must actively contribute to the
For the STI 2019, the financial KPIs are: Constant currency new Company’s operations. The value of the Share Units varies
cloud bookings in 2019, year-over-year growth in non-IFRS constant positively and negatively with the performance of SAP’s share price.
currency cloud and software revenue in 2019, and non-IFRS At the end of the vesting period, the corresponding Share Units are
constant currency operating margin in 2019. The KPIs and their non-forfeitable.
respective target values are derived from SAP’s budget for that year.
For more information about financial KPIs, see the Performance
Management System section.
If the weighted target achievement for the financial KPIs is below
75%, there is no STI payout. In this case, the target achievement for
these KPIs is set to zero.
On February 19, 2020, the Supervisory Board assessed SAP’s
performance against the agreed targets and determined the
amount of the STI 2019 for the entire Executive Board. This resulted
in a target achievement of 82.4% (cloud and software revenue
growth of 106.4%, operating margin increase of 130.8%, and new
cloud bookings of 31.2%).
The STI compensation for 2019 will be paid out after the Annual
General Meeting of Shareholders in May 2020. It is paid in the
Executive Board member’s home currency 1). All Executive Board
members are obliged to purchase SAP shares worth at least 5% of
the actual payout amount in accordance with appropriate trading
period regulations. These shares are subject to a three-year holding
period.

1)
Home currency is the currency of the Executive Board member’s primary place of
residence.

24 Compensation Report
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

LTI Grant Process PSU Calculation

Supervisory Board determines grant amount for current

financial year, based on operating profit target achievement 60% PSUs
(non-IFRS, at constant currency) set for the previous year,
Originally granted
80% to 120%
of the target amount set in the Executive Board member’s SAP share price performance relative
contract to Peer Group Index performance
100% = same performance of SAP share price and Peer Group
Index
Grant amount is converted
into PSUs and RSUs
Peer Group Index SAP share price
resulting in
performs better performs better
than SAP share than Peer Group
price Index
60% PSUs 40% decreased by percentage increased by percentage
points of outperformance of points of outperformance.
Performance Share
Units
RSUs Peer Group Index If payout price is higher than
grant price, percentage
Retention points are doubled
Share Units
hurdle at 50% decrease cap at 50% increase
PSU calculation
resulting in a
Performance factor
Payout after four years
0% 50% to 150% max. 150%
Final number of PSUs and RSUs x payout price (€)
Cap of payout price = 300% of grant price

Final number of PSUs

The payout price used for the settlement is the simple arithmetic Originally granted number x performance factor (%)
mean of the XETRA closing prices of SAP stock on the 20 trading
days following the publication of SAP’s fourth-quarter results
subsequent to the end of the vesting period. The payout price is
SAP’s share price performance is measured by comparing the
capped at 300% of the grant price. The LTI tranche is paid in euros
grant price against the payout price. We calculate the difference
after the Annual General Shareholders’ Meeting of the
between SAP’s share price performance and the Peer Group Index
corresponding year. Any potential foreign currency exchange rate
performance. In case of an increased SAP share price and an
risk is borne by the Executive Board members themselves.
outperformance against the Peer Group Index, the calculated
The number of Share Units that will finally result in payments to
difference is doubled to reward positive performance.
the Executive Board members can and will likely differ from the
number originally granted. The number of PSUs ultimately paid out
changes depending on the performance of the SAP share relative to
the Peer Group Index at the end of the vesting period. This places
more weight on SAP's performance within the industry. In contrast,
the final number of RSUs is fixed. However, both types of Share
Units may expire during the entire term of a tranche under certain
conditions (see the "LTI Forfeiture Rules” graphic below).

Compensation Report 25
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

The following examples of the PSU calculation illustrate possible The Peer Group Index currently includes the following major
outcomes assuming 1,000 PSUs granted: international competitors of SAP: Adobe, Microsoft, IBM,
Salesforce, Oracle, VMWare, ServiceNow, Workday, and
SAP share price performs better than Peer Group Index NortonLifeLock (formerly Symantec). The Supervisory Board has
defined this group based on internal and external recommendations
SAP share price performance +18%
and, if necessary, adjusts the group. In 2019, Tableau was delisted
Peer Group Index performance +10% and therefore removed without replacement from the group. The
Difference +18% – (+10%) +8% Peer Group Index is calculated as a price index based on weighted
market capitalization. The weighting is adjusted quarterly, applying
Performance factor with doubled difference (+8% x 2) + 100% 116%
a cap of 15%. Consequently, the weight of smaller, more volatile
Final number of PSUs 116% x 1,000 1,160 competitors is increased in relation to their size, resulting in a highly
ambitious index. The index is calculated daily by Deutsche Börse
Group and can be tracked under ISIN DE000A2BLEB9.
SAP share price performs much higher than Peer Group Index;
cap is triggered
Composition and Weighting of Peer Group Index
SAP share price performance +30%

Peer Group Index performance –5%

Difference +30% – (–5%) +35% Adobe 16%

Performance factor with doubled difference (+35% x 2) + 100% 170% Microsoft 15%
Capped at 150% IBM 15%
Final number of PSUs 150% x 1,000 1,500 Salesforce 15%

Oracle 14%
Peer Group Index performs better than SAP share price
VMWare 9%
SAP share price performance +5%

Peer Group Index performance +10% ServiceNow 8%

Difference +5% – (+10%) –5% Workday 6%

Performance factor –5% + 100% 95% NortonLifeLock 2%
as at December 31, 2019
Final number of PSUs 95% x 1,000 950

Peer Group Index performs better than SAP share price; LTI Forfeiture Rules
low hurdle is triggered
If an Executive Board member’s service contract is terminated
SAP share price performance –10% before the end of the third year following the year in which the Share
Peer Group Index performance +50% Units were granted, both the PSUs and RSUs are forfeited in whole
or in part, depending on the circumstances of the relevant
Difference –10% – (+50%) –60%
resignation from office or termination of the service contract. In
Performance factor –60% + 100% 40% case PSUs and RSUs are forfeited in part, the percentage of the
Hurdle is 50% 0% forfeiture is proportional to the four-year vesting period of each
grant. This means that 25% of the grant is earned each year of the
Final number of PSUs 0% x 1,000 0
vesting period. Unearned grants are forfeited.

26 Compensation Report
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

LTI Forfeiture Rules

Example Calculation1)
forfeited grants
Executive Board Executive Board member PSUs and RSUs forfeit
Member resigns starts working for an SAP in their entirety
from office competitor 2) before the
without cause end of the vesting period 100% 100% 100% 100%

2016 2017 2018 2019

Supervisory Board terminates the Executive Board member's

service contract for cause Total four-year: 100% forfeiture

Executive Board Executive Board member PSUs and RSUs forfeit earned grants forfeited grants

Member resigns does not start working for on a pro rata temporis
from office an SAP competitor 2) basis 0%
25%
without cause before the end of the 50%
75%
vesting period

2016 2017 2018 2019

Executive Board member’s service contract expires due to
mutual consent, resignation, retirement, or death Total four-year: 37.5% forfeiture

earned grants plus 50% forfeited grants

Change of PSUs and RSUs are paid
control3) out immediately
0.0% 12.5%
on a pro rata temporis 25.0% 37.5%
basis plus 50% which
otherwise would be
forfeited
2016 2017 2018 2019
Total four-year: 18.75% forfeiture

1)
Example calculation with four tranches (grant allocation of 100%, stable share price from grant to vest, and no consideration of performance condition);
Executive Board member’s contract terminates after year four (December 31, 2019).
2)
As defined in the individual Executive Board members’ contracts; this is not equal to the companies listed in the Peer Group Index.
3)
For the definition, see the Early End-of-Service Undertakings section.

The change from the previous RSU Milestone Plan to the In the event an Executive Board member leaves the company
LTI 2016 Plan required a transition rule in order to avoid unjustified and PSUs would otherwise be forfeited on a pro rata basis, the
disadvantages for Executive Board members. In the event an Executive Board member is entitled to PSUs equal to the
Executive Board member leaves the company, the disadvantage equalization amount. The following graphic gives an example of how
arises from the difference in the one-year vesting period in the RSU the equalization amount was derived, assuming a grant of €1,000
Milestone Plan in comparison to the four-year vesting period in the for the RSU Milestone Plan, a grant of €1,500 for the LTI 2016 Plan,
LTI 2016 Plan. In order to compensate for this disadvantage related and a forfeiture of the grants on a pro rata temporis basis on
to the vesting periods, an individual equalization amount was December 31, 2019:
determined for Executive Board members who participated in the
earned grants equalization amount forfeited grants
RSU Milestone Plan.
The equalization amount has been subject to: 1,500
– A target achievement of at least 60% of the non-IFRS constant 250
1,000 1,125 625
currency operating profit target, and 750
– An ongoing employment relationship in 2016, 2017, and, in one 375
case, in 2018.
2015 2016 2017 2018 2019

RSU Milestone Plan LTI 2016 Plan

Compensation Report 27
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Clawback Provisions The following graphic illustrates the relation of the fixed and
SAP has the contractual right to request that the Executive performance-based compensation elements in the Executive Board
Board member returns any payments made from STI or LTI if it members’ target compensation for 2019 based on € amounts, as
subsequently emerges that the payment was not justified in whole well as the minimum and maximum possible compensation. The
or in part because targets were not achieved at all or not achieved in height of the bars is not indicative of the absolute compensation
the scope assumed when calculating the payment amount due on amount.
account of false information having been provided. In such case, the
Compensation Scheme 2019
Executive Board member is obliged to repay to SAP the amount by
which the payment actually made exceeds the payment amount
due on the basis of the targets actually achieved. Such 347%

contractually agreed claim to repayment supplements the claim for 317%

restitution of unjustified enrichment pursuant to section 812 of the

German Civil Code (BGB). LTI (long-term
incentive)
Minimum and Maximum Compensation
STI (short-term
The minimum compensation amount reflects the fixed incentive)
compensation amount and an LTI and STI payout of zero. Fixed
The maximum compensation amount is capped at 347% (Co- compensation
CEO) and 317% (Executive Board member other than Co-CEO) of
the total target compensation of the Executive Board members who
were employed at year end. Due to the change during the year, we 100% 100%
have annualized the compensation for our calculation. This would
be achieved in the event of the maximum possible payout amount
of the STI and the LTI, as follows:
– The maximum possible payout amount of the STI is reached 13% 17%
when the target achievement of all financial KPIs is 140%.
– The maximum possible payout amount for the LTI tranche is
Min Target Max Min Target Max
468% of the contractual target amount.
Executive Board
Co-CEO
(other than Co-CEO)
The maximum possible payout amount of the LTI is reached if all
of the following conditions are cumulatively met:
– The grant amount for the LTI tranche has been set at its capped
Overview of the Relations Between Target and Payout for
maximum of 120% of the contractual target amount.
Performance-Based Compensation
– SAP’s share price outperforms the Peer Group Index by at least
The total target achievements of STI reflect the relation between
25 percentage points (reaching the capped maximum 150% of
the target amount and the payout amount. The STIs for the years
the initial PSU allocation for that year).
– The SAP share price has at least tripled (corresponding to an 2015 to 2018 were already paid out.
average annual increase of approximately 32%) compared to the STI Total Target Achievement
grant price (cap on share price development).
Percentage 2019 2018 2017 2016 2015

In the event of the maximum LTI payout for the entire Executive 82.4 93.0 88.2 104.4 147.5
Board of €117 million in 2023, the shareholders would also benefit
through the strong increase in market capitalization, which would The relation between the LTI target amounts for the 2016 to
be at least €200 billion from 2019 to 2023. 2019 tranches and the theoretical payout amounts are based on
SAP’s share price at year end. The 2015 tranche discloses the
relation between the respective target amount and the actual
payout amount in May 2019.

Relation Between Target Amount and Payout Amount of the LTI

Percentage LTI 2016 Plan RSU
Milestone
Plan 2015
2019 2018 2017 2016 2015
Tranche1) Tranche1) Tranche1) Tranche1) Tranche2)

12/31/2019 156.6 126.4 110.5 76.8 233.8

12/31/2018 NA 90.9 82.6 55.5 233.8

1)
Consideration of theoretical payout amounts based on SAP’s share price at year end
2)
Consideration of individual adjustment factor in addition to target achievement 2015
ranging between 31.62% and 37.38%

28 Compensation Report
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Changes to Compensation System for 2020 Each underlying KPI includes a hurdle and a cap in addition to
the overall hurdle of 75% and the overall cap of 140%. In the event
General that the hurdle for the individual KPIs is missed and results in the
For 2020 and beyond, the Supervisory Board established weighted target achievement also falling below the overall hurdle of
changes to the STI and LTI to align compensation to support SAP’s 75%, the individual hurdle for the respective KPI will be ignored.
strategy, including business transformation and medium-term
prospects. The changes were based on analysis of market best Long-Term Incentive
practice and feedback from investors. The Supervisory Board introduced a new long-term multi-year
performance-based compensation plan effective from 2020 and
Short-Term Incentive onwards: the SAP Long Term Incentive Program 2020 (LTI 2020).
The major differences in the STI 2020 compared to the previous The LTI 2020 reflects SAP’s strategy, rewards the development
STI are as follows: of SAP’s total shareholder return (TSR) in comparison to the
– Introduction of sustainability targets (sustainability KPIs) with a market, and has a retention element. It is a financially rewarding
total weighting of 20% in addition to the financial targets instrument for attracting and retaining SAP’s Executive Board
(financial KPIs). The sustainability KPIs are: Customer Net members, who play a key role in increasing the earnings power and
Promoter Score, which measures SAP’s customer loyalty; in enhancing the value of SAP over the long term.
Employee Engagement Index, which measures SAP’s employee The major differences in the LTI 2020 compared to the previous
commitment, pride, and loyalty; and Carbon Impact, which LTI plan are as follows:
measures SAP’s greenhouse gas emissions. – The discretion element in determining the grant amount has
– Replacement of the financial KPI new cloud bookings by current been eliminated. Therefore, the grant amount is the
cloud backlog, which includes new contracts as well as renewals contractually agreed target amount.
of existing contracts and thus reflects cloud growth more – SAP’s performance of the Market Performance Share Units
holistically than the cloud bookings metric. (MSUs) is now measured based on total shareholder return
– Limitation of the Supervisory Board’s discretion to adjust the (previous plan: share price) and compared against the NASDAQ-
performance-based compensation for the STI before payout 100 Index (previous plan: SAP Peer Group Index) over three
upwards or downwards in the interest of SAP for cases of years (previous plan: four years).
extraordinary, unforeseeable events, to a range of +/–20%. – The achievement of financial targets is rewarded with Financial
Performance Share Units (FSUs) with a performance period of
three years. The financial targets are set in line with SAP’s
Financial Sustainability communicated mid-term ambition for 2023. (previous plan: no
KPIs 2020 KPIs 2020 FSUs).
– The RSU component has been reduced to 33.3% (previous plan:
80% 20% 40%).
30% Current cloud 6.67% Customer Net – The payout will include the share price as well as dividends
backlog Promoter Score (previous plan: only share price).
(non-IFRS1), at (NPS) – The payout is capped at 200% of the grant price (previous plan:
constant currency) 300%).
6.67% Employee
25% Cloud and Engagement Index – In case of death or disability, the unearned grant will vest in full
software revenue (EEI in %) according to the payout schedule (previous plan: forfeits on a
growth 6.67% Carbon Impact pro rata temporis basis).
(non-IFRS1), at (greenhouse gas – The Supervisory Board limited the extent of the discretion to
constant currency) emissions in kt CO2) adjust the performance-based compensation for the LTI before
25% Operating margin payout upwards or downwards in the interest of SAP for cases of
increase extraordinary, unforeseeable events, to a range of +/–10%
(non-IFRS1), at
constant currency)
(previous plan: no limitation).

