SAP SE (SAP) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. I'm pleased to declare this year's Annual General Meeting of Shareholders of SAP as open. Welcome. The Annual General Meeting of Shareholders is taking place under unusual conditions this year because the COVID-19 pandemic has made it impossible for us to hold the meeting in our customary manner. For this reason, we decided to make use of the legislation enacted by the German government in response to the coronavirus crisis and to the wide-ranging restrictions on gatherings of all kinds, and to hold today's Annual General Meeting of Shareholders virtually. In contrast to previous years and to what we had planned for this year, we therefore welcome you not to the SAP Arena in Mannheim, Germany, but to a purely virtual meeting taking place at SAP Group headquarters in Walldorf, Germany without the physical presence of our shareholders. This was not a decision we took lightly because we know that you, our shareholders, greatly appreciate the dialogue you have with us, the Supervisory Board and the Executive Board of SAP at our Annual General Meeting of Shareholders. The format of a virtual Annual General Meeting of Shareholders offers only limited opportunities for this dialogue to take place. Nevertheless, we will try to answer your questions and address your comments as effectively as the virtual format allows. On a positive note, legislation permitting a virtual Annual General Meeting of Shareholders with a shortened invitation period has allowed us to keep to the date we had originally scheduled for our meeting. This, in turn, means that we can pay the dividend to our shareholders as announced, provided of course that you approve management's proposed dividend as it appears on the agenda for today's meeting. We believe therefore that by taking this approach, we are acting in the interest of our shareholders. Another peculiarity of this Annual General Meeting of Shareholders is that it will not, as it is customary, be chaired by the SAP Supervisory Board Chairman, Professor Hasso Plattner. This is also due to the COVID-19 pandemic. Mr. Plattner is currently abroad and hopes you will appreciate that he does not wish to expose himself to the health risks of traveling to Germany at this time. He has therefore asked me to chair this Annual General Meeting of shareholders, and he would like to send his greetings with the following video message.

Dear shareholders and colleagues, ladies and gentlemen, I'd like to welcome you [indiscernible] in Mannheim. That [indiscernible] COVID-19, we have so many travel restrictions and I have not been able to come [indiscernible] and the precautionary [indiscernible] has sent me to my [indiscernible] in California and just [indiscernible] today. And from this conclusion, I'm not an active participant. I'm very grateful that Friederike Rotsch is on site and is chairing the meeting, is standing in for me today. I don't know if Christian Klein [indiscernible] the detailed Board report. And I don't want to [indiscernible]. However, the [indiscernible] personal comments I'd like to share with you. COVID-19 is a new challenge for all of us, that implications that we can't see yet and there is no end in sight. [indiscernible] see how our [indiscernible] can handle this challenge. 6 months ago, the world looked different. And Bill McDermott decided to leave as [indiscernible] CEO [indiscernible] in his place. [indiscernible] was the ideal business model. However, the [indiscernible] around the strategy of SVP didn't make the [indiscernible] beginning of this year. And COVID-19 [indiscernible] especially in our industry [indiscernible] works like a catalyst and [indiscernible] is paralyzed by the internal discussions. For the benefit of [indiscernible] company and our customers [indiscernible], thus decided that [ there will be ] single CEO to guide us through these difficult times. It is also important for me to let you know that this was not a decision against a woman. She wasn't voted to be Co-CEO because she was a woman, no. She was successful with customer [indiscernible] sales, that's why we chose [indiscernible] Board and Chair and consistently [indiscernible] by powerful women. In the top bodies of my foundation, you'll find men and women alike. But developments [indiscernible] originated in research done by a female PhD candidate. Since her sex was irrelevant when we decided who should become CEO, it was irrelevant, too, when we decided that she had to leave. I'm convinced that we'll see more women in executive positions in the future at SAP and elsewhere. And I wish all the best to Jennifer for her future. Christian Klein has been known to me since he started as a trainee student of SAP. I hope so how [ on zone ], he gained the respect and recognition by his performance both from employees and from customers. For a future-proof SAP with his experience, despite his relatively young age, he's the right person right now. He has the trust, not just of me, but of the entire Supervisory Board and also of the colleagues in the Executive Board. You will see him in a minute and can form your own picture. Let me seize this opportunity to express my thanks to Stefan Ries and Michael Kleinemeier and bid farewell to them. Michael was one of the most dedicated defenders of customer interest within SAP, and the customer really appreciated his reliability. Stefan contributed greatly to the further popularization of HR. I'd like to thank both of them on behalf of the Supervisory Board, and I wish them all the best. Personally, I can look back to almost 50 years of SAP. Turbulent times, and by the look of it, the turbulence will keep going for some time. I think, personally, it's a struggle like that with the HPI in Potsdam and my direct exchange with students. I still have the opportunity to bring in my experience I have with SAP and the customers and to combine those with the latest development made in technology. As long as I am able to manage to do this together with my colleagues in the Supervisory Board, I can continue to provide advice and support in the Supervisory Board. And as long as that is required, I'm happy to do so. But this will come to an end at some point in time. And last year, I've indicated that during this term of office, I'm going to look after a successor. But the events of the past month however and the uncertainties linked to COVID-19 have made me more careful. A proper succession planning is more essential than ever before. But we'll take our time, the time that is required and we won't be rushed into anything. I'd like to thank you for your trust to be able to do my job to the best of SAP until we reach safer grounds and found good successor. Thank you very much. Stay safe and be well. And I hand back to Friederike Rotsch.

Ladies and gentlemen, following these preliminary remarks, I now need to announce the formalities of this virtual Annual General Meeting of Shareholders which are, of course, significantly different from those of a conventional annual general meeting taking place in the physical presence of shareholders. For the record, the Executive Board members, Christian Klein, Adaire Fox-Martin, Luka Mucic and Thomas Saueressig are physically present here in the room. Likewise, the -- Michael Kleinemeier is with us today. The Executive Board members here, Juergen Müller, Stefan Ries; and the members of the Supervisory Board, with the exception of Aicha Evans and Dianne Greene who send their apologies, are following the meeting live on the Internet. As such, we are complying with the contact restrictions imposed on us as a result of COVID-19. I would like to welcome [ Dr. Stefan Formed ], Notary Public, who is also physically present here in the room and will be taking the minutes. Today's meeting was called with due notice in accordance with legal requirements and the provisions of the Articles of Incorporation. Notice of the Meeting was published in the Bundesanzeiger, on the German Federal Gazette on April 21, 2020. A copy of the notice will be annexed to the minutes. All notices required for the convening the Annual General Meeting were properly issued. No motions or candidacies were submitted by shareholders to the company. Although there are no shareholders physically present in the room where this virtual annual meeting is taking place, we are keeping electronic attendance register of the proxies designated by the company. They represent shareholders who have already appointed and instructed them accordingly or who do so during the course of the meeting. A printed copy of the attendance register is in the meeting room. Shareholders who probably applied through their custodian bank to attend the meeting and were sent their voting right card were able to exercise their voting rights in advance of the meeting, either by postal vote or by appointing and instructing the proxies designated by the company. There's still time now for shareholders to use their voting right card to appoint and instruct the proxies designated by the company or to cast their votes electronically via the password-protected shareholder portal right up until the Executive Board has finished answering the questions submitted by shareholders and then voting begins. At that point, I will issue a clear reminder to shareholders that this is their final opportunity to cast the votes or issue voting instructions. As I said at the start of the meeting, the virtual format of the Annual General Meeting, like a meeting at which the participants are physically present, does not allow a direct dialogue with the shareholders and shareholders' representatives. Nevertheless, it does provide for shareholders to ask questions in accordance with the new rules issued. In line with the COVID-19 Act, the Executive Board and Supervisory Board offered shareholders who properly registered to attend the meeting the opportunity to submit their questions via the password-protected shareholder portal no later than midnight Central European Summertime on May 17, 2020. Questions received in advance of the Annual General Meeting will be answered after the speech given by SAP's CEO Christian Klein. I would like to stress here that we have not preselected questions. No, we will answer all the questions submitted to us. We will also try to answer these questions in as much detail as we would at an annual general meeting of shareholders at which the participants are physically present. I would like to point out that this virtual Annual General Meeting of Shareholders is not only accessible online to registered shareholders but is being publicly broadcast on the Internet. However, only what I'm saying now and the speech given by CEO, Christian Klein, will be recorded and posted on the Internet after the meeting. Ladies and gentlemen, now to the agenda. Let us first take Item 1 of the agenda. I can report that the following documents were available at the website, www.sap.com/investors, from the time the Annual General Meeting was called. The 2019 SAP SE financial statements, the consolidated financial statements, the combined management report for the SAP Group and SAP SE, including the compensation report and the Executive Board's explanatory notes relating to the information provided pursuant to the German Commercial Code Sections 289a(1) and 315a(1), the Supervisory Board Report and the Executive Board's proposed resolutions on the appropriation of retained earnings. These documents are here in the meeting room, and they can also be accessed on our website for the duration of the meeting. The auditor, KPMG AG Wirtschaftsprfungsgesellschaft, examined the SAP SE financial statements, the consolidated financial statements and combined SAP SE and SAP Group management report for fiscal year 2019 and issued an unqualified auditor's opinion. The Supervisory Board reviewed the aforementioned documents and approved them on February 19, 2020. The SAP SE financial statements for 2019 were thus formally adopted. The Supervisory Board compiled a written report which is published on Pages 15 to 23 of the integrated report. This report describes the focus of the Supervisory Board's work in 2019 in detail, and the way in which we discharged our function of advising and supervising the SAP Executive Board. Our work is founded on a close and trusting partnership between the Supervisory Board and the Executive Board on efficient distribution of tasks between the Supervisory Board and its committees and, not least, on the use of our own software, such as the SAP Digital Boardroom, which visualizes all financial HR and process-related information across all company transactions for us in real time, whenever we need it. Let me go into more detail about some of the key areas of our work. Last year, the Supervisory Board devoted considerable time at several meetings to discussing personnel changes on the Executive Board and the associated restructuring of the Executive Board and to discussing the changes in Executive Board compensation, which I will return to in a moment. We also deliberated at length at both the Finance and Investment Committee and full Supervisory Board meetings, the company's strategy and its future capital allocation policy. Following a detailed review, the Supervisory Board approved the enhanced capital return proposed by the Executive Board, authorizing the Executive Board to buy back shares totaling EUR 1.5 billion in 2020. We also consistently focused attention on compliance matters in 2019 and particularly on the ongoing investigations being conducted with the assistance of external counsel into potential violations of anticorruption laws and export controls. In response to these investigations, company management substantially expanded the teams working on compliance and significantly improved its anticorruption compliance program. The Supervisory Board also addressed the issue of the gaps the company recently reported on in the contractual cybersecurity infrastructure terms for certain SAP Cloud products. The Supervisory Board was closely involved in SAP's response, advising the Executive Board on performing internal investigations and on analyzing the results hereof. Please be assured that SAP is taking the gaps that have been identified in compliance with IT security standards very seriously indeed. The Supervisory Board likewise pushed very hard for these gaps to be remediated as quickly as possible. And my view is that we are making good progress here. Christian Klein will address this issue later in the proceedings. Ladies and gentlemen, in 2019, the Supervisory Board Chairman, Hasso Plattner, once again held discussions with institutional investors on matters that are the responsibility of the Supervisory Board. These discussions was to continuously channel feedback from our investors into our work on the Supervisory Board. In this period of always making these exchanges transparent for shareholders, there is, as last year, a letter on the SAP website from Mr. Plattner to all shareholders summarizing the main content of his discussions. I would like now to turn to changes in the membership of the Executive Board. The Supervisory Board have appointed Thomas Saueressig to the Executive Board with effect from November 1, 2019. Since then, Thomas has been leading the Board area SAP Product Engineering. I'd like to welcome Thomas to the meeting, and ask him briefly to introduce himself to our shareholders.

