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Note 14 - Share-Based Payment Plans
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3 Months Ended | |||||||||
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Mar. 31, 2012
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| Notes to Financial Statements [abstract] | ||||||||||
| Disclosure of Share-based payment plans | (14) Share-Based Payment Plans
For a detailed description of our share-based payment plans, see the SAP Annual Report 2011, Notes to the Consolidated Financial Statements section, Note (28), or our Annual Report 2011 on Form 20-F.
The outstanding equity-settled bonus shares under SMP programs entitle their holders to the following numbers of shares:
Outstanding Restricted Shares
EPP and LTI Plan 2015
In the first quarter of 2012, SAP implemented two new share-based payment plans: An Employee Participation Plan (EPP) 2015 for employees and a Long Term Incentive (LTI) Plan 2015 for Executive Board members. The two new plans are designed to reward participants for their contribution to achieving the Company's ambitious 2015 goals.
The plans are focused on SAP's share price and on targets derived from the Company's 2015 strategy. They award virtual shares, called restricted share units (RSUs), to participants. Participants are paid out in cash based on the number of RSUs that vest.
Starting in 2012, the RSUs will be awarded and allocated at the beginning of each year through 2015, with EPP 2015 RSUs subject to annual Executive Board approval. The RSU allocation process will take place at the beginning of each year based on SAP's share price after the publication of its preliminary annual results.
At the end of the given year RSUs will be finally allocated. The number of RSUs that participants actually receive depends on SAP's actual performance for the given year, which might be higher or lower than the originally allocated RSUs. The performance is based on SAP's objectives set forth at the beginning of the plan. These objectives are closely linked to SAP's 2015 goals, and include two key performance indicators (KPIs): non-IFRS total revenue and non-IFRS operating profit.
If both KPIs achieve at least a defined 80% threshold, RSUs vest. Depending on performance, the vesting can reach a maximum of 150% of the budgeted amount. If one or both of those KPIs do not achieve the defined threshold of 80%, no RSUs vest and RSUs awarded for that year will be forfeited.
Under the EPP 2015, the RSUs are paid out within the first quarter of the subsequent year after the one-year measurement period, whereas the RSUs for members of the Executive Board under the LTI Plan 2015 are subject to a three-year-holding period before payout, which then occurs in 2016.
The plans include a “look-back” provision, due to the fact that they are based on reaching the goals in 2015. If the overall achievement in 2015 is higher or lower than represented by the number of RSUs vested from 2012 to 2014, the number of RSUs awarded in 2015 can increase or decrease accordingly. However, RSUs that were already fully vested in prior years cannot be forfeited.
The final financial effect of the EPP 2015 as well as the LTI Plan 2015 will depend significantly on the number of vested RSUs actually to be paid out in cash and the SAP share price, and thus may be significantly above or below the budgeted amounts. Due to the IFRS accounting rules, the Company will record in 2012 almost all expense relating to the 2012 portion of the EPP plan and the majority of the total LTI plan expense. However, the actual amount may be significantly higher or lower than the Company's estimate subject to the actual development of share price as well as the achievement of the financial KPIs. For example, the actual cash payout for the EPP 2015 could deviate significantly from the €500 million planned.
SuccessFactors RSUs
In connection with the SuccessFactors-acquisition (see Note 4) each unvested Restricted Share Unit (RSU) and share of restricted stock that were unvested immediately prior to the closing of the SuccessFactors acquisition remains subject to its vesting terms prior to the Tender Offer and will be cashed out equal to the number of RSUs and restricted shares held at vesting time multiplied by US$40 per share (SAP's purchase price of SuccessFactors shares at acquisition).
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