Target achievement
0% if weighted achievement is below a 75% hurdle
0% 75% to 140%

STI compensation
STI target achievement (%) x STI target amount (€)

1)
Based on SAP’s non-IFRS metrics as defined for use in SAP’s 2019 full year
external financial reporting

Compensation Report 29
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

LTI Grant Process MSU Calculation

Grant amount is converted ¹⁄₃ MSUs

into Share Units
Originally granted
= grant amount (€) ÷ grant price (€)

TSR performance: SAP relative to

¹⁄₃ MSUs ¹⁄₃ FSUs ¹⁄₃ RSUs Index
Market Financial Retention
100% = SAP is ranked to the median of the index companies
Performance Performance Share Units
Share Units Share Units
Index TSR SAP TSR
performs better performs better
MSU FSU
than SAP TSR than Index TSR
calculation calculation
SAP is ranked less than the SAP is ranked better than
median of the index the median of the index
companies companies.
Payout after four years Performance factor is only
higher than 100% when
Final number of all Share Units SAP TSR performance is
x (payout price (€) + dividend amount per share (€)) positive.
Cap of payout per share = 200% of grant price

resulting in a
The vesting period of four years remains unchanged. In Market performance factor
connection with Michael Kleinemeier‘s contract extension, a vesting
period of one year has been agreed for his 2020 tranche.

Final number of MSUs after three years

Originally granted number x market performance factor (%)

SAP’s total shareholder return (TSR) performance is measured

over the three-year measurement period and ranked in relation to
the TSR performance of the companies of the NASDAQ-100 Index.
TSR means the performance of the share combining share price
development and granted and reinvested dividends. The market
performance factor has a cap at 150% at the 75th percentile (P-75)
and a hurdle of 50% at 25th percentile (P-25), below the hurdle no
MSUs are considered.

30 Compensation Report
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

The following examples of the MSU calculation illustrate possible FSU Calculation
outcomes assuming 1,000 MSUs granted:

SAP TSR performs better than TSR of NASDAQ-100 companies;

cap is triggered ¹⁄₃ FSUs
SAP TSR performance +18% Originally granted

Performance factor 80th percentile 160%

SAP’s financial target achievement
Cap 75th percentile 150%
100% = SAP achieves 100% of the three equally-weighted
Final number of MSUs 150% x 1,000 1,500 financial targets

SAP TSR performs better than TSR of NASDAQ-100 companies; ¹⁄₃ ¹⁄₃ ¹⁄₃
in a downwards market trend
SAP TSR performance –5%
Cloud Total Operating
revenue revenue income
(non-IFRS1), at (non-IFRS1), at (non-IFRS1), at
Performance factor 55th percentile 110% constant currency) constant currency constant currency)

Cap positive performance 100%

Final number of MSUs 100% x 1,000 1,000 resulting in a

Financial performance factor
TSR of NASDAQ-100 companies perform better than SAP TSR;
low hurdle is triggered
SAP TSR performance –5%

Performance factor 20th percentile 40%

Hurdle 25th percentile 0%

Final number of MSUs 0% x 1,000 0

Final number of FSUs after three years

Originally granted number x financial performance factor (%)

1)
Based on SAP’s non-IFRS metrics as defined for use in SAP’s 2019 full-year
external financial reporting

The final number of FSUs changes depending on SAP’s

performance against the financial KPI targets over the entire three-
year performance period. The financial KPIs are derived from SAP’s
communicated mid-term ambition for 2023. Cloud revenue and
total revenue have a cap of 120% and a hurdle of 80% target
achievement, while operating income has a cap of 110% and a
hurdle of 90% target achievement.

Compensation Report 31
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Compensation Scheme 2020 Amount of Compensation for 2019

We present the Executive Board compensation disclosures in
accordance with the recommendations of the German Corporate
217% Governance Code (“GCGC”). Furthermore, the tables below provide
LTI (long-term 206% a reconciliation statement following the requirements of
incentive)
sections 314 and 315 of the German Commercial Code
STI (short-term
(Handelsgesetzbuch, or “HGB”) as specified in the German
incentive)
Accounting Standards (“GAS 17”). Pursuant to the
Fixed
recommendations of the GCGC, the value of benefits granted for
compensation
the year under review as well as the benefits received, that is, the
amounts disbursed for the year under review, are disclosed below
100%
based on the reference tables recommended in the GCGC. In
100%
contrast to the disclosure rules stipulated in the German HGB and
GAS 17, the GCGC includes the pension expense, that is, the service
cost according to IAS 19, in the Executive Board compensation and
requires the additional disclosure of the target value for the one-
year variable compensation and the maximum and minimum
compensation amounts achievable for the variable compensation
13% 16% elements.

Min Target Max Min Target Max

Executive Board
Co-CEO
(other than Co-CEO)

Executive Board Members’ Compensation

German Corporate Governance Code
€ thousands Christian Klein Jennifer Morgan
(Co-CEO from 10/10/2019) (Co-CEO from 10/10/2019)

Benefits Granted Benefits Received Benefits Granted Benefits Received

2019 2019 2019 2018 2019 2018 20191) 2019 2019 2018 1) 20191) 2018 1)
(Min) (Max) (Min) (Max)
Fixed compensation 789.9 789.9 789.9 700.0 789.9 700.0 762.1 762.1 762.1 634.3 762.1 634.3
2)
Fringe benefits 14.8 14.8 14.8 13.1 14.8 13.1 125.8 125.8 125.8 128.4 125.8 128.4

Total 804.7 804.7 804.7 713.1 804.7 713.1 887.9 887.9 887.9 762.7 887.9 762.7
One-year variable
1,301.8 0 1,822.5 1,125.8 1,046.9 1,251.5 0 1,752.1 1,052.0 978.4 594.6
compensation
Multi-year variable
compensation
LTI 2016 Plan 3,407.9 0 12,260.1 1,793.2 3,731.2 0 13,424.8 2,128.8
RSU Milestone
Plan 2015
Total 5,514.4 804.7 14,887.3 3,632.1 1,851.6 713.1 5,870.5 887.9 16,064.8 3,943.5 1,866.2 1,357.3

Service cost 104.6 104.6 104.6 51.4 104.6 51.4

Total according to
5,514.4 804.7 14,887.3 3,632.1 1,851.6 713.1 5,975.1 992.5 16,169.4 3,994.9 1,970.8 1,408.7
GCGC

32 Compensation Report
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

German Corporate Governance Code

€ thousands Robert Enslin Adaire Fox-Martin
Member of the Executive Board (until 4/5/2019) Member of the Executive Board

Benefits Granted Benefits Received Benefits Granted Benefits Received

20191) 2019 2019 20181) 20191) 20181) 2019 2019 2019 2018 2019 2018
(Min) (Max) (Min) (Max)

Fixed compensation 219.7 219.7 219.7 800.2 219.7 800.2 700.0 700.0 700.0 700.0 700.0 700.0
2)
Fringe benefits 202.1 202.1 202.1 105.1 202.1 105.1 31.0 31.0 31.0 54.6 31.0 54.6

Total 421.8 421.8 421.8 905.3 421.8 905.3 731.0 731.0 731.0 754.6 731.0 754.6
One-year variable
1,352.8 0 1,893.9 1,327.3 1,234.4 1,117.7 1,125.8 0 1,576.1 1,125.8 1,046.9 666.5
compensation
Multi-year variable
compensation
LTI 2016 Plan 2,545.6 0 10,062.8 2,270.3 2,823.1 0 10,873.8 2,128.8
RSU Milestone
3,628.6 1,248.8
Plan 2015

Total 4,320.2 421.8 12,378.5 4,502.9 5,284.8 3,271.8 4,679.9 731.0 13,180.9 4,009.2 1,777.9 1,421.1

Service cost 177.5 177.5 177.5 235.8 177.5 235.8

Total according to
4,497.7 599.3 12,556.0 4,738.7 5,462.3 3,507.6 4,679.9 731.0 13,180.9 4,009.2 1,777.9 1,421.1
GCGC

€ thousands Michael Kleinemeier Bernd Leukert

Member of the Executive Board Member of the Executive Board (until 3/31/2019)

Benefits Granted Benefits Received Benefits Granted Benefits Received

2019 2019 2019 2018 2019 2018 2019 2019 2019 2018 2019 2018
(Min) (Max) (Min) (Max)

Fixed compensation 700.0 700.0 700.0 700.0 700.0 700.0 175.0 175.0 175.0 700.0 175.0 700.0

Fringe benefits 2) 29.0 29.0 29.0 29.1 29.0 29.1 2.3 2.3 2.3 10.3 2.3 10.3

Total 729.0 729.0 729.0 729.1 729.0 729.1 177.3 177.3 177.3 710.3 177.3 710.3
One-year variable
1,125.8 0 1,576.1 1,125.8 1,046.9 992.9 1,125.8 0 1,576.1 1,125.8 1,046.9 992.9
compensation
Multi-year variable
compensation
LTI 2016 Plan 2,387.0 0 9,435.6 2,128.8 2,688.6 0 10,627.9 2,397.7

RSU Milestone
473.8 3,773.2 1,248.8
Plan 2015

Total 4,241.7 729.0 11,740.6 3,983.7 2,249.7 1,722.0 3,991.6 177.3 12,381.3 4,233.8 4,997.4 2,952.0

Service cost

Total according to
4,241.7 729.0 11,740.6 3,983.7 2,249.7 1,722.0 3,991.6 177.3 12,381.3 4,233.8 4,997.4 2,952.0
GCGC

Compensation Report 33
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

German Corporate Governance Code

€ thousands Bill McDermott Luka Mucic
(CEO until 10/10/2019, Member of the Executive Board
member of the Executive Board until 11/15/2019)
Benefits Granted Benefits Received Benefits Granted Benefits Received
20191) 2019 2019 20181) 20191) 20181) 2019 2019 2019 2018 2019 2018
(Min) (Max) (Min) (Max)

Fixed compensation 1,212.0 1,212.0 1,212.0 1,314.7 1,212.0 1,314.7 700.0 700.0 700.0 700.0 700.0 700.0

Fringe benefits2) 1,123.6 1,123.6 1,123.6 794.7 1,123.6 794.7 12.0 12.0 12.0 11.8 12.0 11.8

Total 2,335.6 2,335.6 2,335.6 2,109.4 2,335.6 2,109.4 712.0 712.0 712.0 711.8 712.0 711.8
One-year variable
2,235.2 0 3,129.3 2,193.0 2,039.5 1,846.7 1,125.8 0 1,576.1 1,125.8 1,046.9 992.9
compensation
Multi-year variable
compensation

LTI 2016 Plan 7,710.6 0 30,479.5 6,876.6 2,387.0 0 9,435.6 2,128.8

RSU Milestone
10,315.3 5,251.0 3,732.5 949.5
Plan 2015

Total 12,281.3 2,335.6 35,944.4 11,179.0 14,690.4 9,207.1 4,224.7 712.0 11,723.6 3,966.4 5,491.4 2,654.2

Service cost 486.5 486.5 486.5 568.3 486.5 568.3

Total according to
12,767.8 2,822.1 36,430.9 11,747.3 15,176.9 9,775.4 4,224.7 712.0 11,723.6 3,966.4 5,491.4 2,654.2
GCGC

€ thousands Jürgen Müller Stefan Ries

Member of the Executive Board (from 1/1/2019) Member of the Executive Board

Benefits Granted Benefits Received Benefits Granted Benefits Received

2019 2019 2019 2018 2019 2018 2019 2019 2019 2018 2019 2018
(Min) (Max) (Min) (Max)
Fixed compensation 700.0 700.0 700.0 700.0 700.0 700.0 700.0 700.0 700.0 700.0

Fringe benefits 2) 13.5 13.5 13.5 13.5 21.8 21.8 21.8 21.9 21.8 21.9

Total 713.5 713.5 713.5 0 713.5 0 721.8 721.8 721.8 721.9 721.8 721.9

One-year variable
1,125.8 0 1,576.1 1,125.8 0 1,576.1 1,125.8 1,046.9 992.9
compensation
Multi-year variable
compensation
LTI 2016 Plan 2,185.8 0 8,640.5 2,010.7 0 7,948.3 1,793.2

RSU Milestone
Plan 2015
Total 4,025.1 713.5 10,930.1 0 713.5 0 3,858.3 721.8 10,246.2 3,640.9 1,768.7 1,714.8

Service cost
Total according to
4,025.1 713.5 10,930.1 0 713.5 0 3,858.3 721.8 10,246.2 3,640.9 1,768.7 1,714.8
GCGC

34 Compensation Report
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

German Corporate Governance Code

€ thousands Thomas Saueressig Total Executive Board
Member of the Executive Board (from 11/1/2019)

Benefits Granted Benefits Received Benefits Granted Benefits Received

2019 2019 2019 2018 2019 2018 2019 2018 2019 2018
(Min) (Max)

Fixed compensation 116.7 116.7 116.7 116.7 6,775.3 6,949.2 6,775.3 6,949.2
2)
Fringe benefits 2.1 2.1 2.1 2.1 1,578.0 1,169.0 1,578.0 1,169.0

Total 118.8 118.8 118.8 0 118.8 0 8,353.2 8,118.2 8,353.3 8,118.2

One-year variable
188.1 0 263.4 13,083.9 11,327.1 10,534.0 8,197.1
compensation
Multi-year variable
compensation
LTI 2016 Plan 515.2 0 1,444.0 32,392.7 23,646.2
RSU Milestone
21,923.4 8,698.1
Plan 2015
Total 822.1 118.8 1,826.2 0 118.8 0 53,829.8 43,091.5 40,810.6 25,013.4

Service cost 768.6 855.5 768.6 855.5

Total according to
822.1 118.8 1,826.2 0 118.8 0 54,598.4 43,947.0 41,579.2 25,868.9
GCGC
1)
The value of the fixed and one-year variable compensation is granted in U.S. dollars. For conversion purposes from U.S. dollars into euro, for fixed compensation the average exchange
rate and for the one-year variable compensation the year-end exchange rate of the respective period applies.
2)
Insurance contributions, the private use of company cars and aircraft, benefits in kind, compensation for unused vacation, expenses for maintenance of two households,
reimbursement of fees for lawyers, the preparation of tax returns, and tax gross-ups according to local conditions. The fringe benefits of Bill McDermott mainly consist of expenses for
maintenance of two households, the preparation of tax returns, and tax gross-ups according to local conditions.