Thank you very much, Friederike. I should like to welcome you all most cordially this year not from Mannheim, but from Walldorf. Many things have changed the current situation and so, too, has the format of this Annual General Meeting. However, where there are challenges, there are always also solutions, and this is one of my life mottos. First of all, I would like to thank the Supervisory Board and the Executive Board for the trust you have placed to me. It is an honor for me to be a member of the Executive Board since November 2019. Especially in this day in time, being faced with new challenges, it is very important to pioneer new paths and walk them together. Together actually is the key word here. Together with our employees, customers and partners, and together with you, dear shareholders. Now a few words about my background. I'm from Lobbach in [ Kries ]. I'm 35 years old, I'm married. I have 2 children, aged 2.5 and 1 year. In 2004, I joined SAP. So I spent almost half of my life here. I feel deeply rooted in the company. And I also feel committed to our employees, customers and our investors, because I'm aware which importance the P&L products have for the region, for Germany and for the global business world. The pandemic shows us how interconnected the economy is and how important digitization is now. Now most children dream to become firefighters, policemen or space travelers. However, my primary school yearbook said that 1 day I wanted to work at SAP. What I imagine SAP to look like at the moment, back then, corresponds to what I'm seeing now, even though we continue to develop constantly. I think this was due to the culture we have here in the company which is marked by fairness and openness. A strong focus on customers and employees, such as the foundation or the groundwork of our companies laid by the SAP founders, and which still gives us the ability. I started my career at SAP in 2004 with a dual degree course. I started out at CRM, where I learned a lot about working together with customers. Then I got the chance to work at Palo Alto, California, where I saw a great ecosystem of innovative companies, and I became Gerd Oswald's board assistant. And between 2016 and 2018, I was CIO with global responsibility. This was a very formative time because our products are the best -- or SAP is the best reference customer for our own products because we use them ourselves, and I'm very aware of the products our customers are facing. At the request of the Executive Board in 2019, I went to engineering. And now I lead the product developing with global applications including SAP S/4HANA, Digital Supply Chain and LoB Cloud applications. SAP HANA Enterprise Cloud as well as our global cloud infrastructure, also part of my area of responsibility. All development cross functions are under one roof at SAP Globalization Services, User Experience and the quality of our products, as well as our educational offers. Now the value of our business application becomes even clearer in this crisis. Digitization is more important than ever. Digital learning, agile software controlled and globally interlinked supply chains, especially in these difficult times, it is all the more important to have a reliable partner at one side. Software, which is agile and supports agile business processes and proactively makes reliable decisions is all the more important. We give customers the ability to prepare for unforeseen situations. SAP assumes responsibility for its customers, investors and for society. This agility allows for resilient business models, which strengthen trust in the company. We want to help our customers and partners to advance digitization, strengthening Industry 4.0, adjusting for cloud to specific industry needs, connecting companies to trade company networks. This is a topic that's -- which is especially close to my heart, and the support of sustainability goals. Despite the current situation, we have a positive outlook on the future. I'm looking forward to many successful years for SAP for our customers and for you. On this note, stay healthy, and thank you for your trust.

Thank you, Thomas. Well, beyond these changes, there have also been a number of other changes recently, which Hasso Plattner already mentioned. Bill McDermott, who served as SAP's CEO for almost 10 years, mutually agreed with the Supervisory Board to step down as CEO effective October 10, 2019, and leave SAP altogether in November 2019. In his place, Jennifer Morgan and Christian Klein were appointed Co-CEOs effective October 10, 2019. In February of this year, the Executive Board members, Stefan Ries and Michael Kleinemeier, reached a mutual decision with the Supervisory Board to end their employment with SAP. Michael left SAP on April 30 after more than 30 years of service to the company, and Stefan will be leaving SAP at the end of May. Christian Klein became SAP's sole CEO on April 20 after Jennifer Morgan mutually agreed with the Supervisory Board to leave the company on April 30, 2020. Well, some of these changes came as a surprise. All of the departing Executive Board members gave long service to SAP in different areas of the company, and were instrumental in shaping and leading many different areas. Bill, Jennifer, Michael and Stefan can each look back on a long career with SAP. Their experience, their in-depth expertise and the enormous respect they enjoyed among employees, partners and customers alike were pivotal to the company's success. We thank them all for their commitment to SAP. Ladies and gentlemen, allow me to turn now to the matter of Executive Board compensation. We last presented our Executive Board compensation system to the 2018 Annual General Meeting for approval, and the response we received from our shareholders at that time was very positive. Nevertheless, it subsequently became clear, based also on feedback from investors, that adjustments were needed to the existing compensation system. Moreover, the implementation of the EU Shareholder Rights Directive into German law and the revised German Corporate Governance Code have led to significant regulatory changes with respect to executive compensation, which are reflected in the new compensation system being presented to you today. The most important changes are as follows. We have limited the frequently criticized discretionary powers exercised in determining payouts in both short-term, performance-based compensation, STI; and long-term performance-based compensation, LTI, programs to a range of plus/minus 20% for the STI and a range of plus/minus 10% for the LTI. For the STI, we've also introduced 3 sustainability key performance indicators, or KPIs, that make up 20% of the STI. These KPIs are Employee Engagement Index, customer Net Promoter Score and carbon impact. Each of these indicators are clearly measurable and have been part of our annual reporting since 2012. We've also overhauled the concept of our long-term, performance-based compensation, the LTI. For example, we've eliminated the discretion element in determining the grant amount. In addition, the performance share units, which used to be coupled to peer group index, have been replaced with 2 new components. These 2 new components are based on challenging financial and market-related targets that better reflect our company performance. And last but not least, we capped the payout of LTI rights after 4-year investing period to 200% of the original grant price. The details of our proposed compensation systems are explained in full in the invitation to the Annual General Meeting. We are confident that the changes we have made and are presenting for your approval here today align us even more closely with our long-term strategy. The new compensation system plays a still greater emphasis on the concept of performance-based pay, enabling SAP to attract the best people and remain competitive on the national and international stage. The Supervisory Board is convinced that this compensation system provides a solid basis for achieving SAP's long-term goals with the current leadership team. Ladies and gentlemen, I now call on SAP's CEO, Christian Klein, to address you. This address has been published as of the 15th of May on our website.

