SAP : Read the message

Message from the Chairman | April 5, 2024

Message from Professor Hasso Plattner, Chairman, SAP Supervisory Board

Dear Shareholders,

Looking back on 52 years of SAP's growth story, it is sometimes hard to fathom how an idea grew into a global juggernaut. Throughout this history SAP has always innovated, reinvented itself, and focused on growth. In particular, after the tough decisions made in 2020 to go all in on the cloud, it is rewarding to see the strategic decisions made taking the company to new levels, despite the geopoltical and economy headwinds. Now, with the technological advances with artificial intelligence (AI) and SAP's focus in this area, I am more excited than ever about our future.

2023 was an outstanding year for SAP, with all outlook metrics exceeded or met. We reported a 27% increase in current cloud backlog1, while cloud revenue increased 23%1. Further, non-IFRS operating profit increased by 13%1. Customers rely on SAP to take them into the cloud and drive their business transformation. This success has been recognized on the market, with our share reaching record highs in 2023 and again in 2024. Since January 1, 2023, our share has increased over 80%2. Further, we propose a dividend of €2.20, an increase of 7% over last year.

Throughout 2023 and into 2024, the Supervisory Board continued its engagement with investors, with Dr. h.c. Punit Renjen and Dr. Friederike Rotsch holding discussions. Below I would like to address some topics that investors have signaled are of interest.

Our strategy

In January, the Executive Board announced the next evolution in our strategy. With the developments in AI, it is clear that there is much potential value to be unleashed when applied in the business world. As SAP continues its transformation with a focus on business AI, the Executive Board has decided to invest almost €1 billion to develop powerful AI use cases with our customers. This also requires a shifting of resources, which includes a restructuring component with a focus on reskilling and voluntary exits. Tough decisions are not easy, but it is important SAP evolve and make the changes necessary to ensure the long-term success of the company for all of its stakeholders. The Executive Board consulted with the Supervisory Board when making these decisions and we fully support this strategy.

Executive Board Changes

To support the Executive Board in ensuring we achieve our strategic targets, we have created a new Executive Board area, led by Thomas Saueressig, focused on ensuring customers' ability to embrace continuous innovation in the cloud. Further, Muhammad Alam has joined the Executive Board leading product engineering. We believe these changes will help support the organization in further integrating Business AI into our solutions.

Further, I would like to welcome Gina Vargiu-Breuer as Chief People Officer. In this role, she will create an even more powerful growth and learning environment at SAP, ensuring our workforce can unleash the innovations and business excellence we need to be successful. On behalf of the Supervisory Board, we would like to thank Sabine Bendiek for her contributions to SAP and wish her much success in the future.

1. At constant currencies
2. As of April 2, 2024

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Message from the Chairman | April 5, 2024

Stepping Down

While I will remain a shareholder, the time has come for me to step back from an active role in the company I care so much about. The Supervisory Board has nominated Pekka Ala-Pietilä for election and intends to elect him to Chair. I am confident that with Pekka Ala-Pietilä, SAP's Supervisory Board is in the most capable hands. He is an experienced leader, having chaired European boards and brings with him a wealth of experience in the IT industry. His vision, experience, independence, and well- measured approach are exactly what SAP needs to ensure its ongoing success.

SAP and Dr. h.c. Punit Renjen have mutually agreed to part ways because of a difference in perspective on the role of SAP Supervisory Board chair, which Punit Renjen was designated to assume. Punit Renjen has chosen to resign his mandate on the SAP Supervisory Board with effect from the end of SAP's Annual General Meeting on May 15, 2024. I fully respect his decision and want to personally thank Punit Renjen for his exceptional energy level and dedication.

Shareholder Representative Nominees

In addition to Pekka Ala-Pietilä, we have nominated four candidates to stand for election. Aicha Evans, Gerhard Oswald, and Dr. Friederike Rotsch have been nominated to stand for re-election. They have enriched the Supervisory Board with their expertise, and we would welcome their continued contributions in the future. Friederike Rotsch would continue to serve in the role of Lead Independent Director.

Additionally, we have nominated Prof. Dr. Ralf Herbrich to stand for election. As managing director and professor for artificial intelligence and sustainability at the Hasso Plattner Institute, Ralf Herbrich would bring an independent view and key technology know how to the Supervisory Board, exactly in a moment when the market is focusing on the potential of this technology.

Executive Compensation

I was happy to see the strong support for the revised compensation system at last year's shareholder meeting. From 2024, the Executive Board's variable pay is now fully aligned with pay-for-performance, and ESG targets have also been included in the LTI. Further the Executive Board is subject to increased shareholding guidelines. The improvements that we in the Supervisory Board have implemented are not only aligned with SAP's objectives but also take into account the feedback received in our ongoing engagement with our shareholders throughout the year.

In 2023 we made some adjustments to compensation. We did so based on careful consideration and the principle of fairness. The effects of the Qualtrics sale and the acquisition of LeanIX have been neutralized. Further, compliance penalties stemming from the time prior to the tenure of the current Executive Board do not impact their compensation in 2023 and 2024.

Supervisory Board Compensation

We are proposing an adjustment to the compensation of the future chair. We have not adjusted the base salary for the chair position since 2015. Since then, SAP has grown significantly and the requirements of and expectations on the SVB chair have significantly increased. Therefore, we are aligning the salary with benchmarks given the growing size and complexity of the company. The compensation will be a flat fee of €600,000 with no additional committee compensation paid to the chair.

Compliance

Earlier this year, the company entered into final settlement agreements with the U.S. Department of Justice, U.S. Securities & Exchange Commission, and South Africa's National Prosecuting Authority. On behalf of SAP, I welcome the conclusion of these past matters.

Indeed, I was absolutely outraged to hear the allegations back in 2017, and ensured the company took steps to prioritize enhancement of the compliance culture and invested in further strengthening the compliance framework. These steps include adjusting compensation incentives, building the compliance team in both size and expertise, ensuring strong and focused compliance communication

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Message from the Chairman | April 5, 2024

and training, and extending the whistleblower platform to allow people both inside and outside of the company to report any concerns.

The Supervisory Board places great emphasis on compliance and is engaged and aligned with SAP's compliance organization to allow it to maintain close oversight and support the ongoing drive for strong compliance.

I want to reiterate that we have zero tolerance for those who do not adhere to the company's compliance policies and procedures. Together with the entire Supervisory Board and Executive Board, I expect everyone in the company to remain vigilant in maintaining the highest standards of ethics and compliance. We are committed to winning the right way; ethically and compliantly.

Thank you

Finally, I would like to say thank you. After our IPO in 1988 in Frankfurt, you, our shareholders, joined the SAP journey. Thank you for your support over the years, as founder, as CEO, and Chairman. Now it is time for me to simply be one of you - a shareholder. I know I am leaving a strong company with a brilliant future, a company I am proud of. I continue to be committed to SAP as founder and shareholder.

For the Supervisory Board,

Professor Hasso Plattner (Chairman)

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