Reconciliation Reporting of Total Compensation Pursuant to Section 314(1)(6a) HGB in Connection with GAS 17
€ thousands Christian Klein Jennifer Morgan Robert Enslin Adaire Fox-Martin

2019 2018 2019 2018 2019 2018 2019 2018

Total according to GCGC 5,514.4 3,632.1 5,975.1 3,994.9 4,497.7 4,738.7 4,679.9 4,009.2

Less granted annual variable

–1,301.8 –1,125.8 –1,251.5 –1,052.0 –1,352.8 –1,327.3 –1,125.8 –1,125.8
compensation
Plus allocated actual annual
1,072.7 1,046.9 1,031.2 978.4 290.1 1,234.4 927.6 1,046.9
variable compensation

Less service cost –104.6 –51.4 –177.5 –235.8

Total compensation 5,285.3 3,553.2 5,650.2 3,869.9 3,257.5 4,410.0 4,481.7 3,930.3

€ thousands Michael Kleinemeier Bernd Leukert Bill McDermott Luka Mucic

2019 2018 2019 2018 2019 2018 2019 2018

Total according to GCGC 4,241.7 3,983.7 3,991.6 4,233.8 12,767.8 11,747.3 4,224.7 3,966.4
Less granted annual variable
–1,125.8 –1,125.8 –1,125.8 –1,125.8 –2,235.2 –2,193.0 –1,125.8 –1,125.8
compensation
Plus allocated actual annual
927.6 1,046.9 228.7 1,046.9 1,609.7 2,039.5 927.6 1,046.9
variable compensation
Less service cost –486.5 –568.3

Total compensation 4,043.6 3,904.8 3,094.6 4,154.9 11,655.9 11,025.5 4,026.6 3,887.5

Compensation Report 35
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Reconciliation Reporting of Total Compensation Pursuant to Section 314(1)(6a) HGB in Connection with GAS 17
€ thousands Jürgen Müller Stefan Ries Thomas Saueressig Total Executive Board

2019 2018 2019 2018 2019 2018 2019 2018

Total according to GCGC 4,025.1 0 3,858.3 3,640.9 822.1 0 54,598.4 43,947.0

Less granted annual variable
–1,125.8 –1,125.8 –1,125.8 –188.1 –13,083.9 –11,327.1
compensation
Plus allocated actual annual
927.6 927.6 1,046.9 155.0 9,025.4 10,534.0
variable compensation
Less service cost –768.6 –855.5

Total compensation 3,826.9 0 3,660.1 3,562.0 788.9 0 49,771.3 42,298.4

Vertical Pay Ratio 2018

The vertical pay ratio compares the total target compensation Ratio CEO Executive Board
granted to the Co-CEOs and the Executive Board members other (Other Than
CEO)
than Co-CEO with the total target compensation granted to the
Average Annual 10,384.3 3,942.3
Executives and all employees collectively who were employed at Compensation
year end. Due to the changes on the Executive Board during the (in € thousands)
year, we have annualized the compensation for our calculation. In Executives 906 11 4
order to ensure comparability, only fixed compensation, one-year
Employees 99 105 40
and multi-year variable compensation are considered. The including
Executives comprise the first and second management levels below Executives
the Executive Board, that is, the Global Executive Team (GET) and
the Senior Executive Team (SET). 2017
Ratio CEO Executive Board
2019 (Other Than
CEO)
Ratio Co-CEO Executive Board
(Other Than Co- Average Annual 11,209.2 3,880.0
CEO) Compensation
(in € thousands)
Average Annual 8,604.5 4,196.4
Compensation Executives 923 12 4
(in € thousands)
Employees 101 111 39
Executives 915 9 5 including
Executives
Employees 103 84 41
including
Executives
2016
Ratio CEO Executive Board
(Other Than
CEO)
Average Annual 11,785.4 4,090.8
Compensation
(in € thousands)

Executives 823 14 5
Employees 99 119 41
including
Executives

36 Compensation Report
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Share-Based Payment Information Relating to Long-Term Incentives

Members of the Executive Board received, hold, or held share information about the terms and details of these programs, see the
units issued to them under the LTI 2016 Plan and hold or held RSUs Notes to the Consolidated Financial Statements, Note (B.3).
issued to them under the RSU Milestone Plan 2015. For more

Grants Under the LTI 2016 Plan

Year Total RSUs PSUs Fair Value at Time of Grant
Granted Share Units (40%) (60%)
Quantity Quantity Quantity € per RSUs € per PSUs € thousands
Christian Klein 2019 1)
7,797 3,119 4,678 117.39 139.97 1,021
(Co-CEO from 10/10/2019)
2019 26,047 10,419 15,628 88.54 93.71 2,387

2018 22,385 8,954 13,431 79.01 80.84 1,793

Jennifer Morgan 2019 1)
6,378 2,552 3,826 117.39 139.97 835
(Co-CEO from 10/10/2019)
2)
2019 4,634 1,853 2,781 101.98 115.10 509

2019 26,047 10,419 15,628 88.54 93.71 2,387

2018 26,574 10,630 15,944 79.01 80.84 2,129

Robert Enslin 2019 27,778 11,111 16,667 88.54 93.71 2,546
(until 4/5/2019)
2018 28,340 11,336 17,004 79.01 80.84 2,270
Adaire Fox-Martin 2019 2)
3,970 1,588 2,382 101.98 115.10 436

2019 26,047 10,419 15,628 88.54 93.71 2,387

2018 26,574 10,630 15,944 79.01 80.84 2,129

Michael Kleinemeier 2019 26,047 10,419 15,628 88.54 93.71 2,387

2018 26,574 10,630 15,944 79.01 80.84 2,129

Bernd Leukert 2019 29,338 11,735 17,603 88.54 93.71 2,689
(until 3/31/2019)
2018 29,931 11,972 17,959 79.01 80.84 2,398
Bill McDermott 2019 84,138 33,655 50,483 88.54 93.71 7,711
(CEO until 10/10/2019, Executive
Board member until 11/15/2019) 2018 85,841 34,336 51,505 79.01 80.84 6,877
Luka Mucic 2019 26,047 10,419 15,628 88.54 93.71 2,387

2018 26,574 10,630 15,944 79.01 80.84 2,129

Jürgen Müller (from 1/1/2019) 2019 23,852 9,541 14,311 88.54 93.71 2,186
Stefan Ries 2019 21,941 8,776 13,165 88.54 93.71 2,011

2018 22,385 8,954 13,431 79.01 80.84 1,793

Thomas Saueressig (from 11/1/2019) 2019 3,986 1,594 2,392 114.67 138.96 515
Total 2019 344,047 137,619 206,428 32,393

2018 295,178 118,072 177,106 23,646

1)
Additional grant due to appointment as Co-CEO
2)
Additional grant due to extension of responsibilities

Compensation Report 37
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Executive Board Members’ Holdings

LTI 2016 Plan
Quantity of Share Units Year Holding on Granted Forfeited1) Balanced PSUs 2) Holding on
Granted 1/1/2019 12/31/2019
RSUs (40%) PSUs (60%)
Christian Klein (Co-CEO from 2019 0 13,538 20,306 0 0 33,844
10/10/2019)
2018 22,385 0 0 0 0 22,385
Jennifer Morgan (Co-CEO from 2019 0 14,824 22,235 0 0 37,059
10/10/2019)
2018 26,574 0 0 0 0 26,574

2017 18,539 0 0 0 0 18,539

Robert Enslin (until 4/5/2019) 2019 0 11,111 16,667 25,972 14,809 16,615

2018 28,340 0 0 19,417 0 8,923

2017 29,454 0 0 12,822 0 16,632

2016 40,417 0 0 7,470 0 32,947

Adaire Fox-Martin 2019 0 12,007 18,010 0 0 30,017

2018 26,574 0 0 0 0 26,574

2017 18,539 0 0 0 0 18,539

Michael Kleinemeier 2019 0 10,419 15,628 0 0 26,047

2018 26,574 0 0 0 0 26,574

2017 27,619 0 0 0 0 27,619

2016 37,898 0 0 0 0 37,898

Bernd Leukert (until 2019 0 11,735 17,603 12,852 10,443 26,929
3/31/2019) 3)
2018 29,931 0 0 5,634 3,381 27,678

2017 31,109 0 0 0 0 31,109

2016 42,687 0 0 0 0 42,687

Bill McDermott (CEO until 2019 0 33,655 50,483 65,767 35,857 54,228
10/10/2019, Executive Board
member until 11/15/2019) 2018 85,841 0 0 45,653 0 40,188

2017 89,217 0 0 25,159 0 64,058

2016 122,423 0 0 3,855 0 118,568

Luka Mucic 2019 0 10,419 15,628 0 0 26,047

2018 26,574 0 0 0 0 26,574

2017 27,619 0 0 0 0 27,619

2016 37,898 0 0 0 0 37,898

Jürgen Müller (from 1/1/2019) 2019 0 9,541 14,311 0 0 23,852

Stefan Ries 2019 0 8,776 13,165 0 0 21,941

2018 22,385 0 0 0 0 22,385

2017 23,265 0 0 0 0 23,265

2016 23,987 0 0 0 0 23,987

Thomas Saueressig (from
11/1/2019) 2019 0 1,594 2,392 0 0 3,986

Total 865,849 137,619 206,428 224,601 64,490 1,049,785

1)
Forfeiture according to leaver rules
2)
To balance disadvantages from leaver rules under the LTI 2016 Plan
3)
Forfeiture under the leaver rules assuming termination as at 3/31/2021

The Share Units granted in 2019 have a remaining term of term of 1.1 years, and the share units granted in 2016 have a
3.1 years, the share units granted in 2018 have a remaining term remaining term of 0.1 years.
of 2.1 years, the share units granted in 2017 have a remaining

38 Compensation Report
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

RSU Milestone Plan 2015

Quantity of RSUs Year Granted Holding on Exercised Holding on
1/1/2019 12/31/2019
Robert Enslin (until 4/5/2019) 2015 39,985 39,985 0

Michael Kleinemeier 2015 5,221 5,221 0

Bernd Leukert (until 3/31/2019) 2015 41,578 41,578 0

Bill McDermott (CEO until 10/10/2019, Executive Board
2015 113,667 113,667 0
member until 11/15/2019)
Luka Mucic 2015 41,130 41,130 0

Total 241,581 241,581 0

The table above shows the Executive Board members’ holdings Executive Board seat; or a disability pension depending on a
issued to them under the RSU Milestone Plan 2015. The plan was a health examination if, before reaching the regular retirement age,
cash-settled long-term incentive scheme with a payout subsequent they become subject to occupational disability or permanent
to a performance period of one year (after which the RSUs become incapacity. A surviving dependent’s pension is paid on the death
non-forfeitable) and an additional holding period of three years. The of a former member of the Executive Board. The disability
plan consisted of four plan tranches which were issued with respect pension is 100% of the vested retirement pension entitlement
to the calendar years 2012 through 2015. and is payable until the beneficiary’s 62nd birthday, after which
it is replaced by a retirement pension. The surviving dependent’s
Total Expense for Share-Based Payment pension is 60% of the retirement pension or vested disability
€ thousands 2019 2018 pension entitlement at death. Entitlements are enforceable
against SAP SE. Current pension payments are reviewed
Christian Klein (Co-CEO from 10/10/2019) 1,925 442.2
annually for adjustments and, if applicable, increased according
Jennifer Morgan (Co-CEO from 10/10/2019) 2,894 796.1 to the surplus in the pension liability insurance. If service is
Robert Enslin (until 4/5/2019) 3,480 727.0 ended before the retirement age of 62, pension entitlement is
reduced in proportion as the actual length of service stands in
Adaire Fox-Martin 2,667 796.1
relation to the maximum possible length of service. The applied
Michael Kleinemeier 3,253 914.2 retirement pension plan is contributory. The contribution is 4%
Bernd Leukert (until 3/31/2019) 8,606 775.2
of applicable compensation up to the applicable income
threshold plus 14% of applicable compensation above the
Bill McDermott (CEO until 10/10/2019,
14,689 2,155.8 applicable income threshold. For this purpose, applicable
Executive Board member until 11/15/2019)
Luka Mucic 3,391 675.8
compensation is 180% of annual base salary. The applicable
income threshold is the statutory annual income threshold for
Jürgen Müller (from 1/1/2019) 768 -
the state pension plan in Germany (West), as amended from
Stefan Ries 2,646 772.0 time to time.
– Bill McDermott has rights to future benefits under the portion of
Thomas Saueressig (from 11/1/2019) 128 -
the pension plan for SAP America classified as “Non-Qualified
Total 44,446.5 8,054.4 Retirement Plan” according to the U.S. Employee Retirement
Income Security Act (ERISA). This “Non-Qualified” pension plan
Total expense for the share-based payment plans of Executive is a cash balance plan that provides either monthly pension
Board members was determined in accordance with IFRS 2 (Share- payments or a lump sum on retirement. The pension becomes
Based Payments) and consists exclusively of obligations arising available from the beneficiary’s 65th birthday. Subject to certain
from Executive Board activities. conditions, the plan also provides earlier payment or invalidity
benefits. The “Non-Qualified” pension plan closed with effect
End-of-Service Benefits from January 1, 2009. Interest continues to be accrued on the
earned rights to benefits within this plan. The rights were
Regular End-of-Service Undertakings partially earned before Bill McDermott became a member of the
SAP Executive Board.
Retirement Pension Plan – SAP made contributions to a third-party pension plan for Bill
The following retirement pension agreements apply to the McDermott, Robert Enslin, and Jennifer Morgan, as disclosed in
individual members of the Executive Board: the tables ‘German Corporate Governance Code’. SAP’s
– Adaire Fox-Martin, Christian Klein, Michael Kleinemeier, Bernd matching contributions are based on payments by Bill
Leukert, Luka Mucic, Jürgen Müller, Stefan Ries, and Thomas McDermott, Robert Enslin, and Jennifer Morgan into this pension
Saueressig are entitled to receive a retirement pension when plan.
they reach the retirement age of 62 and retire from their

Compensation Report 39
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Total Defined Benefit Obligations (DBO) and Net Defined Benefit Liability (Asset) to Executive Board
Members
€ thousands Christian Adaire Michael Bernd Bill Luka Jürgen Stefan Thomas Total
Klein Fox- Kleinemeier1) Leukert McDermott Mucic1) Müller Ries 1) Saueressig
(Co-CEO from Martin 1) (until (CEO until (from (from
1) 1) 1) 1)
10/10/2019) 3/31/2019) 10/10/2019, 1/1/2019) 11/1/2019)
Executive Board
Member until
11/15/2019)

DBO 1/1/2018 – 93.5 271.9 584.5 1,310.5 585.9 – 344.6 – 3,190.9

Less plan assets
– 100.7 345.9 540.9 – 490.7 – 275.8 – 1,754.0
market value 1/1/2018

Net defined benefit

– –7.2 –74.0 43.6 1,310.5 95.2 – 68.8 – 1,436.9
liability (asset) 1/1/2018

DBO change in 2018 112.8 89.9 66.7 –16.1 106.2 –42.1 – –67.2 – 250.2
Plan assets change in
141.3 156.3 161.7 153.9 – 145.0 – 143.5 – 901.7
2018
DBO 12/31/2018 112.8 183.4 338.6 568.4 1,416.7 543.8 – 277.4 – 3,441.1
Less plan assets
market value 141.3 257.0 507.6 694.8 – 635.7 – 419.3 – 2,655.7
12/31/2018
Net defined benefit
liability (asset) –28.5 –73.6 –169.0 –126.4 1,416.7 –91.9 – –141.9 – 785.4
12/31/2018
DBO change in 2019 244.7 207.6 205.9 416.5 63.3 475.0 149.7 251.4 41.9 2,056.0
Plan assets change in
145.9 160.6 171.2 363.0 – 147.2 – 144.9 – 1,132.8
2019
DBO 12/31/2019 357.5 391.0 544.5 984.9 1,480.0 1,018.8 149.7 528.8 41.9 5,497.1
Less plan assets
market value 287.2 417.6 678.8 1,057.8 – 782.9 – 564.2 – 3,788.5
12/31/2019
Net defined benefit
liability (asset) 70.3 –26.6 –134.3 –72.9 1,480.0 235.9 149.7 –35.4 41.9 1,708.6
12/31/2019
1)
The values shown here only reflect the pension entitlements that Christian Klein, Adaire Fox-Martin, Michael Kleinemeier, Bernd Leukert, Luka Mucic, Jürgen
Müller, Stefan Ries and Thomas Saueressig will receive from the retirement pension plan for Executive Board members.

The table below shows the annual pension entitlement earned These are vested entitlements. To the extent that members
during the Executive Board membership of each member of the continue to serve on the Executive Board and that therefore more
Executive Board on reaching the scheduled retirement age of 62, contributions are made for them in the future, pensions actually
based on entitlements from SAP under performance-based and payable at the scheduled retirement age will be higher than the
salary-linked plans. amounts shown in the table.