Ladies and gentlemen, shareholders, I would like to welcome you to the AGM of SAP SE. These are unprecedented times, and the format of this event reflects it. I would very much prefer to be with you in the SAP Arena in Mannheim today delivering my first AGM address as CEO in person. But of course, your safety and health have priority, and we want to make sure that there is no delay in the payout of dividends, which is why we decided to hold a virtual AGM this time. It's clear that the corona pandemic has impacted each of us, and our thoughts go out to those who are affected personally. On behalf of the whole of SAP, I want to extend our deepest thanks to all those who are on the frontlines battling the crisis each and every day, and doing everything they can to keep our society going. The same goes for our more than 100,000 colleagues worldwide. I'm so impressed by your commitment. Thank you so much for what you're doing for society, for SAP and for our customers, because it is our more than 440,000 customers who make sure that our business does not come to a halt and are driving the economy forward. I also want to assure our partners. We will not leave any of you standing out there in the rain. In this time of crisis, we will fully focus on your success and we will continue to work for that. Let me stay with a round of thanks for a minute. Leading SAP as CEO is both a tremendous honor and huge responsibility. So I would like to thank the Supervisory Board not just for their support and counsel, but also for the trust they have put in me in this regard. When I joined SAP as a student 20 years ago, I never ever imagined that I would 1 day follow in the footsteps of such visionaries as Hasso Plattner and Dietmar Hopp. Dear Dietmar, you just recently celebrated your 80th birthday, congratulations. Your social engagement and your willingness to help and your commitment to others never fail to impress me. Hasso, my special thanks go to you too for your inspiration, your guidance and your never-ending support. It means very much to me. For the past 10 years, I want to thank also Bill McDermott and what he did for SAP. Let me say a few words about the changes to our Executive Board. Jennifer Morgan mutually agreed with the Supervisory Board to leave SAP on April 30 this year. An esteemed and excellent leader, she's always been and will continue to be a strong advocate of SAP. Thank you, Jennifer, for the close working relationship as well as your tremendous contributions and service to SAP over the past 16 years. SAP also bids farewell to 2 other respected Executive Board members today, Michael Kleinemeier and Stefan Ries. Michael, you always put our customers first and fought tirelessly for their long-term success. Stefan, you helped make SAP one of the best places to work in the world. I appreciate the spirit of partnership and cooperation on the Executive Board and wish you both all the best. I would further like to welcome Thomas Saueressig to the Executive Board. Thomas heads our product development, and I'm convinced that thanks to his technical and business background, he will be crucial to successfully driving the future of SAP and our customers. Congratulations, Thomas. We are aware that there have been a number of changes at the Executive Board level lately. Generational change is normal at all levels. Similarly, it's just as common for Executive Board members to decide to leave of their own accord to pursue a different path. But rest assured, and that in addition to the Executive Board, which is experienced and well-versed, SAP draws upon a strong team of top executives where the retention rate remains very stable at a high level. Let's take a look back at 2019. We raised and met our outlook. Another strong year for SAP it was. Total revenue, plus 12%, the highest growth rate since 2015. Cloud revenue, plus 40%. With this, we outperformed our major competitors. Operating profit, plus 15%. All numbers, by the way, are non-IFRS. We take great pride in this continued growth story and this pleased the stock markets, too. In 2019, SAP stock gained 38.4%, once again outperforming the benchmark indexes, DAX 30 and Nasdaq-100. And as dramatic as the recent development on the stock market have been, with a market cap of over EUR 130 billion. SAP continues to be the most valuable DAX company by far. We want you dear shareholders to share in this success in good times and in times of crisis. Let me make one thing clear: We anticipate solid results this year as well. We do not foresee Kurzarbeit, or short time work, or needing any state aide. Our strong position enables us to pay out a dividend. It is our policy to pay a dividend totaling 40% or more of IFRS profit after tax. We propose to raise the dividend for fiscal 2019 by 5% to EUR 1.58 per share. In February 2020, we resolved together with the Supervisory Board to initiate a share buyback program to the amount of approximately EUR 1.5 billion. Under this program, which was carried out and completed in the first quarter this year, SAP purchased 14,070,538 shares for treasury at an average price of EUR 106.04. Thus, SAP holds 3.98% of its own shares. We do not plan additional buybacks this year. Now let's turn to 2020. No question about it, the year has been marked by the coronavirus pandemic. The entire world has been touched by it, and with that, our employees and customers worldwide. The safety of our employees, customers and partners is, of course, paramount for us. This is why we have restricted travel and we transformed in-person events into virtual events. And even with 95% of our employees currently working from home, we continue to run at nearly 100%. Productivity is not impaired. We run stably. We're doing everything we can to ensure the business continuity of our customers as well. And we're doing this successfully. The feedback from countless conversations with customers shows that even in this crisis, SAP has proven to be the reliable partner. We, too, are feeling the impact of the pandemic. This applies especially to the traditional software license business where we had a decrease by 31% in Q1. But our business model is robust. Firstly, software licenses only accounted for about 15% of our revenues in 2019. And secondly, many customers have merely postponed their business decisions. What's more, our own transformation into an Intelligent Enterprise has put SAP in a strong position. The share of more predictable revenue is now above 70%. All processes from sales to deal signing to employees hiring can be done remotely. Our digital chain runs from -- all the way to the implementation and operation of software starting with the signing of contracts. And our data centers are fully operational with appropriate backup plans. And during the first quarter, we have been able to gain more market share with our core product S/4HANA. Our share in the ERP market is twice as high as one of our next closest competitor. S/4HANA now has more than 14,100 customers. Around 40 of those are net new customers, customers who used to have a different solution from at least one SAP competitor in use. I already said it, despite the extraordinary circumstances, we are confident that we will be stable -- that we will be able to call 2020 a successful year. We believe that conditions will gradually improve in the second half of the year as economies reopen and lockdowns end. In April, we adjusted our outlook based on the expected impact of the coronavirus crisis. For 2020, we expect, non-IFRS at constant currencies, cloud revenue to grow by 18% to 24%, cloud soft and software revenue to grow by 1% to 4%, and total revenue by 1% to 3%, and operating profit to be in the range of EUR 8.1 billion to EUR 8.7 billion. Again, at constant currencies. As SAP's new CEO, however, I don't want to leave you with just facts and figures. Above all, I would like to share what I feel is important when it comes to SAP's future. Four points. Number one, our colleagues, more than 100,000 SAP employees give their best every day for our customers. The success of SAP stands and falls with its people. I want to be a CEO for everyone. I want to listen, be accessible, challenge our employees, encourage them, invest in them, attract the best talents. Now that is important to me, give a clear sense of direction. That is what I want to stand for. At 83%, our current Employee Engagement Index remains above industry benchmarks. With more than 130 locations worldwide, more than 5 generations are working, people from over 150 nationalities, more than 100,000 employees, each with their own unique perspective and individual history. We embrace diversity in our corporate culture. However, building a healthy and inclusive culture requires dedication. This includes, for example, making our own software accessible to more user-friendly and more user-friendly for employees with disabilities. We have already come a long way in this regard, yet there is still much to do. We want to have 30% women in management by the end of 2022. With nearly 27% of women, we are well on our way. But diversity is more than gender, it's personalities, experience, culture, mindsets, characteristics and background. What is important to us, how we deal with challenges, what do we want to achieve. All that is what makes us who we are. For me, it's important that every single employee at this company is seen and heard. They feel empowered to bring new ideas to the table in an open and tolerant working environment because this is what fosters innovation for our customers. This is something we'll keep working on. You have my word. We'll be working on this. Let's come to point number two, customer focus. The so-called Net Promoter Score tells us how satisfied our customers are with us and our offerings. A negative value basically indicates that there are more customers who would recommend -- not recommend SAP than those who would. As you might expect, our score of minus 6 is not where we want to be, but it challenges us to do things better in the future. We were always at our best when we listen to the customer, yet all that listening means nothing if you don't act on the feedback. We have to win the trust of our customers each and every day anew. Our customers expect a clear economic benefit and solutions that are intelligent and integrated for their critical business processes, not individual products. They need a reliable partner for their digital transformation. Together with our customers, we will drive innovation because you know best. Where technical innovation produces the highest benefit for you, we will deliver new innovation in the cloud quickly and in an agile way. Every 4 weeks, we will measure bonuses and compensation more on customer satisfaction. We will introduce new licensing models, which are customer friendly. And of course, security is very important. As part of our huge security strategy, we keep monitoring our own IT security based on internal security or security audit, we noticed that not all SAP Cloud solutions fulfill the standards. I would like to stress here that this was not done in response to an incident. We keep testing our software and monitoring its security, and if there is a problem, then we communicate this proactively. This is what creates the trust relationship between our customers and us. We will keep doing everything to make our solutions as secure as possible to earn the trust of our customers. Point number three, innovation. Innovation forms the core of our strategy. No innovation, no growth. It's one thing that the coronavirus pandemic has proven: Digital transformation and the move to the cloud is no longer an option, it is an imperative, using data for new digital business models and to optimize business decisions. This was already something that gave people a competitive edge before the crisis. But now in the crisis, these companies are much more resilient as a result of this strategy. And when -- in talks with other CEOs, I hear every day that our strategy of the Intelligent Enterprise is more relevant than ever in this crisis. Let me give you a quick example here. Imagine you're a company with a number of brick-and-mortar shops. In times of coronavirus, you have to close all your stores but you've still got the products in stock and you have to keep paying rent and wages. So what to do in this difficult situation? First of all, you have to be familiar with the actual demand for the items you are offering so that you can adapt deliveries as needed. With SAP HANA, you can analyze even the largest amounts of data in real time. And now, right now, in the crisis, you can adjust your planning quickly to the quickly changing market. Since your stores are all closed, you need digital sales channels, so-called e-commerce solutions which will be open around the clock for your customers and who will also know their preferences and wishes. With SAP C/4HANA, our customer relationship management solution, you can also offer your products via such an innovative e-commerce solution. A crisis situation, sometimes results in liquidity problems. Thanks to S/4HANA, our intelligent integrated ERP system, you can offer new flexible payment options and even new payment models such as subscriptions or pay-per-use service. Your customers will thank you for this, especially in times of crisis. But in intelligent companies, not just sales and financials, especially in times of crisis, there are often problems with procurement and deliveries. Our solution for electronic procurement, logistics, management, use artificial intelligence to find if there are any problems with suppliers and predict problems before they occur. And when the economy restarts, it's important to know what your customers want and what your employees need. What gives your colleagues the necessary confidence to return to work? What measures would your customers like to see? Qualtrics gives you the answers to these questions. It is the emotional side of the Intelligent Enterprise to make the right decisions, especially in times of crisis. This is an incredible advantage. And this is how a traditional enterprise becomes an intelligent, competitive enterprise. Such an enterprise does not work without a solid foundation. The SAP Cloud Platform and SAP HANA offer important competitive advantage to our customers because they enable to combine and integrate SAP and non-SAP applications to enhance existing applications and to develop new ones. Why is this so important? On average, every company uses more than 500 software solutions. Only if they're all intelligent and use one data model, new business models can be implemented. And only with new business models can companies stay competitive in the digital age. Applications have to be flexible to adjust to the quickly changing markets and conditions. With our platforms, customers can simply add or remove functionalities for maximum flexibility. We want to build on these strengths and continue to invest in innovation. Our customers expect an unprecedented amount of innovation from us. This is why we will certainly not cut down on our R&D expenditure, we will keep investing. This brings me to our point number four, corporate responsibility. The coronavirus, the climate crisis, hunger and social injustice in many parts of the world are challenges facing modern humanity, and they are omnipresent in the daily news. As a global company, SAP is very aware of the responsibilities we have for our environment. In order to meet the challenges of the climate crisis, we need to be sustainable. Our goal is to become climate-neutral by 2025. We have already been able to decrease our CO2 ambitions despite our strong growth, and we want to help our customers in this regard as well. Which is why we are going one important step further, launching the Climate 21 program at SAP, with which our customers can reduce their CO2 footprint, measure it and reduce it. For example, by relocating production to more sustainable locations. In the end, our customers will not only have more intelligent operations, but also more sustainable companies. In this context, we are investing intensely into R&D. Because we all want to combat climate change. We, as SAP, have a responsibility for society. Our software is used to predict and prevent disasters to promote equality and to educate people who have never had the chance to go to school. Our SAP One Billion Lives program inspires a closer collaboration between social enterprises with the best we have to offer: people, technology, data and a huge network of customers and partners. In the current crisis, during the coronavirus pandemic, we have made available a number of solutions free of charge. We have started a digital learning initiative for students, pupils and children. We also established the COVID-19 Emergency Fund to support the urgent needs of the nonprofits and social enterprises. We have worked together with the federal government to bring thousands of vacationers back to Germany. We are working together with Deutsche Telekom to develop a COVID-19 contact tracking app that will help Germany get through the crisis. We have an application that was developed in Italy that shows the spread of the virus per region. 3D printing in Spain produces face protection for hospitals. These are some examples of the impressive initiatives of our employees, and that makes me so proud to be part of the team. Technology alone will not safe companies or the world, but it can play a key role in this. Ladies and gentlemen, since SAP's founding in 1972, our goal has been to improve business processes and people's lives. That goal has never been more important than today. It is as much our pledge as it is our incentive. Together with my over 100,000 colleagues, I will do everything in my power to follow through. What we stand for is what makes us who we are, the market leader in business software, the biggest European software company, a reliable partner for companies of all sizes in every country of the world in every industry, one of the best employers on the planet. I mentioned it at the start: Leading SAP as CEO is both a tremendous honor and huge responsibility. Together with my colleagues, I will create an SAP that stands for agility, innovation and customer focus. I give you my commitment to be a CEO who is there for everyone. A CEO who listens and builds bridges. A CEO who doesn't just promise but delivers on the promises. A CEO who stands for the long-term success of SAP. Ladies and gentlemen, the trust that you have placed in me and in SAP is something I'm extremely proud of. Next year, I want to be able to look back at 2020 together with you and say we did it. We beat the challenges. We have listened to our customers. We continue to improve. We delivered. We have grown and shaped the future together, not just for our customers but for you, too, dear shareholders. Thank you very much. Stay safe and be well.

Thank you, Christian. I am now calling for speakers to Item 1 and all other agenda items, that is to say Items 2 to 8 in the invitation to the meeting that was sent to you and is available on our website and which also contains the management's proposals. Your screen is now showing an overview of the agenda items for today's Annual General Meeting. These include the resolution of the appropriation of the 2019 retained earnings. The resolution on the formal approval of the acts of the Executive Board in 2019, as well as the appointment of the auditor for 2020 and the authorization for 2 new authorized capital facilities. Because the authorizations for the existing facilities are expiring, they are now to be renewed. Besides Executive Board compensation, there will also be a vote on compensation for the Supervisory Board members today. This vote is merely a matter of confirming the current compensation of the members of the Supervisory Board as stipulated in our Articles of Incorporation. No changes are being proposed today. The resolution thus follows the new legal requirements resulting from the second EU Shareholder Rights Directive. Since we already follow these new requirements with respect to Executive Board compensation, we want to follow suit and do the same with the Supervisory Board compensation. Ladies and gentlemen, before we move on to answering the questions we received in advance of the meeting, I should like to explain once more how you can exercise your voting right at this virtual AGM. As outlined earlier, you have the opportunity to cast your vote on each agenda item or change your vote during this AGM. To do so, you can use our password-protected shareholder portal and either change or grant proxy authorization and voting instructions to the company proxies, or alternatively, exercise your voting right by electronic postal vote. Please note that we will close these functions in the shareholder portal shortly after we have answered your questions.

