CORPORATE GOVERNANCE

Principles of Corporate Governance

Due to the continuous evolution of the German Corporate Governance Code (“Code”), we decided in 2007 to discontinue our own Principles of Corporate Governance. SAP is a German listed company, and our corporate governance is therefore aligned with the Code, as amended from time to time, as well as with the mandatory requirements of the law. Moreover, SAP complies with further provisions that are relevant to it as a German company listed on the New York Stock Exchange (NYSE). For more information about our implementation of the Code’s recommendations and suggestions, see our annual Declaration Concerning Implementation of the German Corporate Governance Code as required by the German Stock Corporation Act, section 161, and our Corporate Governance Report. We issued our most recent declaration concerning implementation on October 31, 2008, and published it on the SAP Web site a www.sap.com/corpgovernance.

Recommendations

The declaration of implementation issued by our Executive Board and Supervisory Board on October 31, 2008, reports that we do not follow five of the 84 recommendations in the version of the Code published on June 6, 2008. In our declaration, we list the instances in which we do not follow Code recommendations:

• We do not impose age limits on members of the Executive Board and Supervisory Board.
• Executive Board and Supervisory Board contracts do not provide for a deductible in directors’ and officers’ liability insurance policies.
• A chairperson or member of the Executive Board can become chairperson of the Supervisory Board or chairperson of a Supervisory Board committee.
• There is no consideration of individual performance in the variable compensation of Executive Board members.
• Executive Board contracts do not cap severance payments on premature termination (deviation from a recommendation that was added to the Code in June 2008).

The reasons for the deviations are set out in the corporate governance report and the implementation declaration. We will comply with the other recommendations that were added to the Code in 2008. Since the third quarter of 2008, the Audit Committee of the Supervisory Board has discussed the half-yearly and quarterly financial reports with the Executive Board before publication. In the future, the full Supervisory Board will decide on and regularly review the Executive Board compensation system, including the main contract elements. Finally, there is a cap in place on severance payments made to Executive Board members should there be a change of control.

Suggestions

With two exceptions, we follow all suggestions in the current Code. As in the previous year, we have not agreed to pay Supervisory Board members performance-oriented compensation based on SAP’s long-term success. We doubt whether the long-term success of SAP is the right basis for Supervisory Board compensation or improves the Supervisory Board members’ motivation in respect of SAP. Variable compensation at SAP is therefore linked to the dividend and can thus be readily determined by applying the Supervisory Board compensation provisions in the Articles of Incorporation. We believe that this thus ensures transparent, appropriate compensation for Supervisory Board members that reflects their legal responsibilities. Contrary to last year and section 2.3.3 of the Code, it will not be possible to appoint and instruct the proxies provided by SAP during the 2009 Annual General Meeting of Shareholders.

U.S. Regulatory Requirements

SAP is an NYSE-listed company and is subject to U.S. financial legislation and to the rules of the SEC and the NYSE. Therefore, we also comply with the Corporate Governance Standards of the NYSE and the U.S. Sarbanes-Oxley Act. Our auditor KPMG’s audit of our financial reporting control over the U.S. GAAP consolidated financial statements submitted to the SEC in accordance with the Sarbanes-Oxley Act, section 404, had not found any indication by March 10, 2009, that the control was not effective on December 31, 2008. In accordance with the NYSE Corporate Governance Standards, SAP discloses the extent to which the German corporate governance rules, as implemented by SAP, differ from the rules that apply to U.S. companies listed on the NYSE. The Report on Significant Differences from NYSE Corporate Governance Rules is available on SAP’s Web site at www.sap.com/corpgovernance.