Annual Pension Entitlement

€ thousands Vested on Vested on
12/31/2019 12/31/2018

Christian Klein (Co-CEO from

8.2 4.1
10/11/2019)
Adaire Fox-Martin 11.8 7.3

Michael Kleinemeier 20.0 14.8

Bernd Leukert (until 3/31/2019) 34.7 24.6

Bill McDermott (CEO until 10/10/2019,
Executive Board Member until 90.8 105.1
11/15/2019) 1)
Luka Mucic 27.6 23.2

Jürgen Müller (from 1/1/2019) 4.8 -

Stefan Ries 16.8 12.6

Thomas Saueressig (from 11/1/2019) 0.2 -

1)
The rights shown here for Bill McDermott refer solely to rights under the pension plan
for SAP America.

40 Compensation Report
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Postcontractual Non-Compete Provisions member of the Executive Board for at least one year or if they leave
Each Executive Board member’s contract includes a 12-month SAP SE for reasons for which they are responsible. Upon the
postcontractual non-compete agreement. During this non-compete appointment of Jürgen Müller and Thomas Saueressig to the
period, Executive Board members receive abstention payments Executive Board, the Supervisory Board abstained from the waiting
corresponding to 50% of their average contractual compensation period of one year in consideration of their long-term successful
as members. This average is calculated on the basis of the tenures with SAP.
preceding three years. Any other occupational income generated by If an Executive Board member’s appointment to the Executive
the Executive Board member is deducted from their compensation. Board expires or ceases to exist because of, or as a consequence of,
The following table presents the theoretical amounts for the net change or restructuring, or due to a change of control, SAP SE and
present values of the postcontractual non-compete abstention each Executive Board member has the right to terminate the
payments. The calculation assumes the following: employment contract within eight weeks of the occurrence by
– The Executive Board member leaves SAP at the end of their giving six months’ notice. A change of control is deemed to occur
respective current contract term. when:
– Their final average contractual compensation prior to their – A third party is required to make a mandatory takeover offer to
departure equals their compensation in 2019. the shareholders of SAP SE under the German Securities
Actual postcontractual non-compete payments will likely differ Acquisition and Takeover Act;
from these amounts depending on the time of departure and the – SAP SE merges with another company and becomes the
compensation levels and target achievements at the time of subsumed entity;
departure. – A control or profit transfer agreement is concluded with SAP SE
as the dependent company.
Net Present Values of the Postcontractual Non- An Executive Board member’s contract can also be terminated
Compete Abstention Payments before full term if their appointment as an Executive Board member
€ thousands Contract Net Present of SAP SE is revoked in connection with a change of control.
Term Expires Value of
Postcontractual
Non-Compete Postcontractual Non-Compete Provisions
Abstention Abstention compensation for the postcontractual non-compete
Payment1)
Christian Klein (Co-CEO from period as described above is also payable on early contract
4/30/2025 2,607
10/10/2019) termination.
Jennifer Morgan (Co-CEO from
4/30/2025 2,787
10/10/2019) Payments to Executive Board Members Resigning
Adaire Fox-Martin 4/30/2025 2,211 in 2019
Michael Kleinemeier 12/31/2020 2,024 Robert Enslin resigned from his position as Executive Board
member on his own accord with effect from April 5, 2019, therefore
Luka Mucic 3/31/2021 2,016
no severance payment was made. The STI 2019 and the granted
Jürgen Müller (from 1/1/2019) 12/31/2021 1,915 rights under the LTI 2016 Plan were handled according to plan
terms. The postcontractual non-compete provision was canceled
Stefan Ries 3/31/2024 1,817
without compensation.
Thomas Saueressig (from 11/1/2019) 10/31/2022 394 Bernd Leukert reached a mutual agreement with the
Total 15,771 Supervisory Board to end his employment at SAP with immediate
1)
effect on March 31, 2019. He received the following payments in
For the purpose of this calculation, the following discount rates have been applied:
Christian Klein 0.26%; Jennifer Morgan 0.26%; Adaire Fox.Martin 0.26%; Michael connection with his retirement for the remainder of the term of
Kleinemeier –0.13%; Luka Mucic –0.12%; Jürgen Müller –0.05%; Stefan Ries 0.17%; appointment until March 31, 2021:
Thomas Saueressig 0.03%.
– Discounted severance payment equaling the appropriately
discounted target salary (base salary plus target STI) totaling
Early End-of-Service Undertakings €3,646,393.
Severance Payments – Granted rights under the LTI 2016 Plan were handled according
to plan terms with respect to the performance criteria and the
The standard contract for all Executive Board members provides
payout schedule.
that on termination before full term (for example, by the Company
– As compensation for the LTI tranches 2020 and 2021 which are
without cause where the member’s appointment is revoked, where
not granted due to early termination, a one-time gross payment
the member becomes occupationally disabled, or in connection
of €999,412.
with a change of control), SAP SE will pay to the member the
– For a period of 24 months, monthly abstention compensation for
outstanding part of the compensation target for the entire
the postcontractual non-compete period totaling €4,723,398.
remainder of the term, appropriately discounted for early payment.
– One-time payment to his retirement account in the amount of
Starting 2018, in accordance with the German Corporate
€336,720.
Governance Code (GCGC), section 4.2.3, payments made to an
Executive Board member due to early termination must not exceed Bill McDermott resigned from his position as Executive Board
twice the annual total compensation, or 150% of the severance member on his own accord with effect from November 15, 2019,
payment cap in case of change of control. Members are not entitled therefore no severance payment was made. The STI 2019 and the
to that severance payment if they have not served SAP as a granted rights under the LTI 2016 Plan were handled according to

Compensation Report 41
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

plan terms. Negotiations regarding abstention compensation for omissions. The current D&O policy includes an individual deductible
post-contractual non-compete obligations are still ongoing. for Executive Board members of SAP SE as required by
section 93 (2) of the German Stock Corporation Act.
Permanent Disability
In case of permanent disability, an Executive Board member’s
contract will end at the end of the quarter in which the permanent
Compensation for Supervisory Board
inability to work was determined. The Executive Board member Members
receives, in addition to a potential disability pension under the
retirement plan described above, the monthly basic salary (fixed Compensation System
compensation) for a further 12 months starting from the date the Supervisory Board members’ compensation is governed by our
permanent disability is determined. Articles of Incorporation, section 16.
Each member of the Supervisory Board receives, in addition to
Payments to Former Executive Board Members the reimbursement of their expenses, an annual basic
In 2019, we paid pension benefits of €2,081,100 to Executive compensation of €165,000. The chairperson receives €275,000
Board members who had retired before January 1, 2019 (2018: and the deputy chairperson €220,000 annually. In addition, we
€2,054,300). At the end of 2019, the DBO for former Executive reimburse members of the Supervisory Board for the value-added
Board members who had retired or left SAP before January 1, 2019 tax payable on their compensation.
was €44,306,300 (2018: €38,373,500). Plan assets of €31,074,600 For membership of the Audit Committee, Supervisory Board
are available to meet these obligations (2018: €31,615,100). members receive an additional fixed annual compensation of
€16,500, and for membership of any other Supervisory Board
Executive Board: Other Information committee €11,000, provided that the committee concerned has
We did not grant any compensation advance or credit to, or met in the year. The chairperson of the Audit Committee receives
enter into any commitment for the benefit of, any member of our €27,500, and the chairpersons of the other committees receive
Executive Board in 2019 or the previous year. €22,000. The fixed remuneration is payable after the end of the
As far as the law permits, SAP SE and its affiliated companies in year.
Germany and elsewhere indemnify and hold harmless their Any members of the Supervisory Board who have served for less
respective directors and officers against and from the claims of than the entire year receive one-twelfth of the annual remuneration
third parties. To this end, we maintain directors’ and officers’ (D&O) for each month of service commenced. This also applies to the
group liability insurance. The policy is annual and is renewed from increased compensation of the chairperson and the deputy
year to year. The insurance covers the personal liability of the chairperson(s) and to the remuneration for the chairperson and the
insured group for financial loss caused by its managerial acts and members of a committee.

42 Compensation Report
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Supervisory Board Members' Compensation in 2019

€ thousands 2019 2018
Fixed Compensation Total Fixed Compensation Total
Compensation for Commit- Compensation for Commit-
tee Work tee Work

Prof. Dr. h.c. mult. Hasso Plattner (chairperson) 275.0 53.2 328.2 275.0 88.0 363.0

Margret Klein-Magar (deputy chairperson) 220.0 26.6 246.6 220.0 22.0 242.0

Pekka Ala-Pietilä 165.0 18.3 183.3 165.0 40,3 205.3

Panagiotis Bissiritsas 165.0 39.4 204.4 165.0 38.5 203.5

Martin Duffek (until 5/15/2019) 68.8 16.0 84.8 165.0 38.5 203.5

Aicha Evans 165.0 33.0 198.0 165.0 29.3 194.3

Anja Feldmann (until 12/31/2018) NA NA NA 165.0 19.3 184.3

Diane Greene (from 5/17/2018) 165.0 11.0 176.0 110.0 2.8 112.8

Prof. Dr. Wilhelm Haarmann (until 5/17/2018) NA NA NA 68.5 13.8 82.3

Andreas Hahn (until 5/15/2019) 68.8 9.2 77.9 165.0 22.0 187.0

Prof. Dr. Gesche Joost 165.0 22.0 187.0 165.0 22.0 187.0

Monika Kovacka-Dimitrova (from 5/15/2019) 110.0 14.7 124.7 NA NA NA

Lars Lamadé 165.0 22.9 187.9 165.0 22.0 187.0

Bernard Liautaud 165.0 22.0 187.0 165.0 33.0 198.0

Gerhard Oswald (from 1/1/2019) 165.0 52.3 217.3 NA NA NA

Christine Regitz 165.0 30.3 195.3 165.0 22.0 187.0

Dr. Friederike Rotsch (from 5/17/2018) 165.0 43.1 208.1 110.0 18.3 128.3

Dr. Erhard Schipporeit (until 5/15/2019) 68.8 20.6 89.4 165.0 46.8 211.8

Robert Schuschnig-Fowler (until 5/15/2019) 68.8 9.2 77.9 165.0 22.0 187.0

Dr. Sebastian Sick (until 5/15/2019) 68.8 9.2 77.9 165.0 22.0 187.0

Heike Steck (from 5/15/2019) 110.0 14.7 124.7 NA NA NA

Pierre Thiollet (until 5/15/2019) 68.8 4.6 73.3 165.0 11.0 176.0

Christa Vergien-Knopf (from 5/15/2019) 110.0 14.7 124.7 NA NA NA

Dr. Gunnar Wiedenfels (from 5/15/2019) 110.0 25.7 135.7 NA NA NA

James Wright (from 5/15/2019) 110.0 25.7 135.7 NA NA NA

Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer
NA NA NA 68.5 6.9 75.4
(until 5/17/2018)
Ralf Zeiger (from 5/15/2019) 110.0 14.7 124.7 NA NA NA

Total 3,217.5 552.7 3,770.2 3,162.0 540.4 3,702.4

In 2019, we received services from members of the Supervisory Hasso Plattner, the chairperson of the Supervisory Board,
Board (including services from employee representatives on the entered into a consulting contract with SAP after joining the
Supervisory Board in their capacity as employees of SAP) in the Supervisory Board in May 2003. The contract does not provide for
amount of €1,976,000 (2018: €1,206,500). any compensation. The only cost we incurred under the contract
was the reimbursement of expenses.
Long-Term Incentives for the Supervisory Board
As far as the law permits, we indemnify Supervisory Board
We do not offer members of the Supervisory Board share-based members against, and hold them harmless from, claims brought by
payment for their Supervisory Board work. Any share-based
third parties. To this end, we maintain directors’ and officers’ (D&O)
payment awards received by employee-elected members relate to
group liability insurance. In accordance with section 3.8 of the
their position as SAP employees and not to their work on the
GCGC, each member of the Supervisory Board will bear a
Supervisory Board.
deductible of at least 10% of any loss. The deductible is capped at
Supervisory Board: Other Information 1.5 times a member’s fixed annual compensation.
We did not grant any compensation advance or credit to, or
enter into any commitment for the benefit of, any member of our
Supervisory Board in 2019 or the previous year.

Compensation Report 43
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Responsibility Statement
To the best of our knowledge, and in accordance with the
applicable reporting principles, the Consolidated Financial
Statements give a true and fair view of the assets, finances, and
operating results of the SAP Group, and the management report of
the Group and SAP SE includes a fair review of the development and
performance of the business and the position of the Group and SAP
SE, together with a description of the principal opportunities and
risks associated with the expected development of the Group and
SAP SE.

Walldorf, February 18, 2020

SAP SE
Walldorf, Germany

Executive Board of SAP SE

Christian Klein Jennifer Morgan

Adaire Fox-Martin Michael Kleinemeier

Luka Mucic Jürgen Müller

Stefan Ries Thomas Saueressig

44 Responsibility Statement
 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Independent Auditor’s Report

For the consolidated financial statements and Group Management Report we have
issued an unqualified auditor’s report. The English language text below is a
Basis for the Opinions
translation of the independent auditor’s report. We conducted our audit of the consolidated financial statements
and of the Group Management Report in accordance with Section
317 HGB and the EU Audit Regulation No. 537/2014 (referred to
To SAP SE, Walldorf subsequently as “EU Audit Regulation”) and in compliance with
German Generally Accepted Standards for Financial Statement
Report on the Audit of the Consolidated Audits promulgated by the Institut der Wirtschaftsprüfer [Institute
Financial Statements and of the Group of Public Auditors in Germany] (IDW) as well as in supplementary
compliance with the International Standards on Auditing (ISAs) and
Management Report
guidelines of the Public Company Accounting Oversight Board
Opinions (United States).
We have audited the consolidated financial statements of SAP Our responsibilities under those requirements, principles and
SE, Walldorf, and its subsidiaries (the Group), which comprise the standards are further described in the “Auditor’s Responsibilities for
consolidated statements of financial position as at December 31, the Audit of the Consolidated Financial Statements and of the
2019, consolidated income statements, consolidated statements of Group Management Report” section of our auditor’s report. We are
comprehensive income, consolidated statements of changes in independent of the group entities in accordance with the
equity and consolidated statements of cash flows for the financial requirements of European law and German commercial and
year from January 1 to December 31, 2019 and notes to the professional law, and we have fulfilled our other German
consolidated financial statements, including a summary of professional responsibilities in accordance with these requirements.
significant accounting policies. In addition, in accordance with Article 10 (2) point (f) of the EU
In addition, we have audited the combined Group Management Audit Regulation, we declare that we have not provided non-audit
Report by the SAP Group and the management report of SAP SE, services prohibited under Article 5 (1) of the EU Audit Regulation.
Walldorf (“Group Management Report”) for the financial year from We believe that the evidence we have obtained is sufficient and
January 1 to December 31, 2019. In accordance with German legal appropriate to provide a basis for our opinions on the consolidated
requirements, we have not audited the content of those financial statements and on the Group Management Report.
components of the Group Management Report specified in the Key Audit Matters in the Audit of Consolidated
"Other Information" section of our auditor's report. Financial Statements
In our opinion, on the basis of the knowledge obtained in the
Key audit matters are those matters that, in our professional
audit,
judgment, were of most significance in our audit of the consolidated
– the accompanying consolidated financial statements comply, in
financial statements for the financial year from January 1 to
all material respects ,with the IFRSs as adopted by the EU and
December 31, 2019. These matters were addressed in the context of
the additional requirements of German commercial law pursuant
our audit of the consolidated financial statements as a whole, and in
to Section 315e (1) HGB [Handelsgesetzbuch: German
forming our opinion thereon, we do not provide a separate opinion
Commercial Code], as well as the IFRSs as adopted by the
on these matters.
International Accounting Standards Board and, in compliance
with these requirements, give a true and fair view of the assets, Revenue
liabilities and financial position of the Group as at December 31, Refer to note (A.1) – Revenue and Group Management Report,
2019, and of its financial performance for the financial year from section Risk Management and Risks.
January 1 to December 31, 2019 and
– the accompanying Group Management Report as a whole The Financial Statement Risk
provides an appropriate view of the Group’s position. In all In the financial year 2019 SAP generated revenue of EUR 27.6
material respects, this Group Management Report is consistent billion, of which EUR 16.1 billion relate to revenues from sales of
with the consolidated financial statements, complies with software licenses and support services.
German legal requirements and appropriately presents the The evaluation of software licenses revenue recognition bears an
opportunities and risks of future development. Our opinion on inherent risk of errors as SAP´s software customer contracts are
the Group Management Report does not cover the content of complex. SAP defined detailed policies, procedures and processes
those components of the Group Management Report specified to manage the accounting for its customer contracts, which are also
in the "Other Information" section of the auditor's report. described in the notes. Applying them often requires significant
Pursuant to Section 322 (3) sentence 1 HGB, we declare that our judgments, in particular in the assessment of the following:
audit has not led to any reservations relating to the legal – (i) whether various contracts are interrelated,
compliance of the consolidated financial statements and of the – (ii) whether product and services qualify as separate
Group Management Report. performance obligations, and