Ladies and gentlemen, let us now turn to the questions submitted by shareholders and shareholder representatives. We have received 96 questions to this year's annual General Meeting. All of those questions will be answered today, so we did not exclude any question. Some questions that are similar we'll put together to keep things simple. We will begin with some questions submitted by Josef Gemmeke from the Schutzgemeinschaft der Kapitalanleger, SDK. Mr. Gemmeke mentions that the SAP virtual annual meeting is not actually a virtual meeting, but an in-person meeting, excluding shareholders. As a tech company, SAP missed an opportunity to set up an actually virtual AGM and to be a trailblazer in this in Germany against the background of the COVID-19 laws. Microsoft gives us an example about the combination of questions that are answered in written form and in an online format. Why can SAP not do that? Now this question was asked in a similar form also by Ms. Benner-Heinacher and Mr. Buhlmann. It is important to us that the format of the virtual AGM enables the participation of all of our shareholders. The speech of the CEO was put online and made available to our shareholders. And so I wanted to give you the opportunity to ask questions and also make your comments available prior to the AGM. What's more, SAP set up the shareholder portal where you could submit your questions. Our goal is to answer all submitted questions here at this AGM. So we want to be as helpful as possible to our shareholders. By the way, the law gives us a framework, a legal framework for this AGM, which we, as well as all public listed companies, have to observe. Now what was our priority? First of all, we wanted to stick to the date that we had set up for the AGM and to be able to disburse the dividends as announced. And on the other side, we wanted to provide top-notch technical stability and security at this AGM. Now if you compare us to companies abroad, this is a problem because they have another legal framework for their AGMs. Mr. Gemmeke also asked the question why SAP, in the invitation to the AGM 2020, gave their shareholders the right to move motions and to ask questions, which are then not actually treated at the AGM. Well, we are following and abiding by the COVID-19 law. So shareholders can only exercise their voting right by postal vote or via the proxies designated by the company. Taking part at the virtual AGM in person is not possible. Therefore, no motions can be moved at the AGM in presence by the shareholders. We know that this comes as quite a restriction to the right to ask questions for the shareholders. SAP at least allowed their shareholders to set up their questions on the shareholder portal prior to the AGM. So shareholders have the possibility to share their opinions of things prior to the AGM. So this is our goal. The AGM shall be as much like a normal AGM as possible and the well-known democracy of shareholders should be limited as little as possible. Mr. Gemmeke have the following -- mentioned the following to the compensation system. I'm under the impression that at this virtual Annual General Meeting, there can be no sufficient debate on the compensation system. Therefore, the agenda item should be withdrawn. The second shareholder directive came into force with some changes and amendments. And therefore, we adjusted the compensation system and put it up for vote at the AGM. The compensation system is the result of a process which we started more than a year ago. We wanted to inform our shareholders about the results of these discussions as early as possible. We think that this system reflects our long-term strategy better than the old compensation system and reflects the system of a performance-based compensation. We are firmly convinced that this is in the interest of the company and its stakeholders. Mr. Gemmeke made an observation. In 2019, at the beginning of 2020, many changes could be seen in the SAP Executive Boardroom. In 2019, Bill McDermott left the company. And the new Co-CEO team, Christian Klein and Jennifer Morgan were appointed. In April 2020, Jennifer Morgan surprisingly left the company and Christian Klein became sole CEO. Mr. Gemmeke asks, what are the real reasons for the surprising change? Are you sufficiently considering the U.S. market now? There are fears that the German technicians could push the Americans from the market. Allow me 2 remarks to start with. First of all, at SAP, we have a large number of incredible American technicians and, as talented, German buyers. Let me point out that not too long ago in this forum another question was asked with a lot of fear. This was, don't you think that SAP is too American and too focused on sales? Of course, there are obvious oscillations into one or the different direction. But one thing is clear, SAP is a global player. We are committed to the U.S. market and to the U.S.A. as a very central -- as a central site of SAP, there can be no doubt as to that. Now let me say a few words on the changes in the boardroom. In October 2019, Bill McDermott mutually agreed with the Supervisory Board not to renew his contract but to take on new challenges. He served the Executive Board for 10 years as CEO. And this is not an unusual thing to do after 10 years. The appointment of Jennifer Morgan and Christian Klein as Co-CEOs was welcomed by everybody. Let me also say that they concluded the year 2019 together successfully and started organizational changes that laid the foundation for things to come. Now the dual CEO model has its advantages, but it also has its weaknesses. And things sometimes take a while. However, we need agile acting. And this is best possible with a central leadership structure. Against this background, Jennifer Morgan mutually agreed with the Supervisory Board in April to leave the company. And with the effect, as of now, SAP turned to a one -- to a model with one CEO. We are taking this step knowing that all stakeholders and the Board support this step because it underlines our strategy and our focus on our customer success. Concerning our sales competence, let me say that Adaire Fox-Martin will continue to be responsible for global sales. She has years of experience and will best help us in this regard. And [indiscernible] also helps us in North America to have this continuity regarding sales. I've already said that SAP has a great importance for the U.S. market, and we're aware of this fact. Against this background, the Executive Board of SAP wants to be present in the region as soon as travel restrictions allow so. Mr. Gemmeke and another shareholder had comments and questions concerning the compensation system. He writes: The compensation system for the Executive Board meets many requirements put up by SDK. It is transparent and understandable. However, it is overly complex. 20 pages of the management report with a lot of graphs and formulas. And the total amounts are too high. Don't you think all these formulas and graphics actually -- will actually hide the fact that things are much too complex? When we decided for the Executive Board compensation, we tried to find a balance between the legal framework, for example, and the new shareholders' directive of the German Corporate Governance Kodex, the requirements of different stakeholders, and of course, it should be in line with our company's aims. These factors have to be considered in finding a -- or working out the compensation system. The annual bonus, for example, now includes sustainability goals and new financial criteria were included in the long-term bonus. At the same time, the discretion of the Supervisory Board was reduced. And it's not always easy to find a solution that is satisfactory for everyone and which reflects the diversity of the different requirements. And this, well, limits the possibility to make things more simple. Concerning the total compensation, we always have to keep in mind who our competitors are. Most of them are in the United States, and their effective compensation is much beyond the Executive Board compensation which is paid out at SAP. Our compensation system has a focus on the principle of pay-for-performance. Against this background, we think it is good. Our system is good and well-balanced. Mr. Gemmeke also would like to know how the target compensation of the members of the Executive Board have changed. Christian Klein, when he was appointed Co-CEO, received an adjustment of his target compensation. This target compensation was maintained when he became the only CEO. Adaire Fox-Martin took over the service section from Michael Kleinemeier and therefore has great responsibility. She's responsible for almost 40,000 employees, which is almost half of our workforce. So with the effect of 2020, she's received an adjustment of her target compensation. Beyond that, there are no further changes for 2020. Here are the current target compensations: Christian Klein, EUR 8.5 million; Adaire Fox-Martin, EUR 6 million; Luka Mucic, EUR 4.2 million; Juergen Müller and Thomas Saueressig, each EUR 4 million. Mr. Gemmeke said that -- or noticed that there is a 5% threshold concerning pension commitments. And for this reason, this compensation system will be rejected by SDK. It is important to us to have a pension system, which is -- well, which is competitive in the market. The compensation system is reviewed regularly in order to make sure that all components are competitive. Mr. Gemmeke also would like to know whether the percentages in the different short-term -- or in the short-term incentive are the same for all executives. Yes, this is the case. The short-term KPIs are the same for all members of the Executive Board. Concerning the departure of Bill McDermott in October last year, Mr. Gemmeke has the following question. According to the management report, Bill McDermott will receive compensation, a post-contractual noncompete obligation. This is part of this contract. Now he has a contract with ServiceNow. So is this correct? What do things look like now? Well, Bill McDermott and SAP agreed on a compensation to the amount of USD 3.5 million. Now the last question concerning the compensation system asked by Mr. Gemmeke is the following. Is the compensation system by the Supervisory Board still the same or has it been changed? No, the Supervisory Board compensation was not amended.

Thank you very much, Friederike, and a very good morning to you, ladies and gentlemen. Now let me take a deep breath and tackle the next number of questions. The first one was about the effect of the corona crisis. In early April, you reduced the targets for 2020 only a little. From today's point of view, given the recession trend, is this still realistic? Are customers not stopping more projects or postponing them? First of all, I want to say, as Christian Klein said also, our business model delivers a high share of more predictable revenue. And by way of their nature, they should remain stable in times of crisis. This includes maintenance revenue, also cloud revenue. And these revenue streams contributed 2/3 last year. And during the first quarter this year, 76% to our overall revenue. In the current situation, that changed the cloud model which has been discussed critically by some investors. But this benefits us now. And we've adjusted our outlook for 2020 taking into consideration the expected outcome of the corona crisis or effect of a corona crisis. And based on the situation and the difficult market environment, we think there will be another decline during the second quarter. But for the second half year there will be a gradual recovery when economies restart and the lockdowns are reduced or lifted all together. Mr. Gemmeke also wanted to know how the efficiency is achieved in the provision of cloud solutions. Well, Mr. Gemmeke, you noticed rightly the gross margin increased by more than 5 percentage points to 68%. And during the first quarter 2020, we could increase that figure even more. The gross margin in the cloud was already above 69%. The background was the centralization of a global cloud management and the replacement of third-party databases by SAP HANA after SuccessFactors in the year before. We have now finalized this year the HANA migration with Ariba. We are bundling cloud operation in one organization and generate more economies of scale and procurement advantages. Technologically speaking, we've harmonized the cloud infrastructure in the context of a converged cloud, and we're now able to run practically all cloud solutions on the same technological platform. What also helps us is the collaboration with the so-called hyperscalers, Microsoft, Amazon, Google and Alibaba. And to create additional efficiency gains and to reduce our capital expenditure, we expect further increases in the cloud gross margin. And by 2023, we want to achieve a profitability of 75%. Mr. Gemmeke then had a question about the auditors. That question was also asked by Mr. Buhlmann of VIP. So I want to answer that question for both of them. KPMG has been the auditor of SAP for a long time since 2002. When was this last completely retendered? The last time this was done was when we changed the KPMG in 2002. According to the EU regulation, SAP is obliged to change auditors in the year 2025 at the latest. However, in April 2020, we already published the invitation to tender the auditing of the fiscal year 2023. This was published in the Federal Gazette, and we are looking at possible candidates. And we started that process early on so that the transition and start-up phase of the new auditors would be as seamless as possible and to ensure independence of the auditors and to give the new auditors sufficient preparation time for their new mandate. Mr. Gemmeke wanted to know details about the dividends in 2020. SAP during the first quarter of this year, bought back shares to the tune of EUR 1.5 billion. Christian Klein mentioned this in his speech. Alternatively, a special dividend was also considered for the same sum. How high would that special dividend have been per share? And why did the company not choose the option of a special dividend which would provide additional liquidity to our shareholders? What is it we're going to do with the repurchased shares? The regular dividend or payout this year totals EUR 1.85 billion or EUR 1.58 per share. With a special dividend, that amount would have been EUR 1 per share. A special dividend, however, would be due at the time of payout of the regular dividend and would have resulted in a high liquidity loss at that point in time. Since the share buyback is a more flexible instrument from the cash flow point of view, it allows control of volumes and the payout terms of individual tranches in the context of a buyback via the commission bank. The more flexible transacting of the share buyback was decisive. In addition to the question of liquidity, the repurchased shares will be kept as treasury shares. Mr. Gemmeke then remarked that the general administration costs 2019 rose by 48% to EUR 1.6 billion. And his question was what caused this and what the situation will be like in 2020. There is mainly one reason for this. Our stock-based compensation and the share price increase in 2019, we reported a strong effect with the administrative costs. And in 2020, we'll see a decline here. This trend was already recognizable in the Q1 report. Mr. Gemmeke then asked a question about the SAPPHIRE Venture funds, and he wanted to know with which value they are recognized in the group balance sheet. The shareholdings held by SAPPHIRE Ventures are recognized with a value of EUR 1.9 billion in the group balance sheet on the 31st of December 2019. In addition to the shareholdings, we also recognized assets and debts from current operation of SAPPHIRE Ventures, but they are negligible from the point of view of the group. Mr. Gemmeke then had a question about the balance sheet effect and wanted to know what happens to the valuation approach if there's a crash of the technology stocks at the stock exchanges. Would this impact the income statement as a result of write-downs? You're right, with your assumption that in that case, write-downs would be necessary. However, this is nothing new. This is something we've always done on a quarter-to-quarter basis. We look at our -- we adjust our valuations every quarter, and we saw this already during the first quarter 2020. During the first quarter, SAPPHIRE Ventures has been able to increase the value of the overall portfolio. However, some investments had to be impaired because of the uncertainties resulting from the COVID-19 pandemic and the resulting insecurities. However, the contribution to our financial income during Q1 remained positive in the lower 2-digit million range which is an excellent result of SAPPHIRE Ventures given the situation. Mr. Gemmeke also wanted to know why the mobile phone software division is going to be sold, and he wanted to know how much this division contributes to the revenue and what the motives are. This area, SAP Digital Interconnect, became part of SAP as part of the Sybase acquisition in 2010. Although the positive aspect is that the area has grown since then but it is not a central component of the corporate strategy. As part of the focusing on our Intelligent Enterprise strategy, we, therefore, decided to sell off that division and we found a suitable partner with the Swedish Sinch AB. The revenue of Interconnect in the past 12 months was approximately EUR 340 million and this was nearly exclusively service revenue. The agreed purchasing price is EUR 225 million. This is approximately 14 EBITDA multiples, which is attractive for a messaging service business in the telco business. And one should also take consideration that in this area, buying prices are usually measured as multiples of the bottom line figure as opposed to software, where revenue multiples are used. We expect this transaction to be finalized by the end of the second quarter 2020. Mr. Gemmeke also asked the following question on the business development. The IFRS operating income 2019 was EUR 4.5 billion. The non-IFRS operating income you reported was EUR 3.7 billion larger. How will that difference develop in 2020 and 2021? In 2019, we had -- in addition to the stock-based compensation components, which were higher due to the very positive development of our stock prices, we had another significant cost item, namely, the global restructuring program which is the reason for the difference you mentioned and which we do not expect to reoccur during this fiscal year. During the first quarter 2020, the difference between IFRS and non-IFRS was reduced to EUR 270 million accordingly. So that we expect the difference between operating income, IFRS and non-IFRS this year and probably next year will significantly -- will be significantly lower than we saw. With regard to our debt financing, Mr. Gemmeke had the following question, and this is the last one that I'm going to take to answer Mr. Gemmeke in this block. What is your position on the issuance of green bonds for refinancing? Basically, green bonds are a very interesting instrument, and they are especially suitable for companies with continuous financing requirements for such projects. Unlike those, SAP, however, is not a so-called frequent issuer. That is capital is usually only needed to finance larger acquisitions. SAP is taking sustainability very seriously, and especially in climate protection it has very ambitious goals. In the sense of a more holistic view, I think one could argue, from my point of view, that all debt instruments emitted by SAP are an investment into a sustainable company. From the investors' point of view, even though the use of the funds is not related to a single green project, in that respect, SAP is not planning any emission or issuance of green bonds. So now 2 final questions by Mr. Gemmeke, and Mr. Klein will go to answer this. Christian?