Independent Auditor’s Report 45

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

– (iii) the standalone selling price used to allocate the transaction support revenue that is expected based on last year’s support
price of a customer contract to the performance obligations in revenue, the loss rate of last year´s support contracts and the
the contract current year software sales that trigger additional support revenue.
SAP derives its revenue from different revenue classes. SAP is For all other significant revenue streams we selected samples to
using a Revenue Accounting and Reporting software solution for all determine the accurate revenue recognition.
revenue streams which aims at increasing the level of automation in
Our Observations
SAP’s revenue accounting processes. Primarily due to the high
SAP has developed an adequate framework for determining the
number and complexity of SAP’s customer contracts, the software
accounting treatment for its revenue. For the vast majority of the
solution as well as the application of the processes to these
software arrangements entered into during 2019, it was clear which
contracts bear a significant risk of error. In response to this
of SAP’s revenue recognition policies should be applied. Where
significant risk of error, SAP established processes and manual
there was room for interpretation, SAP’s judgment was balanced
controls to ensure the accurate revenue recognition in the
and appropriate. SAP established adequate processes and manual
consolidated financial statements. An internal task force was
controls to ensure accurate revenue recognition in the consolidated
established by SAP to prevent and remediate issues. The additional
financial statements.
processes and controls focused on agreeing revenues processed
through the Revenue Accounting and Reporting software solution to Assessment of the Group’s tax uncertainties
underlying source documentation such as sales orders or billing Refer to note (C.5) – Income Taxes, and Group Management
plans. Thresholds were determined to focus the control Report section Risk Management and Risks.
performance on significant deviations.
There is the financial statement risk that revenue recognition The Financial Statement Risk
cut-off as at the balance sheet date is incorrect and that revenues SAP operates in multiple tax jurisdictions with complexities and
are allocated incorrectly. uncertainties due to different interpretations of tax laws, such as
those involving revenue sharing and cost reimbursement
Our Audit Approach arrangements. The determination of provisions for tax uncertainties
On software revenue recognition, we evaluated the compliance requires SAP to make judgments on tax issues and develop
of SAP’s accounting policies with the IFRS Framework and IFRS 15. estimates regarding SAP’s exposure to tax risks. SAP regularly
We tested certain internal controls within the revenue process to engages external experts to provide tax opinions to support their
identify interrelated contracts and separate performance own risk assessment. The risk for the consolidated financial
obligations, to develop estimates of stand-alone selling prices to statements relates to the completeness, measurement and
allocate the transaction price. disclosure of the provision for uncertain tax treatments. As at
For a sample of customer contracts, which were selected using a December 31, 2019 SAP disclosed contingent liabilities relating to
statistical approach, we also: tax uncertainties of EUR 2,013 million.
– inspected the underlying contractual agreements and other
related documents as well as inquiries with SAP’s accounting Our Audit Approach
and/or sales representatives to evaluate SAP’s assessment of We tested certain internal controls over the tax process including
whether contracts were interrelated as well as identified controls over the Group’s assessment of tax law and the process to
performance obligations and allocation of transaction price; estimate the related exposures. We assessed the competency, skill
– obtained and inspected external confirmations of the key terms and objectivity of the external experts as well as the opinions they
and conditions from the respective customers to test the prepared. We inquired of the Group’s tax department and inspected
contract identification as well as the performance obligations correspondence with the responsible tax authorities. We involved
and the transaction price and our tax professionals with specialized skills and knowledge, who
– evaluated whether the revenue recognition policies applicable to assisted in evaluating SAP´s conclusion´s over the estimate of tax
each separate performance obligation were applied uncertainties based on knowledge and experience regarding the
appropriately to ensure that revenue is recognized in the correct application of relevant legislation by tax authorities and the courts.
period.
Our Observations
We evaluated the stand-alone selling prices for each of the
SAP’s judgments as to the amounts recognized as tax provisions
deliverables that qualified as a separate performance obligation by
for tax uncertainties as at December 31, 2019 are appropriate.
assessing the methodology applied, testing mathematical accuracy
of the underlying calculations, and testing a sample of customer Accounting for the acquisition of Qualtrics International Inc.,
contracts to evaluate the underlying transaction data. Provo/USA
On the Revenue Accounting and Reporting software solution and Refer to note (D.1) – Business Combinations.
the related process we tested the design and operating
effectiveness of the manual controls that were implemented to The Financial Statement Risk
On January 23rd, 2019 SAP acquired Qualtrics International Inc.,
agree revenues processed through the Revenue Accounting and
Provo, USA (“Qualtrics”). The purchase price amounted to EUR
Reporting software solution to underlying source documentation. In
6,449 million. In allocating the purchase price to identifiable assets
this regard, we also assessed whether the reports used by SAP to
acquired and liabilities assumed, SAP recognised net assets in the
perform the controls were complete and accurate and evaluated
amount of EUR 1,434 million, and goodwill in the amount of EUR
the results of management’s testing. For the majority of software
5,015 million.
support revenue, we compared the actual support revenue with the

46 Independent Auditor’s Report

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

SAP engaged an external valuation expert to determine and higher risk that the goodwill may be impaired. The key assumptions
measure the identifiable assets acquired. relate to the budgeted revenue growth, budgeted operating margin,
The recognition and initial measurement of the assets acquired and discount rate, whereas minor changes to those assumptions
is complex and is based on the Executive Board’s judgmental have a significant effect on the estimated recoverable amount.
assumptions. Significant assumptions used in the measurement of SAP engaged an external valuation expert to perform the
intangible assets acquired comprise the projections of the acquired goodwill impairment test.
business’s revenues and margins, asset-specific revenue and
Our Audit Approach
margin adjustments, estimated useful lives, royalty and attrition
SAP performed the annual goodwill impairment test at the level
rates, as well as the cost of capital.
of its operating segments as there are no lower levels within SAP at
The risk for the consolidated financial statements relates to
which goodwill is monitored for internal management purposes.
insufficient recognition or incorrect measurement of the assets
SAP’s acquisition executed in the current period led to a material
acquired and the liabilities assumed. In addition, there is the risk
goodwill in the Qualtrics Segment in which SAP mainly develops,
that the disclosures in the notes to the consolidated financial
markets and sells its SAP Qualtrics offerings. Goodwill allocated to
statements are not accurate.
the Qualtrics Segment is EUR 2,882 Mio as of December 31, 2019
Our Audit Approach (4.8 % of consolidated balance sheet total).
We tested certain internal controls over the Company´s The respective impairment test is complex and involves
acquisition-date valuation process including controls over the significant judgment. The estimated recoverable amount of the
identification of intangible assets separate from goodwill and Qualtrics Segment approximated its carrying amount, indicating a
controls to develop the relevant assumptions mentioned above. higher risk that the goodwill may be impaired. The key assumptions
We involved our valuation professionals with specialized skills relate to the budgeted revenue growth, budgeted operating margin,
and knowledge, who assisted in testing the assumptions as listed and discount rate, whereas minor changes to those assumptions
above by comparing them to our own expectations based on our have a significant effect on the estimated recoverable amount.
knowledge of the acquired business, our experience in the software SAP engaged an external valuation expert to perform the
industry, and taking into account recent comparable transactions. goodwill impairment test.
The assumptions and parameters underlying the cost of capital
Our Observations
were compared with own assumptions and publicly available data.
The approaches underlying the impairment testing of goodwill
We agreed the total purchase price with the underlying purchase
are appropriate and consistent with the applicable accounting and
agreement and evidence of payment.
valuation principles. SAP applied a balanced set of assumptions in
We assessed the competency, skills and objectivity of the
determining the recoverable amount.
external valuation expert engaged by SAP.
To assess the mathematical accuracy we recalculated amounts Other Information
selected using a risk-oriented approach. The Executive Board and the Supervisory Board, respectively, of
Finally, we assessed whether the disclosures in the notes to the SAP SE is responsible for the other information. The other
consolidated financial statements with respect to the acquisition of information comprises the following unaudited information in the
Qualtrics are accurate. Group Management Report:
Our Observations – the combined non-financial report, included in section “General
The approaches underlying the identification and valuation of Information About This Management Report” of the Group
the assets acquired are appropriate and consistent with the Management Report,
applicable accounting and valuation principles. SAP applied a – the corporate governance statement, included in section
balanced set of key assumptions and parameters. The disclosures “Corporate Governance Fundamentals” of the Group
in the notes to the consolidated financial statements are Management Report, and
appropriate. – Information extraneous to the Group Management Report and
marked as unaudited.
Recoverability of the carrying amount of goodwill for Qualtrics The other information also includes the annual report on Form
Segment 20-F and remaining parts of the annual report.
Refer to note (D.2) – Goodwill. The other information does not include the consolidated
financial statements, group management report information and
The Financial Statement Risk
our auditor's report thereon.
SAP performed the annual goodwill impairment test at the level
Our opinions on the consolidated financial statements and on
of its operating segments as there are no lower levels within SAP at
the Group Management Report do not cover the other information
which goodwill is monitored for internal management purposes.
and consequently we do not express an opinion or any other form of
SAP’s acquisition executed in the current period led to a material
assurance conclusion thereon.
goodwill in the Qualtrics Segment in which SAP mainly develops,
In connection with our audit, our responsibility is to read the
markets and sells its SAP Qualtrics offerings. Goodwill allocated to
other information and, in so doing, to consider whether the other
the Qualtrics Segment is EUR 2,882 Mio as of December 31, 2019
information
(4.8 % of consolidated balance sheet total).
– is materially inconsistent with the consolidated financial
The respective impairment test is complex and involves
statements, with the Group Management Report information
significant judgment. The estimated recoverable amount of the
audited for content or our knowledge obtained in the audit, or
Qualtrics Segment approximated its carrying amount, indicating a

Independent Auditor’s Report 47

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

– otherwise appears to be materially misstated. appropriate view of the Group’s position and, in all material
If, based on the work we have performed, we conclude that there respects, is consistent with the consolidated financial statements
is a material misstatement of this other information, we are and the knowledge obtained in the audit, complies with the German
required to report that fact. We have nothing to report in this regard. legal requirements and appropriately presents the opportunities
In addition, we were engaged to perform an independent and risks of future development, as well as to issue an auditor’s
assurance engagement on selected qualitative and quantitative report that includes our opinions on the consolidated financial
sustainability disclosures of the integrated report 2019. In regard to statements and on the Group Management Report.
the nature, extent and conclusions of this independent assurance Reasonable assurance is a high level of assurance, but is not a
engagement we refer to our Independence Assurance Report dated guarantee that an audit conducted in accordance with Section 317
on February 19, 2020. HGB and the EU Audit Regulation and in compliance with German
Generally Accepted Standards for Financial Statement Audits
Responsibilities of the Executive Board and the
promulgated by the Institut der Wirtschaftsprüfer (IDW) as well as
Supervisory Board for the Consolidated Financial in supplementary compliance with ISAs and guidelines of the Public
Statements and the Group Management Report
Company Accounting Oversight Board (United States) will always
The Executive Board of SAP SE is responsible for the preparation detect a material misstatement. Misstatements can arise from
of the consolidated financial statements that comply, in all material fraud or error and are considered material if, individually or in the
respects, with IFRSs as adopted by the EU and the additional aggregate, they could reasonably be expected to influence the
requirements of German commercial law pursuant to Section 315e economic decisions of users taken on the basis of these
(1) HGB as well as IFRS as adopted by the International Accounting consolidated financial statements and this Group Management
Standards Board and that the consolidated financial statements, in Report.
compliance with these requirements, give a true and fair view of the We exercise professional judgment and maintain professional
assets, liabilities, financial position, and financial performance of the scepticism throughout the audit. We also:
Group. In addition, the Executive Board is responsible for such – Identify and assess the risks of material misstatement of the
internal control as the Executive Board has determined necessary consolidated financial statements and of the Group
to enable the preparation of consolidated financial statements that Management Report, whether due to fraud or error, design and
are free from material misstatement, whether due to fraud or error. perform audit procedures responsive to those risks, and obtain
In preparing the consolidated financial statements, the Executive audit evidence that is sufficient and appropriate to provide a
Board is responsible for assessing the Group’s ability to continue as basis for our opinions. The risk of not detecting a material
a going concern. The Executive Board also has the responsibility for misstatement resulting from fraud is higher than for one
disclosing, as applicable, matters related to going concern. In resulting from error, as fraud may involve collusion, forgery,
addition, the Executive Board is responsible for financial reporting intentional omissions, misrepresentations, or the override of
based on the going concern basis of accounting unless there is an internal control.
intention to liquidate the Group or to cease operations, or there is – Obtain an understanding of internal control relevant to the audit
no realistic alternative but to do so. of the consolidated financial statements and of arrangements
Furthermore, the Executive Board is responsible for the and measures (systems) relevant to the audit of the Group
preparation of the Group Management Report that, as a whole, Management Report in order to design audit procedures that are
provides an appropriate view of the Group’s position and is, in all appropriate in the circumstances.
material respects, consistent with the consolidated financial – Evaluate the appropriateness of accounting policies used by the
statements, complies with the German legal requirements and Executive Board and the reasonableness of accounting
appropriately presents the opportunities and risks of future estimates made by the Executive Board and related disclosures.
development. In addition, the Executive Board is responsible for – Conclude on the appropriateness of the Executive Board’s use of
such arrangements and measures (systems) as the Executive the going concern basis of accounting and, based on the audit
Board has considered necessary to enable the preparation of the evidence obtained, whether a material uncertainty exists related
Group Management Report that is in accordance with the to events or conditions that may cast significant doubt on the
applicable German legal requirements, the German Accounting Group’s ability to continue as a going concern. If we conclude
Standards number 17 and 20 (GAS 17, GAS 20) and the IFRS that a material uncertainty exists, we are required to draw
Practice Statement Management Commentary and to be able to attention in the auditor’s report to the related disclosures in the
provide sufficient appropriate evidence for the assertions in the consolidated financial statements and in the Group
Group Management Report. Management Report or, if such disclosures are inadequate, to
The Supervisory Board is responsible for overseeing the Group’s modify our respective opinions. Our conclusions are based on
financial reporting process for the preparation of the consolidated the audit evidence obtained up to the date of our auditor’s
financial statements and of the Group Management Report. report. However, future events or conditions may cause the
Auditor’s Responsibilities for the Audit of the Group to cease to be able to continue as a going concern.
Consolidated Financial Statements and of the – Evaluate the overall presentation, structure and content of the
Group Management Report consolidated financial statements, including the disclosures, and
whether the consolidated financial statements present the
Our objectives are to obtain reasonable assurance about
underlying transactions and events in a manner that the
whether the consolidated financial statements as a whole are free
consolidated financial statements give a true and fair view of the
from material misstatement, whether due to fraud or error, and
assets, liabilities, financial position and financial performance of
whether the Group Management Report as a whole provides an

48 Independent Auditor’s Report

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

the Group in compliance with IFRSs as adopted by the EU as well the Internal Control – Integrated Framework (2013) issued by the
as with IFRSs as adopted by the International Accounting COSO.
Standards Board and the additional requirements of German
Executive Board’s and Supervisory Board’s
commercial law pursuant to Section 315e(1) HGB.
– Obtain sufficient appropriate audit evidence regarding the
Responsibility for the Internal Control over
Financial Reporting in the Consolidated Financial
financial information of the entities or business activities within
Statements
the Group to express opinions on the consolidated financial
statements and on the Group Management Report. We are SAP SE’s Executive Board is responsible for maintaining
responsible for the direction, supervision and performance of effective internal control over financial reporting in the consolidated
the group audit. We remain solely responsible for our opinions. financial statements and assessing its effectiveness, which is
– Evaluate the consistency of the Group Management Report with included in the Executive Board’s report on the internal control over
the consolidated financial statements, its conformity with consolidated financial reporting.
German law, and the view of the Group’s position it provides. A company’s internal control over financial reporting in the
– Perform audit procedures on the prospective information consolidated financial statements is a process designed to provide
presented by the Executive Board in the Group Management reasonable assurance regarding the reliability of financial reporting
Report. On the basis of sufficient appropriate audit evidence we in the consolidated financial statements and the preparation of
evaluate, in particular, the significant assumptions used by the financial statements for external purposes in accordance with
Executive Board as a basis for the prospective information, and generally accepted accounting principles. A company’s internal
evaluate the proper derivation of the prospective information control over financial reporting in the consolidated financial
from these assumptions. We do not express a separate opinion statements includes policies and procedures to (1) ensure an
on the prospective information and on the assumptions used as accounting system that in reasonable detail accurately and fairly
a basis. There is a substantial unavoidable risk that future events reflects the transactions and dispositions of the company’s assets,
will differ materially from the prospective information. (2) provide reasonable assurance that transactions are recorded as
We communicate with the Supervisory Board regarding, among necessary to permit preparation of financial statements in
other matters, the planned scope and timing of the audit and accordance with generally accepted accounting principles, and (3)
significant audit findings, including any significant deficiencies in provide reasonable assurance regarding prevention or timely
internal control that we identify during our audit. detection of unauthorized acquisition, use or disposition of the
We also provide the Supervisory Board with a statement that we company’s assets that could have a material effect on the financial
have complied with relevant independence requirements, and statements.
communicate with them all relationships and other matters that Because of its inherent limitations, internal control over financial
may reasonably be thought to bear on our independence, and reporting may not prevent or detect material misstatements. Also,
where applicable the related safeguards. projections of any evaluation of effectiveness to future periods are
From the matters communicated with the Supervisory Board, we subject to the risk that controls may become inadequate because
determine those matters that were of most significance in the audit of changes in conditions, or that the degree of compliance with the
of the consolidated financial statements of the current period and policies or procedures may deteriorate.
are therefore the key audit matters. We describe these matters in The Supervisory Board is responsible for overseeing the Group’s
our auditor’s report, unless law or regulation precludes public internal control over financial reporting in the consolidated financial
disclosure about the matter. statements.

Auditor’s Responsibility for the Internal Control

Other Legal and Regulatory over Financial Reporting in the Consolidated
Requirements Financial Statements
Our responsibility is to express an opinion on the internal control
Report on Internal Control over Financial over financial reporting in the consolidated financial statements
Reporting in the Consolidated Financial based on our audit. We conducted our audit in accordance with the
Statements pursuant to PCAOB standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform
Opinion on Internal Control over Financial
Reporting in the Consolidated Financial the audits to obtain reasonable assurance about whether effective
Statements internal control over financial reporting in the consolidated financial
statements was maintained in all material respects. Our audit of
We have audited the internal control over financial reporting in
internal control over financial reporting in the consolidated financial
the consolidated financial statements of SAP SE, Walldorf, and its
statements included obtaining an understanding of internal control
subsidiaries in place as at December 31, 2019. This control system
over financial reporting, assessing the risk of material deficiencies
is based on criteria set out in the Internal Control – Integrated
in internal control, testing and evaluating the design and operating
Framework (2013) issued by the Committee of Sponsoring
effectiveness of internal control based on this assessment, and
Organizations of the Treadway Commission (COSO).
performing such other procedures as we considered necessary in
In our opinion, SAP maintained, in all material respects, effective
the circumstances.
internal control over financial reporting in the consolidated financial
We believe that the audit evidence we have obtained is sufficient
statements as at December 31, 2019 based on the criteria set out in
and appropriate to provide a basis for our opinion.

Independent Auditor’s Report 49

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Further Information pursuant to Article 10 of the German Public Auditor Responsible for the
EU Audit Regulation Engagement
We were elected as group auditor at the annual general meeting The German Public Auditor responsible for the engagement is
on May 15, 2019. We were engaged by the Chairman of the Audit Bodo Rackwitz.
Committee of the Supervisory Board of SAP SE on May 23, 2019,
and this engagement was confirmed on July 31, 2019. We have been
the group auditor of SAP SE without interruption since the financial
year 2002.
We declare that the opinions expressed in this auditor’s report Mannheim, February 19, 2020
are consistent with the additional report to the audit committee
pursuant to Article 11 of the EU Audit Regulation (long-form audit
report). KPMG AG
In addition to the financial statement audit, we have provided to Wirtschaftsprüfungsgesellschaft
group entities the following services that are not disclosed in the [Original German version signed by:]
consolidated financial statements or in the Group Management
Report:
We audited the financial statements of SAP SE and performed
various financial statement audits at subsidiaries. Furthermore, Rackwitz Schneider
other assurance services required by law or on a contractual basis Wirtschaftsprüfer Wirtschaftsprüferin
were performed, including an assurance engagement on selected [German Public Auditor] [German Public Auditor]
qualitative and quantitative sustainability disclosures of the
Integrated Report 2019 and an EMIR assurance service pursuant to
section 20 of German Securities Trading Act [WpHG] and service
organization attestation procedures.

50 Independent Auditor’s Report

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Combined Group Management Report

General Information About This Management Report...............................................................................................................................................52
Strategy and Business Model ......................................................................................................................................................................................54
Performance Management System ........................................................................................................................................................................... 60
Products, Research & Development, and Services....................................................................................................................................................67
Security, Data Protection, and Privacy ....................................................................................................................................................................... 71
Customers .....................................................................................................................................................................................................................74
Employees and Social Investments............................................................................................................................................................................. 75
Energy and Emissions ................................................................................................................................................................................................. 80
Financial Performance: Review and Analysis ............................................................................................................................................................ 83
Corporate Governance Fundamentals ...................................................................................................................................................................... 101
Business Conduct ....................................................................................................................................................................................................... 103
Risk Management and Risks ...................................................................................................................................................................................... 105
Expected Developments and Opportunities ............................................................................................................................................................. 126

Combined Group Management Report 51

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

General Information About This

Management Report

Basis of Presentation Forward-Looking Statements

This combined group management report by the SAP Group This management report contains forward-looking statements
(collectively, “we,” “us,” “our,” “SAP,” “Group,” or “Company”) and the and information based on the beliefs of, and assumptions made by,
management report of SAP SE have been prepared in accordance SAP management using information currently available to them.
with sections 289, 289a, 289f, 315, 315a, and 315d of the German Any statements contained in this report that are not historical facts
Commercial Code and German Accounting Standards (GAS) No. 17 are forward-looking statements as defined in the U.S. Private
and 20. The management report is also a management Securities Litigation Reform Act of 1995. We have based these
commentary complying with the International Financial Reporting forward-looking statements on our current expectations,
Standards (IFRS) Practice Statement “Management Commentary”. assumptions, and projections about future conditions and events.
German Commercial Code, sections 289b and 315b, requires us As a result, our forward-looking statements and information are
to prepare, for both SAP SE and the SAP Group, a non-financial subject to uncertainties and risks, many of which are beyond our
statement within the management report or a non-financial report control. If one or more of these uncertainties or risks materializes,
outside of the management report in which we report on social, or if management’s underlying assumptions prove incorrect, our
environmental, and other non-financial matters. The required actual results could differ materially from those described in or
disclosures can be, but do not need to be, a separate section in our inferred from our forward-looking statements and information. We
management report. Instead, the information required can also be describe these risks and uncertainties in the Risk Management and
provided, in an integrated manner, in the different sections of the Risks section.
management report. SAP released a combined non-financial report The words “aim,” “anticipate,” “assume,” “believe,” “continue,”
outside of the combined management report but within our online “could,” “counting on,” “is confident,” “development,” “estimate,”
integrated report with references to the sections of our combined “expect,” “forecast,” “future trends,” “guidance,” “intend,” “may,”
management report. This combined non-financial report is available “might,” “outlook,” “plan,” “predict,” “project,” “seek,” “should,”
at http://www.sap.com/investors/sap-2019-combined-non- “strategy,” “want,” “will,” “would,” and similar expressions as they
financial-report. We believe that this approach is best aligned with relate to us are intended to identify such forward-looking
SAP’s integrated reporting strategy, also taking into account that all statements. Such statements include, for example, those made in
non-financial information stipulated in the German Commercial the Operating Results section, our quantitative and qualitative
Code, sections 289c and 315c, that is relevant to understand SAP’s disclosures about market risk pursuant to the International
development, business performance, and the position of the Group Financial Reporting Standards (IFRS), namely IFRS 7 and related
and SAP SE is included in our combined management report. statements in our Notes to the Consolidated Financial Statements;
Our auditor, KPMG AG Wirtschaftsprüfungsgesellschaft (KPMG), Expected Developments and Opportunities section; Risk
audited SAP’s combined group management report, except for Management and Risks section; and other forward-looking
information that was not subject to the statutory audit of our information appearing in other parts of this report. To fully consider
combined group management report, but on which a limited the factors that could affect our future financial results, both this
assurance engagement was performed as stated in the following in report and our Annual Report on Form 20-F should be considered,
this paragraph. Additionally, KPMG performed an independent as well as all of our other filings with the U.S. Securities and
assurance engagement on selected qualitative and quantitative Exchange Commission (SEC). Readers are cautioned not to place
sustainability disclosures. The SAP’s Impact; Security, Data undue reliance on these forward-looking statements, which speak
Protection, and Privacy; Employees and Social Investments; Energy only as of the date specified or the date of this report. We undertake
and Emissions; and Business Conduct sections include information no obligation to publicly update or revise any forward-looking
that was not subject to the statutory audit of our combined group statements as a result of new information that we receive about
management report, but on which a limited assurance engagement conditions that existed upon issuance of this report, future events,
was performed. These sections contain further explanations about or otherwise unless we are required to do so by law.
the audit scope in an info box at the end of the respective section This report includes statistical data about the IT industry and
marked by the symbol . For more information about the scope of global economic trends that comes from information published by
the assurance and the underlying reporting criteria, see KPMG’s sources including International Data Corporation (IDC), Gartner, the
Independent Auditor’s Report and the Assurance Report of the European Central Bank (ECB), and the International Monetary Fund
Independent Auditor on Selected Qualitative and Quantitative (IMF). This type of data represents only the estimates of IDC,
Sustainability Disclosures in the SAP Integrated Report. Gartner, the ECB, the IMF, and other sources of industry data. SAP
All of the information in this report relates to the situation as at does not adopt or endorse any of the statistical information
December 31, 2019, or the fiscal year ended on that date, unless provided by sources such as IDC, Gartner, the ECB, the IMF, or other
otherwise stated. similar sources that is contained in this report. The data from these

52 General Information About This Management Report

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

sources is subject to risks and uncertainties, and subject to change

based on various factors, including those described above, in the
Risk Management and Risks section, and elsewhere in this report.
These and other factors could cause our results to differ materially
from those expressed in the estimates made by third parties and
SAP. We caution readers not to place undue reliance on this data.

General Information About This Management Report 53

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Strategy and Business Model

Overview of SAP Our vision for the intelligent enterprise, an event-driven, real-
time business, focuses on three key objectives:
Founded in 1972, SAP is a global company headquartered in
– Create a new end-to-end customer experience through a
Walldorf, Germany. Our legal corporate name is SAP SE. SAP is the
platform for Experience Management that allows businesses to
market leader in enterprise application software1) and also the
collect, understand, and act on feedback across their customers,
leading experience management, analytics, and business
employees, products, and brands in real time. In particular, we
intelligence company. The SAP Group has a global presence and
enable companies to enhance feedback with analytics, so they
employs more than 100,000 people.
not only can understand what is being said, but also why.
Our ordinary shares are listed on the Frankfurt Stock Exchange.
– Achieve a step change in productivity through the next level of
American Depositary Receipts (ADRs) representing SAP SE
automation in business processes powered by artificial
ordinary shares are listed on the New York Stock Exchange (NYSE).
intelligence/machine learning (AI/ML) embedded in every part
SAP is a member of Germany’s DAX and TecDAX as well as the Dow
of the business process (across financials, supply chain,
Jones EURO STOXX 50, the Dow Jones Sustainability Index World,
manufacturing, procurement, travel, and human resources). AI is
and the Dow Jones Sustainability Index Europe. As at
defined as algorithms that learn from data without being
December 31, 2019, SAP was the most valuable company in the
explicitly programmed, thus empowering enterprises to scale by
DAX and the 49th most valuable company globally based on market
automating business processes. The key to doing so is improving
capitalization. SAP was ranked as the most sustainable software
the cycle time of business processes and injecting speed and
company in the Dow Jones Sustainability Indices for the thirteenth
increasing quality wherever possible.
consecutive year.
– Help companies engage their workforces by delivering total
SAP SE is the parent company of the SAP Group. As at
workforce engagement across full-time and contingent labor.
December 31, 2019, the SAP Group comprised 264 companies that
At SAP, our commitment to our customers is to help them meet
develop, distribute, and provide our products, solutions, and
today’s challenges and prepare for anticipated challenges of the
services. For a list of our subsidiaries, associates, and other equity
future. SAP aims to deliver on these objectives by leveraging the
investments, see the Notes to the Consolidated Financial
power of data in SAP software with technologies such as AI/ML to
Statements, Note (G.9).
build powerful intelligent applications.
Our Purpose Becoming the “Experience Company powered
At SAP, our purpose is to “help the world run better and improve by the Intelligent Enterprise”
people’s lives” by empowering our customers to create a better
Our software, technologies, and services address the three core
economy, society, and environment for the world.
elements of the intelligent enterprise for the 25 industries and the
In line with our purpose, we are committed to supporting the
12 lines of business (LoBs) we serve:
United Nations Sustainable Development Goals (UN SDGs).
– An intelligent suite of LoB applications that includes enterprise
Technology-driven innovation underpins how SAP, together with our
resource planning (ERP) and digital supply chain management,
customers and our partner ecosystem, can execute initiatives
as well as solutions for customer experience, intelligent spend
across all 17 of the UN SDGs. Our goal is to lead the evolution of
management, and human experience management. The
technology while also helping ensure that the focus remains on
intelligent suite is integrated and differentiated through industry-
taking responsibility for its outcomes and societal effects. Examples
specific business processes for end-to-end scenarios.
of how we are doing this include the focus of social investments on
– A business technology platform to help customers manage
building digital skills and our guiding principles for artificial
data orchestration across their entire application footprint. This
intelligence and governance.
includes real-time visibility into distributed data silos using data
management solutions and an open cloud platform as a
Our Strategy business platform for integration and business process
SAP’s strategy is to be the Experience Company powered by innovation.
the Intelligent Enterprise.2) We believe every digital interaction is – An Experience Management (XM) platform, bringing together
an opportunity for a company to positively influence a customer. experience data (X-data) and operational data (O-data) to help
Through these interactions, companies can measure “experiences” organizations manage four core experiences – customer,
– such as customer satisfaction, employee engagement, partner employee, product, and brand. This includes using API-based
collaboration, and brand impact. These interactions are also integration between XM and the intelligent suite to connect X-
opportunities for companies to understand how end users and data with relevant O-data.
customers perceive a vendor or a product. We want to help every For more information about the products and solutions offered
SAP customer thrive in today’s “experience economy” by equipping as part of our strategy framework, see the Products, Research &
them with the technologies to become intelligent enterprises. Development, and Services section.