Yes. Thank you. Further question by Josef Gemmeke. Mr. Gemmeke noticed that at the 2019 annual congress of the user group, DSAG, there was clear criticism directed to SAP. The integration of the acquired software was only slowly and many initiatives triggered by SAP users who were not pursued. Only 1/4 of customers would rely on the SAP strategy. And we further expanded that there was a tremendous need for improvement in this field. This was only -- was also obvious in the target deviation of the 2019 Net Promoter Score. So his questions, what is the initial initiatives by SAP to live up to customer expectations and to increase the Net Promoter Score in 2020 by 3% to 5% -- 3 to 5 points, sorry. Well, I was attending the DSAG Annual Congress. And rest assured, I listened closely -- I not only listened, we have taken several measures already. And as you've learned from my address, it is dear to my heart also in my new role to closely work with our customers, partners and user groups. One specific point of reason that was voiced during the congress was the integration of applications. Well, for more than 50 years -- almost 50 years, sorry, SAP stands for the running of business-critical processes at our customers. In the cloud, nothing changes here. Business economics remains the same. The processes need to be covered end-to-end. And we have made considerable progress. Almost 30% of the integration requirements by customers have been delivered. By the end of this year, we will have achieved 90% of these integration requirements. So we made good headway also when it comes to the integration of our applications to non-SAP applications because that's also important for digital integration and transformation of our customers. And Qualtrics, our experience platform, will be including all our products so that end users will be able to give us real-time feedback regarding the experience our solutions offer. And then we can respond in an agile and innovative fashion. And beyond that, I've already said that the innovation growth strategy is closely delivered combined with our customers in the industrial cloud. Many customers come to us. Especially right now in this digital world, where so many new business models are emerging, are changing, they see SAP offering these new models and integrating them in our business model. And rest assured, our developers across the world are in close cooperation with our customers to really understand precisely what the needs are. I have great expectations linked to our reorganization, which we started in February, because one point of criticism was that it's too complex in the day they exchanged with SAP. Since February, Adaire Fox-Martin has taken over customer success. That's all the customer-bound functions. And with that, we expect a holistic support for our customers from sales, across services and the operation of our growth solutions. I've already mentioned in my presentation that bonuses and compensation of our employees will be focused more on customer benefits. Another question by Mr. Gemmeke. He wants to know about the development after the acquisition of Qualtrics. And he wants to know how many existing customers are using Qualtrics products. Right now, roughly 12,000 customers use the Qualtrics portfolio. Out of these 12,000, more than 7,000 are existing customers, meaning they're using our SAP products. The broad market development with Qualtrics has only just started. Remember that SAP has more than 440,000 customers, and we expect tremendous growth potentials with Qualtrics. And we are confident that, currently, we only see the top of the iceberg of the opportunities. A current example, from a customer's perspective, once the economy will start to open up, it's important to know about the experiences, the expectations of customers and employees. What do the customers expect to feel at ease? What makes employees feel safe to come back to their office? And these answers can be provided by Qualtrics. And rest assured that in close cooperation and close discussions with Qualtrics and Ryan Smith, who's responsible here, we look together for further applications of Qualtrics in our portfolio. And there's tremendous potential here. For us, it is essential that we offer intelligent solution to our customers but also solutions that reflect the customers' expectations above all in this times of crisis. Right. With that, I'd like to hand back to Friederike Rotsch.

Thank you, Christian. Let us now address the questions raised by -- Frau Jella Benner-Heinacher from the Deutsche Schutzvereinigung für Wertpapierbesitz, DSW. Ms. Benner-Heinacher asked about the changes within the Board within the last 6 months. It's the task of the Supervisory Board, its Chairman and the General and Compensation Committee to ensure long-term succession planning and calmness, so to speak, on the Board level. Are the reshufflings now at an end? With currently 5 board members, it's rather unlikely, all the more so since an HR officer is missing. Can we expect a further expansion also in the sense of diversity? And would it be time to set up a global Executive Committee as a basis for long-term succession planning to have sufficient talent at the waiting pool, so to speak, at the second executive level? Well, this question regarding HR officer was also asked by Mr. Schmidt of DWS. Well, the first question as regards to changes in the Board, well, there were tremendous dynamics being observed. Any change as such made sense and was understandable. But as we've mentioned in the other answers, the Supervisory Board of SAP sees the current setup of the Board as ideal for the future. This also gives the answer to the second question. Currently, we're not planning to make any changes to the Board with a sole [indiscernible] exception is a Chief Human Resources Officer that might be introduced in June. And we're not planning a global Executive Committee. Below the Board, we have the 2 levels, the so-called global executive team and the senior executive team. These 2 units comprise the top executive levels directly below SAP SE. Ms. Benner-Heinacher made the following comment. The coming and going within the Board causes a lot of unrest and leads to a shift of power towards Walldorf, but it also costs a lot of money. You've mentioned the cost for 2019 in the report. But what about 2020? Can you please detail the payments made, amongst others, to Jennifer Morgan? And if I remember it correctly, Mr. McDermott had a non-compete clause in his contract. How is it possible that he is now working for ServiceNow? And to what extent does he get payments from the contract for non-compete clause? Well, McDermott left the Executive Board at his own request on the 15th of October 2019 with the approval of the Supervisory Board. Therefore, no severance payment was made. He received his contractually owned claims until leaving the company, according to the planning conditions. And beyond that, we agreed a compensation payment of USD 3.5 million according to the post-contractual non-compete clause. In this context, ServiceNow was assessed as a partner. In the context with the other changes, the following severance payment were made: Michael Kleinemeier received EUR 1.2 million; Stefan Ries, around EUR 7 million; and Jennifer Morgan, EUR 15 million. Now the next questions will be answered by Christian.

Thank you, Friederike. Ms. Benner-Heinacher praised that DSW thinks it's good that the SAP CEO donates part of his remuneration to the crisis. However, DSW would like to see the whole Board and this Supervisory Board to follow his example. And the questions are any information regarding the donations of the Executive Board and the Supervisory Board? And what exactly are the donations or where exactly go the donations? Two more shareholders asked about the personal contribution of Supervisory Board and Executive Board to tackle the current crisis. Well, I donate 20% of my fixed remuneration to this SAP Solidarity Fund. SAP Solidarity Fund is a nonprofit organization trying to help people who are in need due to catastrophe. It was founded in 2001 as a response to the 11th of September by employees of SAP. The Solidarity Fund thus lives by the commitment and the donations of our colleagues. Other board members have followed my example. However, in the end, I'm not acting as a CEO of SAP SE, I'm acting as a private person. And accordingly, these similar decisions taken by every SAP colleagues or the Supervisory Board are private, private decisions, including the questions whether these donations are to make -- are made public or not. Next question, also by Ms. Benner-Heinacher. Well, the time of the big acquisition seems to be over for SAP, the company is now broadly positioned. But the cross-selling potential of the acquisitions hasn't been fully used. That is why you're focusing more on integration. That's new. Because so far, all the acquired companies have been left at a long leash in order not to lose the know-how and the talents. Is that a proper change of strategy? And don't you expect a loss of talented know-how, a brain drain? Well, first and foremost, I'd like to tell you that the strategy of SAP needs to be within the different functions of the company to develop the market-leading software and to convince the end users of the benefit of this software. Beyond that, no other software supplier offers the same range of applications. And we have to play this benefit by good integration because business processes go across all the functions within a company. So that doesn't mean that integration needs to go to the detriment of innovation within the different solutions. For integration at the development side, we use 10% of total capacity. So more than 90% of our development capacity remains for innovation, also in different functions with our software to remain market leader. And the regular employee surveys tell us that in the field corporate culture, we performed really well with the Employee Engagement Index, when we reached 83% in 2019. And we pushed our cloud transformation in the past years. Here, the cloud acquisitions played a major role. The market success of all our cloud solutions proves us right. For us, there was no alternative here. We wouldn't have been able in our existing business to keep being strong at the same time from our own power to build up such a portfolio of cloud solutions. And beyond that, we've developed -- we've acquired leading cloud solutions that help us now to provide intelligent enterprise for our customers. So now our focus is on integrating the solutions and pushing innovation at the same time. Because only if all the integration of all the solutions work seamlessly, you can implement new business models. Covering the complete value chain has always been our key competitive edge. And that needs to apply to the cloud. And we are well on track, as I've mentioned. We've already achieved 30% of the integration requirements. And by the end of the year, Thomas Saueressig and Juergen Müller, with their organization, will have achieved 90% of the integration requirements. And a personal comment here, I mean, we talk a lot about unhappy customers. And let me tell you one thing. Right now, the crisis, rest assured, we get a lot of positive feedback. We have satisfied customers, who especially right now rely on SAP. Especially in these times of crisis, they want to remain robust, and we secure the operation of our software and their operations. And don't forget that our CFO at SuccessFactors. And on the one hand, I've noticed how important integration is but also have learned how -- what it means to work in an acquired company. The know-how of every single employee is more decisive than ever. For the handling of critical business processes in the world, we need every colleague. We need every solution and every region. We are fully aware of that. And that is why we appreciate it by dedicating responsibilities to these employees all over the world. We have numerous talents from acquired companies. And we've handed over responsibility to them. And we will keep promoting global talents. At the same time, we make sure that every colleague who can be heard dares to voice their ideas and finds an open and tolerant environment. Then more questions by Ms. Benner-Heinacher. With the classical CRM business, SAP ranks second after Salesforce. Gartner estimated the addressable 2020 market for CRM at EUR 50 billion. What are your targets for the market share in this field? What about the market position? Has it improved due to Qualtrics and it's right that Salesforce will continue to be #1? CRM still is the biggest and fastest-growing category in the field of corporate software. The addressable market is estimated to reach USD 100 billion in 2023. And of course, we want to play a major role here and are focusing thus on the most quickly growing categories of the CRM market, where we are strong. Also thanks to our acquisitions, the faster-growing areas in CRM are in line with our strengths, platforms for customer data, trade, customer experience management. Only SAP can consistently cover the entire value chain so that companies can respond in real time to any changes in their supply chain. With our Hybris acquisition, we've gained an extremely strong customer bases in commerce. And here, we see increasing demand during the crisis. And this area will continue to be one of our focus topics. Qualtrics, too, strengthens our solution portfolio in a bright broad basis, in particular also in the field of CRM or customer experience management. This strategy works. Within the CRM market, according to Gartner, IDC, we come second with a market share of roughly 6%. Ms. Benner-Heinacher has also explained that DSW is of the opinion that sustainability is not pushed aside by corona. SAP has launched a new program, Climate 21, the objective being to be climate-neutral by 2025. In addition, SAP supports the Value Balancing Alliance, which wants to push forward the measurability of sustainability and the market, too, requires an IFRS for ESG. What does SAP expect from such initiative? And how can you make money with that in the future? Well, in my address, I've briefly mentioned this. To tackle the climate crisis in the long term, we need sustainable solutions. And it's our objective to become climate-neutral by 2025. And we want also to help our customers and have launched Climate 21 to that purpose. This new program helps our customers to understand the CO2 footprint along their value chain, to understand it, to measure it and to minimize it. For instance, by shifting production to sites that can produce more sustainable, so customers -- sorry, companies become not only more intelligent but also more sustainable. Well, first and foremost, we have to be aware of our responsibility as global companies, both for the environment and the society. The relevance also shows that it was never easier to find partners as co-innovation partners. And for this project, even though that other topics are relevant, climate protection is gaining ground. As you know, SAP has been a pioneer in the field of integrated reporting. Financial and nonfinancial KPIs are mutually influencing each other and integrating, monitoring, planning, benchmarking and reporting also of nonfinancial KPIs. The focus of the Value Balancing Alliance is on a uniform methodology of collecting, calculating and evaluating social and ecological impact of operating activities. This covers the entire value chain and covers different industries. The VBA has thus been commissioned by the EU to develop the green accounting standard. In the second step, this new standard will be integrated in the operating of the system. For SAP, we have this opportunity with our software to identify and calculate nonfinancial KPIs and their value contribution and thus providing support to our customers. They, in turn, can optimize their value chain and improve reporting at the analytical level. Ms. Benner-Heinacher and other shareholders asked about the effects of COVID-19 crisis. What is changing in the business process of SAP? And what are the current experience you made with virtual sales and virtual product launches? Well, basically, our business model doesn't change fundamentally. However, our operative processes are to be adapted also in the long run after the crisis. Basically, our change towards an intelligent enterprise enabled us to keep our operations going. Many of our processes have been automated and made more intelligent. Remote operations across all functions has been a matter of course within SAP. 95% of our employees are working from home, but we still work at 100% performance. A high share of the implementation work and customer service can be done remotely. And this share will continue to increase by our success in the cloud. 30% of our transaction volumes are already handled by SAP Digital Store. We've swiftly switched to virtual sales and use, amongst others, Microsoft Teams and Zoom for virtual meetings and presentations and also for online demos. Trust me that I would have liked to have such solutions in my portfolio, too. As regards to digital contracting, we use DocuSign. With a product amplifier, we triggered an initiative to increase the volume of virtual interaction transactions. It's our target to -- to double the figures of potential sales and thus offset bigger deals that have been postponed. We'll expand this approach the entire customer success board area. We're convinced that these strategies can be integrated into our traditional sales model, above all, for the time after the crisis and after their current restrictions. We'll also revise our event content and use virtual format more strongly in the future. Also, the communication with capital market will fall back on digital opportunities. We had some digital road shows with investors, and we have observed how quicker and simpler the dialogue has become. In the market, the trend towards subscription models will continue to gain ground. Major investment in software licenses will decrease since customers focus on the flexibility and the liquidity benefits of the subscription model. All in all, we expect a stronger hybridization of the working process across all areas, a combination of virtual and physical interaction. And with that, I'd like to hand back to Luka.