54 Strategy and Business Model

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Our people are critical to delivering our strategy, as they are key Sapphire Ventures
in delivering innovations to help our customers transform. For more
In addition to our investments in organic growth and
information, see the Employees and Social Investments section.
acquisitions, SAP also supports entrepreneurs that aspire to build
industry-leading businesses, through venture capital funds
Acquisitions managed by Sapphire Ventures. Sapphire Ventures manages over
We will continue to focus on organic investments in technology US$3.5 billion and has invested in more than 160 companies. These
and innovations that ensure sustainable growth of our solution include growth-stage technology companies and early-stage
portfolio to drive our short-term, mid-term, and long-term venture capital funds. Sapphire Ventures pursues opportunities in
ambitions. Additionally, we may make targeted acquisitions to which it can help fuel enterprise growth by adding expertise,
complement our solution offerings and improve coverage in key relationships, geographic reach, and capital. It places a particular
strategic markets. focus on companies in Europe, Israel, and the United States. In
In January 2019, we acquired Qualtrics International, Inc., a addition to our venture investments through Sapphire Ventures,
leader in the Experience Management (XM) software category that SAP also has the SAP.iO Fund, managed by Sapphire Ventures, that
enables organizations to thrive in today’s economy. The acquisition focuses on strategic early-stage investments in enterprise software
closed on January 23, 2019. Together, SAP and Qualtrics are startups. As a part of the SAP.iO Fund, SAP has also committed to
working to accelerate the new XM category by combining invest up to 40% of the investable capital in underrepresented
experience data and operational data to power the experience groups in enterprise software to foster diversity and inclusion, such
economy. For more information about the Qualtrics segment, see as startups founded or led by female entrepreneurs.
the Notes to the Consolidated Financial Statements, Note (C.1).
For more information about the acquisition of Qualtrics 1) Enterprise application software is computer software specifically developed to
International Inc., see the Notes to the Consolidated Financial support and automate business processes.
Statements, Note (D.1). 2) An “intelligent enterprise” is an event-driven, real-time business powered by
technology that includes machine learning, blockchain, the Internet of Things, and
analytics capabilities to help scale innovation.

Strategy and Business Model 55

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

SAP’s Impact

We innovate software and technology solutions that help Inputs

empower our customers to become intelligent enterprises. For us, This process does not happen in a vacuum. It is enabled by
delivering an intelligent enterprise and helping our customers thrive internal and external inputs, most importantly customer insights
in the experience economy are essential for a better, more and broader stakeholder dialogue, financial capital, employees’
productive world. By helping unlock the potential of innovation, we expertise, and intellectual property, products and services from our
support businesses and governments with having a positive impact partner ecosystem, as well as the IT infrastructure we rely on.
on the economies, societies, and environments in which they exist.
In this way, we aim to fulfill our purpose of helping the world run Impact
better and improving people’s lives. Our solutions enable impact at our customers and – through
them – in the world. The following are some examples of our impact
Our Business Model in various areas.
We create value by identifying the business needs of our
customers, then developing and delivering software, services, and Economy
support that address these business needs. Through close SAP software supports the UN SDGs 8 (Decent Work and
collaboration with our customers and partners, we aim to ensure Economic Growth); 9 (Industry, Innovation, and Infrastructure);
that our software creates value for our customers. By obtaining 10 (Reduced Inequalities); and 12 (Responsible Consumption and
customer feedback, we strive to continuously improve our Production) by helping companies provide jobs and strengthening
solutions, identify further business needs, and deliver enhanced industries and infrastructure. For example, SAP software helps:
value to our customers. – Companies work better to bring economic prosperity and fairly
paid jobs to people around the world.
Results – Organizations optimize resource utilization, aspiring for a world
By developing software, providing our software and services to with zero waste.
our customers, and engaging them in feedback, we generate results
Society
for SAP such as growth, profitability, employee engagement, and
customer loyalty. SAP software supports the UN SDGs 1 (No Poverty); 2 (Zero
Hunger); 3 (Good Health and Well-Being); 4 (Quality Education);
5 (Gender Equality); 7 (Affordable and Clean Energy);
11 (Sustainable Cities and Communities); and 16 (Peace, Justice,

56 Strategy and Business Model

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

and Strong Institutions) by helping create a peaceful and just Furthermore, we know there is power in collaboration and we
society through better healthcare, education, and access to engage in a wide range of partnerships to address
technology. For example: SDG 17 (Partnerships for the Goals).
– We are also deeply committed to empowering the world’s youth,
working adults, differently-abled people, and the unemployed Trade-Offs
with the right skills to thrive in the digital economy. At the same time, we are aware of potential negative impacts of our
– Cities are facing growing populations and aging infrastructures. business activities and strive to mitigate these. For example:
SAP solutions for the Internet of Things can help manage and – An acceleration of the digital divide could decouple societal
monitor resources so that cities can run more sustainably and groups from entire segments of the economy, impacting
help citizens enjoy more enjoyable, safer lives. employment potential. SAP focuses our social investment
activities on providing digital skills to underprivileged people. For
Environment
more information, see the Employees and Social Investments
SAP software supports the UN SDGs 6 (Clean Water and section.
Sanitation); 13 (Climate Action); 14 (Life Below Water); and 15 (Life – We expect increasing energy consumption due to our own
on Land) and helps protect the environment by addressing the need growth and increasing digitization globally. We offer a green
for water, clean energy, and responsible development. For example: cloud to help reduce CO2 footprint. For more information, see the
– We are all affected by climate change. SAP technology is helping Energy and Emissions section.
our customers increase their overall resource productivity and
transform their businesses to reduce carbon outputs.
– With the world population growing steadily, humanity will need to Audit Scope
provide water, food, and shelter to billions of people in the The content of this section was not subject to the statutory audit of
coming years. SAP solutions help our customers reduce water our combined group management report. However, our external
waste and support sustainable management of water and auditor, KPMG, performed an independent limited assurance
sanitation for all. engagement on the contents of this section.

Strategy and Business Model 57

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Measuring Our Success

We use the following financial and non-financial objectives to steer our company:
– Growth
– Profitability
– Customer loyalty
– Employee engagement

The table below provides an overview of the specific key performance indicators (KPIs) used to measure performance within these
objectives and compares this performance with our goals. In addition, we are committed to become carbon neutral in 2025 and therefore
regularly report and analyze the reduction in our carbon footprint. 1

Outlook and Results for 2019

2019 Outlook* 2019 Results
Strategic Objective KPI
(non-IFRS, at constant currencies) (non-IFRS, at constant currencies)

Cloud revenue €6.7 billion to €7.0 billion €6.77 billion

Growth Cloud and software revenue €22.4 billion to €22.7 billion €22.49 billion

Strong increase, at a rate lower than

Total revenue €26.91 billion
operating profit

Profitability Operating profit €7.85 billion to €8.05 billion €7.95 billion

Customer Loyalty Customer Net Promoter Score +1 –6

Employee Engagement Employee Engagement Index 84% to 86% 83%

Carbon Impact Net greenhouse gas emissions 285 kt 300 kt

* The outlook was communicated in January 2019 and financial targets were raised in April. The 2019 outlook numbers above reflect the raised outlook from April 2019.
Note: A reconciliation of non-IFRS results to IFRS equivalent is available in the Performance Management System section.

Outlook for 2020

2019 Results 2020 Outlook
Strategic Objective KPI
(non-IFRS) (non-IFRS, at constant currencies)

Cloud revenue €7.01 billion €8.7 billion to €9.0 billion

Growth Cloud and software revenue €23.09 billion €24.7 billion to €25.1 billion

Total revenue €27.63 billion €29.2 billion to €29.7 billion

Profitability Operating profit €8.21 billion €8.9 billion to €9.3 billion

Customer Loyalty Customer Net Promoter Score –6.0 Increase by three to five points

Employee Engagement Employee Engagement Index 83% 84% to 86%

Carbon Impact Net greenhouse gas emissions 300 kt 238 kt

Note: A reconciliation of non-IFRS results to IFRS equivalent is available in the Performance Management System section.

1
Carbon emissions are part of the short-term incentive in Executive Board compensation as of fiscal year 2020.

58 Strategy and Business Model

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Ambitions for 2023

2023 Ambition
Strategic Objective KPI
(non-IFRS)

Cloud revenue More than triple compared to 2018

Growth
Total revenue More than €35 billion

Increase the non-IFRS operating margin by one percentage point per year on average,
Profitability Operating margin
representing a total expansion of approximately 500 basis points compared to 2018

Customer Loyalty Customer Net Promoter Score Steadily increase

Employee Engagement Employee Engagement Index 84% to 86%

Carbon Impact Net greenhouse gas emissions 95 kt, with the goal of becoming carbon neutral by 2025

Note: A reconciliation of non-IFRS results to IFRS equivalent is available in the Performance Management System section.

Strategy and Business Model 59

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Performance Management System

We use various performance measures to manage our new customers and from incremental purchases by existing
performance with regard to our primary financial objectives, which customers for offerings that generate cloud revenue. For new cloud
are growth and profitability, and our primary non-financial bookings we take into consideration committed deals only, meaning
objectives, which are customer loyalty and employee engagement. utilization-based payments are not included in this measure. In this
We view growth and profitability as indicators of our current way, it is an indicator of cloud-related sales success in a given
performance, while we see customer loyalty and employee period and of secured future cloud revenue. We focus primarily on
engagement as indicators of our future performance. the average contract value variant of the new cloud bookings
measure that generally takes into account annualized amounts for
Measures to Manage Our Financial contracts. There are no comparable IFRS measures for these
Performance bookings metrics.
Cloud backlog: In addition to new cloud bookings, we use the
Measures to Manage Our Operating Financial measure “cloud backlog” to evaluate our sales success in the cloud
Performance business. We define cloud backlog as a measure that represents
expected future cloud revenue that, as of period end, is contracted
In 2019, we used the following key measures to manage our
operating financial performance: but not yet billed.
Operating profit (non-IFRS): We use operating profit (non-IFRS)
Cloud revenue (non-IFRS): This revenue driver comprises the
expressed in both actual currencies and constant currencies to
main revenues of our fast-growing cloud business. Revenue from
measure our overall operational process efficiency and overall
cloud is derived from fees earned from providing customers with
business performance.
any of the following:
Cloud gross margin (non-IFRS): We use our cloud gross margin
– Software as a service (SaaS)
(non-IFRS) to measure our process efficiency in our cloud business.
– Platform as a service (PaaS)
– Infrastructure as a service (IaaS) Cloud gross margin (non-IFRS) is the ratio of our cloud gross profit
(non-IFRS) to cloud revenue (non-IFRS), expressed as a
– Premium cloud support beyond regular support embedded in
percentage.
cloud offerings.
For more information regarding cloud revenue and a description of Operating margin (non-IFRS): We use operating margin to
these services, see the Notes to the Consolidated Financial measure our overall operational efficiency. Operating margin (non-
Statements, Note (A.1). IFRS) is the ratio of our operating profit (non-IFRS) to total revenue
(non-IFRS), expressed as a percentage.
We use the cloud revenue (non-IFRS) measure at both actual
Starting in 2020, new cloud bookings will be replaced by current
currencies and constant currencies.
cloud backlog (CCB), both in actual and at constant currencies, to
Cloud and software revenue (non-IFRS): We use cloud and
manage our operating financial performance. We intend to use that
software revenue (non-IFRS) expressed in both actual currencies
measure to evaluate our overall go-to-market success in the
and constant currencies to measure our revenue growth. Our cloud
committed cloud business. CCB is the contractually committed
and software revenue includes cloud revenue plus software licenses
cloud revenue we expect to recognize over the upcoming 12 months
and support revenue. Cloud revenue and software revenue are our
as of a specific key date. Thus, it is a subcomponent of our overall
key revenue drivers because they tend to affect our other revenue
streams. Generally, customers that buy software licenses also enter remaining performance obligations following IFRS 15.120. For CCB,
we take into consideration committed deals only. CCB can be
into related support contracts, and these generate recurring
regarded as a lower boundary for cloud revenue to be recognized
support revenue after the software sale. Support contracts cover
standardized support services and unspecified future software over the next 12 months, as it excludes utilization-based models
updates and enhancements. Cloud and software revenue also tends without pre-commitments and committed deals closed after the
key date. For our committed cloud business, we believe the
to stimulate services revenue, which is earned by providing
expansion of CCB over a period is a valuable indicator of go-to-
customers with professional services, premium engagement
market success, as it reflects both new contracts closed as well as
services, training services, messaging services, and payment
existing contracts renewed.
services.
Total revenue (non-IFRS): We use total revenue (non-IFRS) to
Measures to Manage Our Non-Operating
measure our growth at both actual currencies and constant
currencies. The total of cloud revenue and support revenue divided
Financial Performance
by total revenue is the share of more predictable revenue. This We use the following measures to manage our non-operating
measure provides additional insight into our sustained business financial performance:
success. Financial income, net: This measure provides insight into the
New cloud bookings: For our cloud activities, we also look at return on liquid assets and capital investments and the cost of
new cloud bookings (both in actual currencies and constant borrowed funds. To manage our financial income, net, we focus on
currencies). This measure reflects the committed order entry from cash flow, the composition of our liquid assets and capital