Thank you, Christian. So I can answer the remaining question by Mrs. Benner-Heinacher. First of all, share some questions regarding the share buyback program. Why didn't you pay out a special dividend? What was the benefit of the share buyback? And what about Elliott? What did they say to your situation in the corona crisis? Any talks or are they just happy with the dividend? Well, first 2 are pretty much in line with what Mr. Gemmeke said and I've already answered those. The reasons for the share buyback instead of a special dividend, well, flexibility and their liquidity topics, they were decided. And what were the benefits? Well, shares in the amount of EUR 1.5 million that are now in our treasury stock. As regards Elliott, well, we have regular talks with many of our shareholders and would like to ask for your understanding that we're not giving any details regarding individual tasks. Concerning the organizational changes, Ms. Benner-Heinacher had the following remarks and questions. The restructuring of SAP was successfully concluded. Now SAP starts a classic efficiency program, as we've seen with many other companies. Here, I'm especially interested in the bundling of data centers, especially in cooperation with the cloud, mostly with hyperscalers such as Microsoft. What do you expect from this, a higher workload, a higher cloud profit? Please explain the positive effects. Well, I said it before. By far, our greatest potential for growth lies in the cloud. There, we have the potential to achieve around half of the increase in our non-IFRS operating margin planned for 2023. So concerning the cloud, we come from a very fragmented world, where every unit, especially acquired units, usually have their own cloud infrastructure. Some time ago already, we have defined converged cloud, as I referenced. However, as long as this remains a nonbinding reference, the effect could not have been fully realized. We have now begun to implement this convergence strategy with greater consistency. And this can be seen in the strongly increasing usage of capacities and the highest -- significantly higher cloud gross margin and the good results in the first quarter 2020 despite the corona crisis. With hyperscalers, Microsoft, Google, Amazon or Alibaba, well, against the background of these competitors, we can offer infrastructures which they cannot offer. This helps us to increase our margin and also to reduce our investment expenses. So we are on a very good path in order to achieve a cloud margin of 75% by the end of 2023. Against the corona crisis, Ms. Benner-Heinacher also have the following questions and remarks. You have adjusted your outlook for 2020 as well as the expected free cash flow that you've corrected downwards because customers will spend less money on IT probably due to the corona crisis. Many current customers are already struggling with the migration to S/4HANA. Aren't you afraid that customers will postpone their IT investments 2 to 3 years? If there is no recovery in the second half of the year, don't you think that there will be a gap that you cannot catch up on in '21 or '22 because you have not given up on your goals for 2023? I guess that's true. We cannot foresee the future either. It is quite difficult to give you a reliable statement at the moment. However, we do not just want to withdraw our outlook. We have a successful development to more foreseeable revenues. So we think we are in a good position based on our assumptions that we have a positive trend for our figures in the year 2020. We have a higher share of better plannable revenue. And this is a good message. Let me say something concerning the cash flows. You are right in the current situation. It is important to be cautious when it comes to assumptions and to financial incomes. However, our adjusted financial cash flow also includes observations from 2019. And this shows the strength of our business model. Concerning '23, there is the question if our planning assumptions will lead to an improvement of a situation in the second year because the corona restrictions will be eased. In case of a second wave, where whole economies will shut down, well, then this will, of course, have an impact on our goals. However, we cannot predict the future either. Ms. Benner-Heinacher also has the following comment. In your ad hoc statement, you just said that there is a number of cloud products which showed security issues, which identified in internal reviews. SuccessFactors, Concur, Callidus and SAP Cloud were -- impacted 9% of your customers. Now you want to have a new unit, which is responsible for IT security in the U.S.A. What will this cost? Well, concerning security this year, year-over-year, we spent a 2-digit million euro amount on top of this so-called runway. And this will help us to actually implement the measures in IT security. Most of these measures will come into force or be finished by the end of the second quarter 2020. As we said on the 4th of May in our statement, the cost for these measures are covered in our current forecast for 2020. Now these are the questions I wanted to answer. And now I will hand back to Friederike.

Thank you very much. Now we come to the questions submitted by Mr. Buhlmann from VIP. Mr. Buhlmann has a following question. The questions that were not read out at the AGM, will those be published on the website in a transparent and complete way? Let me answer as follows. We had similar other questions submitted by Mr. Gemmeke. I already commented on these questions. Regardless of this, I would like to make the following remarks. Now our aim is that the virtual AGM should be as much like a normal AGM as possible. We don't want to restrict the important right to ask questions that shareholders have. For these reasons, all questions that were orderly submitted will be picked up at the AGM and will be responded to. No questions will be left out or be answered on our website, even though the legislator gives companies the possibility of the current situation to do so or give a certain leeway in this respect. Mr. Buhlmann also wanted to know what the new Board looks like. This question was also asked in a similar way by Ms. Benner-Heinacher and Mr. Gemmeke. And Mr. Buhlmann also sees beyond that or has a question concerning the strategy and asks if there are already quantifiable results. He also wants to know if the Chairman, having operating impact, is still as strong and if he is the de facto leader of the company. Well, let me say the following. As I already said, concerning the other 2 questions, SAP thinks that the Board is well positioned. The strategy that you just mentioned is fit for purpose according to our view. We work closely together with the -- or Board work closely together with the Supervisory Board. And as Mr. Klein said in his address, these aims meet with our overall approval. Now we don't have any quantifiable results yet, and I think this is understandable. Concerning the role of our Supervisory Board Chair that you brought up, let me say, the company benefits greatly from a strong role as chief controller, his ideas, his entrepreneurial spirit, his cleverness and his passion for SAP. In his scope of responsibility as Chair of the Supervisory Board, he is very -- he's very engaged. But let me stress that strategic and HR decisions are always taken by the whole Supervisory Board. And the development of the strategy and operating -- the operating steering is always in the remit of the Executive Board. Mr. Buhlmann also mentioned that good corporate governance was observed with regard to the new shareholders' directive. And he asked according to Section 114 of the Stockholders' Act, how many approvals were passed? Well, this question concerns counseling agreements, which need the approval of the Supervisory Board according to the Stock Corporation Act. Let me say that such approvals were not given by the Supervisory Board. You asked for approval since the 1st of January 2017. So let me add that in the years 2017 and 2018, in whole, 2 approvals were handed out. And these were mandates to a greater law firm, where a former member of the Advisory Board was partner. For the next question, I would like to hand it back to Christian.

Thank you, Friederike. Mr. Buhlmann also had questions concerning to the acquisitions we made. You've spent almost EUR 30 billion on M&A activities. Can't you use these synergies in a better way? There must be more leeway or more possibility for profitability and higher scalability. Well, our focus still is organic investments, technology and innovation. This enables sustainable growth of our solution portfolio and makes a contribution to us achieving our goals. We made these acquisitions, which added to our portfolio, to our cloud and helps us to cover strategic markets better than we could in the past. Now the integration of our cloud solution is an important factor in the purchase decisions of our customers. The software of sales is closely interlinked with the supply chain software of a company or the software for procurement is closely interlinked with the finance software, as an example. But there are also many other factors you have to consider and which have an impact on the purchase decisions of our customers. And this is why it's so difficult to quantify these things. Concerning quality, and this is a decisive point, we can say that SAP is in the position to provide great benefits for our end users so that they can keep growing profitably and gain market share. Now I hand it to you, Luka. Thank you very much.

Now I will go on with the remaining questions put to us by Mr. Buhlmann. He asked for the growth in our APJ region, as we call it, this is Asia Pacific and Japan. Here, we can see a positive trend, especially in Japan. The region APJ only generated EUR 3.1 billion in revenue. Latin America is also not very high up in the list. Don't you think there should be more potential for SAP? Well, first of all, thank you very much for the question. I think there is much more potential in there. I personally am the sponsor for our business in North America and Japan on the Board. For this reason, I have a personal emotional interest in this. But we also have to say that APJ as well as Latin America in 2019 have contributed to the growth of the total revenue of SAP. The overall growth of the SAP group was 9% at stable currencies; Asia Pacific, Japan, 6%; and Latin America, 9%. So the business activities in this region were impacted by certain fears and also by the escalation of a trade war between China and the U.S.A. We are all convinced that our solution portfolio enables SAP to contribute to a relief, to a recovery of the economy in this region. We are convinced that we can do so in a very good way and can contribute to a digital transformation in that region. Mr. Buhlmann also had a question concerning sustainability. He challenged the cost of the improvement of our ecological footprint. How do you evaluate your improvement? Is there a breakeven? What's the balance between costs and ecology? Well, it is our aim to reduce continuously, so reduce our CO2 footprint and be climate-neutral by 2025. Because I said it in the speech, an important approach from our point of view is providing innovative services and products to our customers. SAP is a trailblazer here. We are convinced that improving our own CO2 balance also gives incentives -- or provides incentives to our customers to help improve theirs. In order to achieve our goals, we took measures in order to improve our own footprint. Top priority has the reduction of our CO2 emission over the whole value chain. Let me give you one example. Video conference technologies were expanded in order to reduce business travels and in order to reduce CO2 emissions. This is also against the background of the COVID-19 pandemic. These were good investments that help us now. In order to reduce our CO2 footprint, we also invest in 100% renewable energy for all sites worldwide and our data centers. We also change to electromobility in our company cars. This way, we achieve a good balance between important investments and our ecological footprint. We steer our improvement not via a breakeven model, but we look at the costs and the effects. Reducing our CO2 emissions by 1%, for example, saves EUR 6 million. If the CO2 emissions increase by 1%, however, year-over-year, then the operating costs will also increase by EUR 6 million. Mr. Buhlmann also wanted to know where the positive effect in the financial result came from. I already made the statements concerning this in another context. And I also presented this in our management report. As can be seen in the integrated report 2019, the positive effect in 2019 is mainly due to sales and fair value adjustments of investments in companies, most of which were managed by Sapphire Ventures. There was a significant increase here compared to 2018. On the other hand, there were offsetting effects from interest expenses from liabilities, from derivatives and from negative fair value adjustments of investments. [Audio Gap] [Foreign Language] on the 21st of September 2015, [ 19.5% ], and at year-end, [ 23.5% ]. The P/E according to IFRS was at 28.7 in 2015 and at 43.2 in 2019. The P/E ratio, however, is always a key date-based indicator, and it should always be seen in the longer perspective. And a momentary comparison is, therefore, really not something that produces meaningful results. So we think this is still an attractive investment. But this is, of course, something that shareholders have to decide on. And with that, I'd like to hand back to Christian Klein, who's going to take the first questions from Hendrik Schmidt of DWS.

Thank you very much, Luka. Mr. Schmidt notes that the current crisis situation is an unprecedented burden on the global economy. And his questions are what measures are you taking in the current crisis situation with regard to your staff and other stakeholders? What immediate effects on your different business areas have you noticed so far? And how are you responding? And to what extent does the COVID-19 pandemic affect the short- and medium-term targets, margins and sales? And why did you sell SDI, although a communication platform for cloud services is an obvious added value in the current situation? On the first question regarding our measures, as I said previously, the safety of our staff, our colleagues, our customers and partners is top priority. This is why we took many measures. For example, we restricted travel and we turned physical into virtual events. Nearly all our staff members are working from the home, by the way, without appreciable productivity losses. We do everything we can to enable our customers to continue their business without interruption with success. Countless talks with customers show one thing very clearly, SAP is the reliable partner also in a time of crisis. The second question concern the business areas. Of course, the corona pandemic is affecting our business, especially license revenue. And our business model, thanks to our transformation into an intelligent company, is very resilient and robust. And that will not change through the crisis. For the whole year, at constant currency and based on non-IFRS figures, we expect a growth of 18% to 24% in cloud revenue and with software, a decrease. With service revenue, we expect an increase in the lower single-digit percentage. The third question on the effects on the short- and medium-term goals has already been answered in response to a question by Ms. Benner-Heinacher. The fourth question about the motives for selling the SDI business was asked in a similar way by Mr. Gemmeke of the SdK Association and answered. But let me say again that SDI is not a software business. It is basically a service business for the aggregation and delivery of text messages, SMS messages. The area came to SAP as part of the Sybase acquisition. And it has no strategic relevance for us, which is different with Sinch, the buyer. So we're optimistic that the business there will develop positively there. Mr. Schmidt had the following question regarding employee satisfaction. The evaluation of employee satisfaction is an important indicator for the success of SAP. But in 2019, as we read in the annual report, it deteriorated. The index for employee engagement went from 84% to 83%, the retention rate from 93.9% to 93.3%. But the LTI, the Leadership Trust Index, went down from 60% to 59%. What are the reasons behind that? And what measures are you taking to meet these results, which are certainly not satisfactory. First of all, I would like to stress that despite the slight decline in the indicators for employee engagement, retention and leadership trust, we are still far above the industry average. We conduct regular surveys to find out what -- where we do well and where we need to improve. The reasons for the slight decline of these indicators are mainly topics like strategy implementation, innovation and process simplification. We've made these focus areas, and we have increased our efforts. And whether the measures taken will show positive impact, effect and where we might have to do some fine-tuning, we will check in another Pulse Check exercise. Mr. Schmidt had a number of questions regarding acquisitions. How can the integration of the acquisitions in the existing portfolio be sped up and concluded speedily? And what does the future acquisition strategy look like? The question of the integration of acquired solutions into our solution portfolio will be answered by my colleague, Thomas Saueressig, in detail. Regarding our future acquisition strategy, we will keep watching the market and consider acquisitions if they fit our strategy and our portfolio and if they also are a good match in terms of financial and technical requirements. Regarding the changes on the Board, Mr. Schmidt had the following questions. What does the end of the co-CEO structure mean for the further strategy? How will the cloud business in the U.S. continue after the leaving of Jennifer Morgan? What does this mean for the sales structures there? Does this have an impact on the future growth in the cloud area? And how will the Board responsibilities with regard to integration of acquisitions, strengthening sales and technology transformation be divided? And how will Mr. Klein receive support here? The effect on the strategy has already been answered in response to the question by Mr. Buhlmann of VIP. And the second question was about the cloud business in the U.S. In the cloud business in the U.S., especially the SAP cloud solutions there, there are no fundamental strategic changes. Of course, these solutions have to be developed further dynamically and also outside their application as part of the suite, that is, as a stand-alone solution, they must remain attractive for our customers. But we also want to integrate our solution to ensure that we can offer seamless business processes. Our customers and users expect a clear business benefit and holistic, intelligent and integrated solutions for their business-critical processes, not individual products. Third product -- the third question was about the sales structures in the U.S. And we already answered that in the answer to Mr. Gemmeke. Point four was the growth in the cloud area. We expect no negative impact on the growth in the cloud. But we see that the trend towards the cloud will, in fact, increase. As we mentioned, the digital transformation and the change to the cloud are no longer options, they are prerequisites to stay competitive. The final question in this block was about the structure of the Board areas. And as we said, our current Executive Board is strong. It has experience, competence and forward-looking perspectives. All members of the Board have long-standing experience in the company. And they will, of course, support me and provide the support I need. And beyond that, we have a global and stable team of managers, which has proven its strength, not only in crisis. With that back to you, Luka.

Thank you, Christian. And I can now prove that I can support you with the next question, the dividend policy. Mr. Schmidt asked, can you already say how -- what effect the COVID-19 pandemic will have with regard to your dividend policy? I think I have good news for you there. Our dividend policy is to pay out at least 40% of the IFRS income after tax. 2019 was another successful year for us. Despite the challenging overall economic situation, we expect solid results this year, too. Therefore, we assume that our dividend policy will remain unchanged. Mr. Schmidt also asked since the proposed capital [indiscernible] exceeds the DWS limit of 40% of the capital stock of the company, we will approve the first resolution proposal. And we have only the first resolution proposal. And we have a question, what do you need the capital increases proposed in 6.1 and 6.2? And this is about the authorized capital proposed, Authorized Capital I and II. These will replace the Authorized Capitals I and II from the year 2015, which expired right before this AGM. The amount of the previous authorizations, up to EUR 250 million as well as the terms of 5 years each, will remain unchanged. With the proposed authorized capitals, we are talking about a kind of extension of the existing or previous authorized capitals to increase our capital stock. Now in the recent 5 years, SAP has not made any use of these authorizations. And let me say quite clearly, there are no specific plans right now to use the proposed new authorizations. The extension of the 2, Authorized Capitals I and II, serves to give SAP flexibility for the financing through the capital market and to give it the possibility just in case to respond quickly to any financing requirements that might occur. Right. The other questions of Mr. Schmidt will then be answered by Friederike Rotsch.

Thank you. Mr. Schmidt asked about the remuneration system. We will support the proposed remuneration system proposed today because the short-term variable compensation component includes the sustainability priority. However, we do not consider the percentage of only 20% by -- with equal weighting of employee engagement, NPS and CO2 reduction appropriate. A higher weight, at least 30%, seems more appropriate. Unfortunately, these factors are not -- or are missing altogether in the longer incentives. And here, we decided a statement of the extra financial factors in the operating income. He also wanted to know when we can expect to see the extra financial targets reflected in the long-term incentive. And would it make sense to differentiate the STI component by Executive Board member. On your first question, our sustainability goals are published in our long-term guidance. The goals in our short-term variable compensation component are based on our long-term strategy and are part of our integrated report. We consider it as paramount to measure, evaluate and report every year the sustainability targets. And including sustainability targets into the long-term incentive scheme is not planned at the moment. On your second question, the members of the Executive Board all work on the basis of the same overall strategy. The targets of individual Board areas are derived directly from that strategy. It is correct that we assign the same targets for the STI component for all Board members. But this promotes team spirit and strengthens a team culture even in top management. And it will prevent the remuneration system from becoming too complex. Regarding the changes on the Executive Board, Mr. Schmidt asked what reasons are behind the leaving of Jennifer Morgan and the return to a single CEO model? I already answered that question. It was asked in a similar form by Mr. Gemmeke of the SdK Association. With that, we have reached the end of the questions of the [ DBS ], and we then come to Ingo Speich of Deka Investment. And with that, I'll hand over to Christian Klein.

Mr. Speich asked, how do you explain the meanwhile strong increase of long-term and successful SAP staff leaving the company in the middle of a strategic reorganization or a strategic change? Are there different opinions about future focuses of the development of the company? And what are they? We are aware that there was certainly several personnel changes, especially at Board level. At the same time, we've just extended the contract with Financial Officer, Luka Mucic. As I said in my address, a generation change takes place at all levels. And there are members of the Executive Board who decide of their own accord that they want to go different ways in the future. Continuity is important but so are changes to make sure that there are new perspectives and competencies. Our current Board is strong and bundles rich experience, competence and forward-looking perspectives. Also from my own experience, we need a diverse team that combines new ideas, different points of view and different skills. As a result of the reorganization and the merging of Board areas or company areas as part of our reorg in February 2019, some of our long-standing staff members left us. Some were early leavers. Others decided to look for new challenges outside the company. On your second question, no, there are no different views or opinion about future focuses of the corporate development. We have coordinated the development of the strategy closely with the Supervisory Board. And it is generally considered to be mature and conducive to success. Then Mr. Speich had the following question. Progress of the integration and optimization of units are slowly showing. How do you secure the consistent positive development beyond 2020? Well, first of all, I'm happy that you noticed progress made in integration. And of course, our customers expect in future years excellent products, exemplary support and service processes and know-how. At the same time, simple and clear communication parts are essential, a uniform approach as well as transparency with a view to product strategy and integration scenarios. For clear product strategy with clear priority, we have to overcome overlapped silos and inefficiency and also develop clear road maps to our customers so that they can take reliable decisions. That is why we reoriented our organization. Sales service and customer engagement organization are now combined in the Board area, customer success under the heading of Adaire Fox-Martin. Product management, development and support are combined into Thomas Saueressig's Board area. Juergen Müller is responsible for the provision of seamless integrated data management solution as well as the entire SAP platform technology development plus intelligent technologies such as artificial intelligence. Most of the existing digital business service teams of Michael Kleinemeier were integrated in the Board areas of Mrs. Fox-Martin and Mr. Saueressig. We're convinced that these adaptations bring clear focus, clear priorities and new forms of cooperation. That's the only way to make the best of every single employee, every team and the entire SAP. Then another question by Mr. Speich. The cooperation with hyperscalers triggered the following question. How does SAP ensure in the long term that this cooperation doesn't lead to the marginalization of SAP in the digital transformation of the big customers in that SAP is no longer fully integrated in the development process? Well, my answer is the following. We ensure independence in the long term by drawing clear lines for our cooperation with hyperscalers. Our partnerships with hyperscalers focus more, first and foremost, on the operation of the infrastructure because many customers expect to select their partner for operation. Due to our expertise we have in the industry and the strong cooperation with our customers at the process level, we see ourselves as the natural partner when it comes to changes of business processes. Here, we need to be at the table because such information goes way beyond the technical integration and the operation of infrastructure. The SAP business platform, in addition to technical interfaces, offer services for business incidents, which makes it easier for customers to quickly implement and standardize processes in sales, warehousing and logistics. This uniform structure of the SAP data model makes it, for instance, easier for customer with an SAP S/4HANA on-premise environment to transfer to the cloud. In the midterm, this will impact also all the other areas of the comprehensive SAP product portfolio. And with that, we ensure that we push the innovation in the context of the digital transformation of our customers and not any other one or any of the hyperscalers. Our customers have trusted us with the operation of their business-critical processes. We understand the specific problems and have the right solutions for our customers. And that's where we stand out against the hyperscaler. The next questions will be answered by Adaire-Fox Martin. And Mr. [ Schweiz ] from Union Investment also asked, how easy is it to push through the limited investments in sales and marketing and also sustained improvement of working capital in a sales-focused organization? How do you ensure that the new focus on organic excellence does not weigh on the momentum of your sales organization?

Thank you very much for the question. With our best run program and our increased focus on operational excellence, we are creating a simpler and more agile SAP. We are not sacrificing investment in growth and in true innovation. On the contrary, the operational excellence initiatives will help support our growth momentum and free up resources to invest in true innovation. We've seen progress towards these objectives already in 2019, with strong top line growth in the core and the cloud as well as strong bottom line improvements, especially on the cloud gross margin. I'd like to highlight some key initiatives we're executing on. We are breaking down the silos, removing redundancies and tightening integration between our cloud solutions and cloud to S/4HANA. We are focusing on high growth, priority must-win segments in which we are fortunate to operate, segments such as those supported by our S/4HANA portfolio, Commerce Cloud, our customer experience management and our Human Capital Management experience. As retaining an existing customer is about 1/5 of the cost of attracting a new customer, we are streamlining our go-to-market and driving customer success with One SAP face to the customer. And we will absolutely get smarter on our marketing spend, including events, sponsorships and how in the future we leverage digital channels. Mr. [ Schweiz ] had the following question on the long-term strategy. There are rumors out of your acquired companies that they see integration very skeptically. Management also had only 31.2% target achievement for order entry in new cloud bookings, while the operating margin target achievement was 130.8%. Do both of these goals preclude each other? No, these goals do not preclude each other. Integration is a key priority for our customers. So while generating efficiencies through integration, we are also streamlining our go-to-market with One SAP face to the customer, as I mentioned previously. In addition to improving sales productivity, this should simplify and shorten our sales cycle, broaden the cross-sell and the upsell opportunities and ultimately drive faster growth for SAP and faster time to value for our customers. These are all of my answers to Mr. [ Schweiz ]. I'm handing over now to Luka.

Thank you, Adaire. Mr. [ Schweiz ] had a rather general question. How do you offset margin against growth? That is pretty much in line with what Adaire just said. So I couldn't agree more with what Adaire has just said. She really hit the nail on the head. We don't believe that we have to offset one against the other. Now as regards to growth, the current crisis makes it clear that digitization is an essential must for the companies, and that's exactly what our vision of the Intelligent Enterprise comes in. Christian has explained it in great detail in his address. We help our customers to implement this digital transformation. With the help of our solutions, company can introduce efficiently new business models and seamlessly integrate and digitize their entire value chain. With SAP HANA, our customers can update their demand pipeline by the minute -- by the second rather and also control their suppliers' network dynamically and efficiently. With Qualtrics, you can systematically collect feedback of customers and employees in real time and then you can really take immediate actions, and that was never as important as it is now. All this, however, doesn't work without a sound technological basis. In particular, SAP HANA, the SAP cloud platform where we, ourselves, our customers and our partners build, expand and integrate applications. And we also make other processes more intelligent. These are just some examples that make us so optimistic that SAP will pass through this crisis more strengthened and will continue to grow in the future, too. Because in the past, we have taken the right and courageous decision to invest, and with that, have the strongest portfolio of applications in this industry. Now as regards to profitability and margin expansion, in the context of our Best-run program, we've identified a bundle of opportunities for efficiency increases, which will not lead to top line losses. I've explained it in November to the capital market. I call it no-regret measures. Let me give you some examples. I've mentioned it already that we've increased our cloud profitability by streamlining our cloud infrastructure and by working together with hyperscalers. In terms of [ non-others ] cloud gross margin, we improved from 63% in 2018 to 68% in 2019, and this positive trend is going to continue. In the first quarter, we've already achieved 69%. With a view to sales and marketing, we've clearly simplified and streamlined our structures. We're not saving on the feet on the street, but we can become more efficient in our structure, and at the same time, make it easier for our customers to work with SAP. Also in the field of administration, there's a tremendous economic scale and scale effects and a high level for automation. Many processes can be handled digitally or remote, from sales, contract signing, including implementation and the operation of our software. And then there's one thing that is really important to me. In the development field, we've taken measures to make us more effective and efficient. But we will not scale down our investment. Quite to the contrary, this area is not a margin driver, but a growth driver. Otherwise, we would indeed sacrifice long-term growth for short-term margin maximization. And that's neither politics nor the strategy of our company. With that, we'd come to the questions of Mr. [ Schweiz ] that goes more towards the development. And that, I'd like to hand over to Thomas Saueressig.