60 Performance Management System

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

investment portfolio, and the average rate of interest at which that is, those giving us a score of 7 or 8. Consequently, the range of
assets are invested. We also monitor average outstanding achievable scores is –100 to +100, with the latter being the best
borrowings and associated finance costs. achievable score for customer loyalty as measured by the Customer
Days Sales Outstanding (DSO): We manage working capital by NPS methodology.
controlling the DSO of trade receivables. DSO measures the average Employee Engagement Index: We use this index to measure the
number of days from the raised invoice to cash receipt from the motivation and loyalty of our employees, how proud they are of our
customer. We calculate DSO by dividing the average invoiced trade company, and how strongly they identify with SAP. The index is
receivables balance of the last 12 months by the average monthly derived from an annual survey of our employees. Applying this
cash receipt of the last 12 months. measure is recognition that our growth strategy depends on
engaged employees.
Measures to Manage Overall Financial Leadership Trust Score: We use this score to further enhance
Performance accountability and to measure our collective effort to foster a work
We use the following measures to manage our overall financial environment based on trust. It is derived from a question in our
performance: annual global employee survey that gauges employees’ trust in our
Earnings per share (EPS) (IFRS and non-IFRS): EPS measures leaders. We measure leadership trust by using the same NPS
our overall performance because it captures all operating and non- methodology that we use to compute the Customer NPS.
operating elements of profit as well as income tax expense. It Starting in 2020, we will also use carbon emissions to manage
represents the portion of profit after tax allocable to each SAP share our non-financial performance. It is used as a metric to strengthen
outstanding. EPS is influenced not only by our operating and non- our ambitious short-term and long-term carbon reduction targets.
operating business and income taxes but also by the number of We measure our net carbon emissions according to the Greenhouse
shares outstanding. Gas (GHG) Protocol. The net carbon emissions are calculated by
Effective tax rate (IFRS and non-IFRS): We define our effective deducting emission savings such as renewable energy and carbon
tax rate as the ratio of income tax expense to profit before tax, offsets from our gross carbon emissions.
expressed as a percentage.
Operating, investing, and financing cash flows and free cash Value-Based Management
flow: Our consolidated statement of cash flows provides insight into Our holistic view of the performance measures described above,
how we generate and use cash and cash equivalents. When applied together with our associated analyses, comprises the information
in conjunction with the other primary financial statements, it we use for value-based management. We use planning and control
provides information that helps us evaluate the changes in our net processes to manage the compilation of these key measures and
assets, our financial structure (including our liquidity and solvency), their availability to our decision-makers across various
and our ability to affect the amounts and timing of cash flows to management levels.
adapt to changing circumstances and opportunities. We use our SAP’s long-term strategic plans are the point of reference for our
free cash flow measure to determine the cash flow remaining after short-term and mid-term planning and controlling processes. We
all expenditures required to maintain or expand our organic initially identify future growth and profitability drivers at a highly
business have been paid off. This measure provides management aggregated level. In a first step, the resulting financial plan is broken
with supplemental information to assess our liquidity needs. We down into (i) our deployment models “On Premise”, “Software as a
calculate free cash flow as net cash from operating activities minus Service/Platform as a Service”, “Infrastructure as a Service”, and
purchases (other than purchases made in connection with business “Intelligent Spend Management”; and (ii) functions such as
combinations) of intangible assets and property, plant, and development, sales, and administration. In a second step, the
equipment, as well as payments for lease liabilities. planned total revenues and total expenses are generally allocated to
the areas of functional responsibility of the individual members of
Measures to Manage Our Non-Financial the Executive Board (the Board areas). If a Board area represents
Performance not only a functional department but also has a responsibility for
operating segments within this Board area (for example, Intelligent
In 2019, we used the following key measures to manage our non-
financial performance in the areas of customer loyalty, employee Spend Group segment and Qualtrics segment), the allocation is
done at the lower segment level. Budget adjustments may be
engagement, and leadership trust:
applied during the year to reflect changes in priorities, to achieve
Customer Net Promoter Score (Customer NPS): This score
efficiency targets, and to reflect endogenous and exogenous
measures the willingness of our customers to recommend or
factors. Such budget adjustments, as well as the assessment of the
promote SAP to others. It is derived from ongoing customer surveys
Executive Board’s performance, are handled at the Board area level
and identifies, on a scale of 0–10, whether a customer is likely to
if the Board area is part of a segment, or at the segment level if the
recommend SAP to friends or colleagues, is neutral, or is unwilling
to recommend. We introduced this measure in 2012, as we are Board area comprises several segments. It is then the individual
Board member’s responsibility to break down the allocated budget
convinced that we can achieve our financial goals only when our
adjustments within the segment budget boundary. Based on an
customers are loyal to, and satisfied with, SAP and our solutions. To
integrated portfolio process running in parallel to the budgeting
derive the Customer NPS, we start with the percentage of
process, we ensure aligned investment behavior across Board areas
“promoters” of SAP, that is, those giving us a score of 9 or 10 on a
with regards to specific solutions or solution areas. In a final step,
scale of 0–10. We then subtract the percentage of “detractors,” that
customer-facing revenue targets and cost-of-sales and marketing
is, those giving us a score of 0 to 6. The method ignores “passives,”
targets are broken down into sales regions.

Performance Management System 61

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Based on our detailed annual plans, we determine the budget for recurring revenue that we are not permitted to record as revenue
the respective year. We also have processes in place to forecast under IFRS due to fair value accounting for the contracts in effect at
revenue and profit on a quarterly basis, to quantify whether we the time of the respective acquisitions.
expect to realize our financial goals, and to identify any deviations Under IFRS, we record at fair value the contracts in effect at the
from plan. We continuously monitor the affected units in the Group time entities were acquired. Consequently, our IFRS software
to analyze these developments and define any appropriate actions. support revenue, IFRS cloud revenue, IFRS cloud and software
Our entire network of planning, control, and reporting processes is revenue, and IFRS total revenue for periods subsequent to
implemented in integrated planning and information systems, acquisitions do not reflect the full amount of revenue that would
based on SAP software, across all organizational units so that we have been recorded by entities acquired by SAP had they remained
can conduct the evaluations and analyses needed to make informed stand-alone entities. Adjusting revenue numbers for this revenue
decisions. impact provides additional insight into the comparability of our
ongoing performance across periods.
Non-IFRS Financial Measures Cited in
Operating Expense (Non-IFRS)
This Report Operating expense numbers that are identified as operating
expenses (non-IFRS) have been adjusted by excluding the following
Explanation of Non-IFRS Measures
expenses:
We disclose certain financial measures such as revenue (non-
– Acquisition-related charges
IFRS), expense (non-IFRS), and profit measures (non-IFRS) that are
▪ Amortization expense/impairment charges for intangibles
not prepared in accordance with IFRS and are therefore considered
acquired in business combinations and certain stand-alone
non-IFRS financial measures. Our non-IFRS financial measures may
acquisitions of intellectual property (including purchased in-
not correspond to non-IFRS financial measures that other
process research and development)
companies report. The non-IFRS financial measures that we report
▪ Settlements of preexisting business relationships in
should only be considered in addition to, and not as substitutes for,
connection with a business combination
or superior to, our IFRS financial measures.
▪ Acquisition-related third-party expenses
We believe that the disclosed supplemental historical and
– Share-based payment expenses
prospective non-IFRS financial information provides useful
– Restructuring expenses, that is, expenses resulting from
information to investors because management uses this
measures which comply with the definition of restructuring
information, in addition to financial data prepared in accordance
according to IFRS.
with IFRS, to attain a more transparent understanding of our past
We exclude certain acquisition-related expenses for the purpose
performance and our anticipated future results. We use non-IFRS
of calculating operating profit (non-IFRS), operating margin (non-
revenue and profit measures consistently in our internal planning
IFRS), and earnings per share (non-IFRS) when evaluating SAP’s
and forecasting, reporting, and compensation, as well as in our
continuing operational performance because these expenses
external communications, as follows:
generally cannot be changed or influenced by management after
– Our management primarily uses these non-IFRS measures
the relevant acquisition other than by disposing of the acquired
rather than IFRS measures as the basis for making financial,
assets. Since management at levels below the Executive Board does
strategic, and operating decisions.
not influence these expenses, we generally do not consider these
– The variable components of our Executive Board members’ and
expenses for the purpose of evaluating the performance of
employees’ remuneration are based on revenue (non-IFRS),
management units. For similar reasons, we eliminate share-based
operating profit (non-IFRS), operating margin (non-IFRS), as
payment expenses as these costs are impacted by share price
well as new cloud bookings measures rather than the respective
developments and other factors outside our control. We also
IFRS measures.
eliminate restructuring expenses because they are volatile and
– The annual budgeting process for all management units is based
mostly cannot be influenced by management at levels below the
on revenue (non-IFRS) and operating profit (non-IFRS) numbers
Executive Board.
rather than the respective IFRS financial measures.
– All forecast and performance reviews with all senior managers Operating Profit (Non-IFRS), Cloud Gross Margin
globally are based on these non-IFRS measures, rather than the (Non-IFRS), Operating Margin (Non-IFRS),
respective IFRS financial measures. Effective Tax Rate (Non-IFRS), and Earnings per
– Both our internal performance targets and the guidance we Share (Non-IFRS)
provide to the capital markets are based on non-IFRS revenue Operating profit, cloud gross margin, operating margin, effective
and profit measures rather than the respective IFRS financial tax rate, and earnings per share identified as operating profit (non-
measures. IFRS), cloud gross margin (non-IFRS), operating margin (non-IFRS),
Our non-IFRS financial measures reflect adjustments based on effective tax rate (non-IFRS), and earnings per share (non-IFRS)
the items below, as well as adjustments for the related income tax have been adjusted from the respective IFRS measures by adjusting
effects. for the aforementioned revenue (non-IFRS) and operating expenses
Revenue (Non-IFRS) (non-IFRS) and the income tax effects thereon.

Non-IFRS revenue measures have been adjusted from the Constant Currencies Information
respective IFRS financial measures by including the full amount of We believe it is important for investors to have information that
software support revenue, cloud revenue, and other similarly provides insight into our sales. Revenue measures determined

62 Performance Management System

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

under IFRS provide information that is useful in this regard. Limitations of Non-IFRS Measures
However, both sales volume and currency effects impact period- We believe that our non-IFRS financial measures described
over-period changes in sales revenue. We do not sell standardized above have limitations including, but not limited to, the following:
units of products and services, so we cannot provide relevant – Without being analyzed in conjunction with the corresponding
information on sales volume by providing data on the changes in IFRS measures, the non-IFRS measures are not indicative of our
product and service units sold. To provide additional information present and future performance, foremost for the following
that may be useful to investors in breaking down and evaluating reasons:
changes in sales volume, we present information about our revenue ▪ While our profit (non-IFRS) numbers reflect the elimination of
and various values and components relating to operating profit that certain acquisition-related expenses, no eliminations are
are adjusted for foreign currency effects. made for the additional revenue or other income that results
We calculate constant currencies measures by translating from the acquisitions.
foreign currencies using the average exchange rates from the ▪ While we adjust for the fair value accounting of the acquired
comparative period instead of the current period. Constant entities’ recurring revenue contracts, we do not adjust for the
currency measures on revenue backlog use the closing exchange fair value accounting of deferred compensation items that
rate from the previous year’s corresponding keydate instead of the result from commissions paid to the acquired company’s
average exchange rate. sales force and third parties for closing the respective
customer contracts.
Free Cash Flow ▪ The acquisition-related amortization expense that we
eliminate in deriving our profit (non-IFRS) numbers is a
Among other measures, we use free cash flow to manage our
recurring expense that will impact our financial performance
overall financial performance. We have modified the free cash flow
in future years.
metric by subtracting payments of leasing liabilities in order to
▪ The remaining acquisition-related charges that we eliminate
eliminate the impact of increasing net cash flows from operating
in deriving our profit (non-IFRS) numbers are likely to recur
activities, following the adoption of IFRS 16.
should SAP enter into material business combinations in the
future. Similarly, the restructuring expenses that we eliminate
€ millions 2019 2018 ∆ in %
in deriving our profit (non-IFRS) numbers are likely to recur
Net cash flows from operating 3,496 4,303 –19 should SAP perform restructurings in the future.
activities
▪ The revenue adjustment for the fair value accounting of the
Purchase of intangible assets and –817 –1,458 –44 acquired entities’ contracts and the expense adjustment for
property, plant, and equipment
acquisition-related charges do not arise from a common
(without acquisitions)
conceptual basis. This is because the revenue adjustment
Payments of lease liabilities –403 0 NA aims to improve the comparability of the initial post-
Free cash flow 2,276 2,844 –20 acquisition period with future post-acquisition periods, while
the expense adjustment aims to improve the comparability
Usefulness of Non-IFRS Measures between post-acquisition periods and pre-acquisition
periods. This should particularly be considered when
We believe that our non-IFRS measures are useful to investors
evaluating our operating profit (non-IFRS) and operating
for the following reasons:
margin (non-IFRS) numbers as these combine our revenue
– Our revenue (non-IFRS), expense (non-IFRS), and profit (non-
(non-IFRS) and expenses (non-IFRS) despite the absence of
IFRS) measures, along with the “new cloud bookings” and “cloud
a common conceptual basis.
backlog” measures (see above) provide investors with insight
▪ Our restructuring charges resulted in significant cash
into management’s decision-making because management uses
outflows in the past and could do so in the future. The same
these measures to run our business and make financial,
applies to our share-based payment expense because most
strategic, and operating decisions. We include the revenue
of our share-based payments are settled in cash rather than
adjustments outlined above and exclude the expense
shares.
adjustments outlined above when making decisions to allocate
▪ The valuation of our cash-settled share-based payments
resources. In addition, we use these non-IFRS measures to
could vary significantly from period to period due to the
facilitate comparisons of SAP’s operating performance from
fluctuation of our share price and other parameters used in
period to period.
the valuation of these plans.
– The non-IFRS measures provide investors with additional
▪ In the past, we have issued share-based payment awards to
information that enables a comparison of year-over-year
our employees every year and we intend to continue doing so
operating performance by eliminating certain direct effects of
in the future. Thus, our share-based payment expenses are
acquisitions, share-based compensation plans, and
recurring, although the amounts usually change from period
restructuring plans.
to period.
– Non-IFRS and non-GAAP measures are widely used in the
We believe that constant currencies measures have limitations,
software industry. In many cases, inclusion of our non-IFRS
particularly as the currency effects that are eliminated constitute a
measures may facilitate comparison with our competitors’
significant element of our revenue and expenses and could
corresponding non-IFRS and non-GAAP measures.
materially impact our performance. Therefore, we limit our use of
constant currencies measures to the analysis of changes in volume

Performance Management System 63

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

as one element of the full change in a financial measure. We do not

evaluate our results and performance without considering both
constant currencies and nominal measures of revenue (non-IFRS)
and operating profit (non-IFRS) measures on the one hand, and
changes in revenue, operating expenses, operating profit, or other
measures of financial performance prepared in accordance with
IFRS on the other. We caution the readers of our financial reports to
follow a similar approach by considering nominal and constant
currencies non-IFRS measures only in addition to, and not as a
substitute for or superior to, changes in revenue, operating
expenses, operating profit, or other measures of financial
performance prepared in accordance with IFRS.
Despite these limitations, we believe that the presentation of our
non-IFRS measures and the corresponding IFRS measures,
together with the relevant reconciliations, provide useful
information to management and investors regarding present and
future business trends relating to our financial condition and results
of operations.

64 Performance Management System

 To Our Combined Group Consolidated Financial Further Information on Economic, Additional
Stakeholders Management Report Statements IFRS Environmental, and Social Performance Information

Reconciliations of IFRS to Non-IFRS Financial Measures for the Years 2019 and 2018
€ millions, unless otherwise stated 2019 2018

IFRS Adj. Non-IFRS Currency Non-IFRS IFRS Adj. Non-IFRS

Impact Constant
Currency

Revenue measures

Cloud 6,933 81 7,013 –240 6,773 4,993 33 5,027

Software licenses 4,533 0 4,533 –101 4,431 4,647 0 4,647

Software support 11,547 0 11,548 –263 11,285 10,981 0 10,982

Software licenses and support 16,080 0 16,080 –364 15,716 15,628 0 15,629

Cloud and software 23,012 81 23,093 –604 22,489 20,622 33 20,655

Services 4,541 0 4,541 –124 4,417 4,086 0 4,086

Total revenue 27,553 81 27,634 –728 26,906 24,708 33 24,741

Operating expense measures

Cost of cloud –2,534 305 –2,228 –2,068 213 –1,855

Cost of software licenses and support –2,159 141 –2,018 –2,092 130 –1,962

Cost of cloud and software –4,692 446 –4,247 –4,160 343 –3,817

Cost of services –3,662 254 –3,408 –3,302 151 –3,151

Total cost of revenue –8,355 700 –7,655 –7,462 494 –6,969

Gross profit 19,199 781 19,979 17,246 527 17,773

Research and development –4,292 438 –3,854 –3,624 219 –3,406

Sales and marketing –7,693 909 –6,784 –6,781 589 –6,192

General and administration –1,629 477 –1,152 –1,098 106 –992

Restructuring –1,130 1,130 0 –19 19 0

Other operating income/expense, net 18 0 18 –20 0 –20

Total operating expenses