Yes. Thank you. Against the development -- backdrop of development in the field of CRM and HCM, Mr. [ Schweiz ] asked, how do you want to make progress in the long run and achieve attractive profits? Well, in the field of CRM, customer relationship management, this is not just a market for corporate customers. Now the relationship of our customers to their customers keep changing because, for instance, they use new sales channels such as Instagram. CRM developed into CXM, customer experience management. And this is not restricted to purchasing -- to the purchase as such but to all processes that follow such as the delivery. With that alone, many processes and also the relevance of our customers' changes and the hyperpersonalization leads to new challenges for customer relationship management. And we want to support our customers during these changes by not only offering solutions for current topics but also to develop the technologies required for tomorrow. And we deliberately decided not just to focus on short-term goals but to really push into the market with a long-term view. And here, we focus on the fastest-growing category in the field of customer experience, both in terms of technology as well as in terms of product. In the field of commerce, SAP is already leading, and we keep working on further expanding these processes and network them with ERP systems, so that our customers can offer even better service to their customers in turn. Qualtrics, for instance, strengthens the SAP solution portfolio and the field customer experience management as well as on a sound basis. With Bob Stutz, we've been able to win excellent experience manager in the field of customer experience, who not only knows the market inside out, but who has been influenced for many years and will definitely help us to make major progress. In the field of HCM, our SAP SuccessFactors solution is the market leader. Due to the acquisition of Qualtrics, we've been able to expand our solution portfolio in this section to and add a new category, human experience management. This is about the employee experience that's much more than pure personnel management. With Qualtrics, we've been able to increase our head start in the market and to win new market share. An essential distinguishing marker for SAP SuccessFactors will be the close integration into the intelligent enterprise. And here, we focus on the harmonization of the business processes, the technologies, data model and the user guidance with other areas such as SAP Fieldglass and SAP S/4HANA. This enables our customers to shape processes more effective, more efficient and more customer friendly. With the harmonization, we also increased our own innovation speed and our development efficiency. SAP has tremendous strength in the field of payroll. Our global expertise in the payroll field has been -- has grown over the past 3 decades. A huge number of globally active companies uses our market-leading payroll solutions. We invest to make our offer future-proof. It's our objective to secure our market-leading position in the cloud, too, by using our cloud technology and our concept for human experience management. Since payroll is a business-critical process and has a high stickiness factor, that's a high customer retention potential, this investment secures us against our competitors. To support our on-premise customers in moving to the cloud, we invest in additional -- into an expanded development of our SAP SuccessFactor core solution employee central. And we expect in Germany alone that by 2024, 1/3 of our customers with classical HR management solutions will move to SuccessFactor applications. And we want to grow in both areas in the next few years. We will continue to be existential pillars of our future cloud growth and the -- to increase the cloud gross margin. Now as regards to customer satisfaction, Mr. [ Schweiz ] has asked the following question. In past years, there was clear criticism linked to the integration of different SAP products, above all, by the SAP user associations. When do you think will SAP has done their homework? And when will the customer feedback be improved? Hendrik Schmidt from DWS has also asked about the integration of acquired solutions or basically, momentum of SAP S/4HANA is unbroken. 29 out of 30 DAX companies and 86% of the [ PCT ] 50 most innovative enterprises use SAP S/4HANA. So they either have already switched to SAP S/4HANA or they're right in the middle of switching to it. Of course, we take the feedback of all the user groups such as DSAG very seriously. We have intense and constant exchange with our customers. And we are well aware that there were in certain unhappiness and there was -- that not everyone was satisfied above all in the field of integration. And the progress in the past few years wasn't always what we would have liked to see. We work at full speed to improve our road map for integration. An area of digitalization integration is essential to enable consistent business processes and value chains. This goes way beyond the merely technical integration between different SAP applications. Digitalization means not only the implementation of front-end application but beyond that, the harnessing of critical core systems and data for the back-office processes. The entire value chain and all the connections to the core process offer a sustainable solution for the digitization in the companies. SAP has a clear road map for the integration of our products. In 2019, we've already made progress with a view to the point-to-point integration between solutions. In 2019, we've been able to complete the integration of SAP S/4HANA Cloud with the solution of SAP SuccessFactor, SAP Analytics Cloud and Qualtrics. The integration of SAP S/4HANA Cloud with SAP Ariba too has been implemented and will continue to improve. This year, we will complete the integration of the solution for SAP Fieldglass and SAP Concur, whereas the cloud portfolio for SAP experience management, including the solution for SAP Sales Cloud with the functionality of CallidusCloud. The integration of SAP -- when it comes to the integration of SAP applications, customers expect deeper integration than when it comes to the product of third parties. The last one mainly connected via open interfaces. Our own products are fully integrated. That includes a comprehensive user experience and a consistent, innovative and analytical functionalities with wide range of portfolios, and the customers' expectation that they work seamlessly is justified. A unified data model is the basis for our success and is the basis to create an ecosystem for our customers and partners. Different applications need to be based on the same consistent data model if business process need to function in an integrated fashion. Experts of DSAG and SAP work together in a working group to push forward the concept of standardized master data models. With a unified data model, we enabled interfaces and services on the SAP Cloud Platform for integrated business processes that involve several applications. So this requires customers, suppliers, products and employees. And some of the most essential master data have already harmonized and are made available on the SAP Cloud Platform. This is the basis, not just for integrated applications, but for truly integrated business processes. Then a final question regarding the product area. When will functionalities and implementation be clearly improved? And when will you generate more synergies from the huge product portfolio? Well, the success story of SAP is based on the ability to consistently reflect business processes across the entire enterprise. Integration is of the essence at the time of the digitalization. It enables companies to have consistent business processes and value chains across enterprise borders. In past years, SAP focused more towards moving into the cloud. Now we focus again on bringing the entire portfolio closer together and to fine-tune and dovetail it. The cloud has the benefit with a high level of standardization and shorter release cycles to be able to deliver innovations faster and simpler to the customers. Due to short innovation cycles, our customers can become more agile and react more flexibly to constantly changing market requirements. The innovative functionalities, for instance, in the context of SAP S/4HANA, also available to the on-premise customers. Our customers can choose whether they want to have SAP S/4HANA on-premise in their own data center, in the cloud or whether they opt for a hybrid solution. Core applications such as SAP S/4HANA control essential enterprise processes. To expand it quickly and fastly, we have our modular approach. Customers can adapt their system environment and refurbish and expand it with modules and additional cloud applications. For the product development, we focus both on integration and innovation. It's not either integration or innovation, but integration and innovation. To sum it up, the modularity of our application, the selection of the provision and shorter innovation cycles result in flexibility and agility for our customers. At the same time, they result in resilient business models, no matter whether it's on -- in the cloud or on premise. We always want to be a reliable partner to our customers. That brings me to the end of my answer, and back to Friederike.

Thank you, Thomas. Now we come to the question of Markus Golinski of Union Investment. Mr. Golinski had the following question to the Supervisory Board. Isn't the Board too German, too male and too technology focused? What about sales in North America? Are they sufficiently represented at the top level? Well, similar question has been asked similarly by Mr. Gemmeke and other shareholders and has been answered. And the next question will be answered by Christian Klein.

Thank you, Friederike. Mr. Golinski had the following question to me. Mr. Klein, obviously, you're not happy with the customer promoter score, Net Promoter Score. Is that due to the lack of the integration of the many acquisitions over the past year? Is that maybe the reason for the safety deficiencies? What about your strategy here? Do you want to keep the acquisition with a long leash and do without synergy effects in sales, costs and products? Or do you want to further integrate them with the combined risk like creativity, flexibility and the key person will go? First of all, you're right. With the current Net Promoter Score, we are anything but happy. But it was a clearing effect, so to speak. It's an incentive to improve our performance. Integration is a central topic here. Our customers perceive tremendous improvement potential. But here, the expectations are particularly high to SAP as the leading suite provider, quite rightly so. And yes, the identified solutions we have when it comes to the contractual obligations are linked to unified standards that need to be kept by all units. The right integration approach is, as you said, like walking the tightrope. And this walking on a tightrope is shifting. It's a kind of balance you have to strike. It's right that we are slightly -- that we are integrating the acquired cloud solutions slightly more nearer into the company. You can see this from the organizational changes. But that doesn't mean that everything is decided from headquarters. Certain standards need to be kept for sure and approved integration is a must have if you want to offer integrated business solutions as part of SAP. However, decisions on development focus and strategies remain with the units to be successful in the different units in future, too. Please bear one thing in mind. The software industry and SAP, in particular, are reflected in the trust, in the competence, the imagination and the responsibility of the employee. That is what has made us so successful. And that is why the decision-making confidence of the operative units are so high. This applies both to the acquired area as well as for the organic areas. And let me tell you by way of conclusion that our customers and partners right now in this crisis greatly appreciate the cooperation we offer. Mr. Golinski, here comes Mr. Golinski's last question. How can SAP assert itself against tech giants such as Amazon, Google or Microsoft? Will partners be competitors? Isn't it dangerous to compete with them if you want to expand your offer on comparable software products? What are your answers to almost unlimited financial and technological resources that Microsoft and Amazon and Google have? Well, I would like to give Mr. Golinski a similar response that I gave to Mr. [ Schweiz ] a couple of minutes ago. SAP has to and will diversify concerning its expertise and development and optimization and in industry know-how. The experience we made in 50 years cannot just be replaced overnight. No company in the world, Microsoft, Amazon, Google, can do that. They don't have an application, which is -- which covers all business-critical business processes as we do. This is our strength, which we defend and which we will keep expanding. Of course, we see what the companies you mentioned do, what is in their development pipeline and which -- in which direction they're going. We've seen that these partners have their strengths, especially when it comes to the massive scaling of data and storage capacities. So we work all the more to make sure that we have a strong offer; that we have good confidence; that we have good processes, which have to be of top quality. The trust of our customers, which has grown over decades, is something we want to protect. We understand their problems, and we have a deep understanding. And we have the solutions for the challenges of the digital transformation, especially with our industry background. And only at SAP, the customer has the freedom to have their own landscape or to use our hyperscale landscape. We want to be innovative. We want to be close to the customer. And this helps us to be -- this helps us more than it is harmful. Now we come to the private investors. And I hand it over to my colleague, Mr. Mucic.

Mr. [ Kuppert ] said SAP was and has been a trailblazer in electric mobility. Almost 10 years ago already, they were the first electric vehicles on SAP premises and could be charged there. Now here's the following questions concerning the current situation of electric mobility at SAP. How many electric cars are there at the moment? And how many of them are used by employees? First question. Second question, how many plug-in hybrids are there? Third, how many charging points are there on the premises in Walldorf or St. Leon-Rot, respectively? And are there any plans or concrete figures concerning further expansion of e-mobility? Well, thank you very much for this question. We offer our employees the possibility to use e-cars as company cars. This is also supported by SAP. In Germany, the purely e-fueled cars in the SAP fleet is 400 cars, and 1,650 plug-in hybrids are being used around the world. We have about 2,900 fully electrical and hybrid e-vehicles operating. Our employees in Walldorf have 270. And there is in St. Leon-Rot 100 charging poles at their disposal. And we have planned to expand this even more. Professor [ Kispert ] and another shareholder had a question concerning the virtual AGM. What are the costs of the AGM? To what extent have they reduced due to its online format? Can you compare this to the cost of the 2019 AGM and also estimated compared to the year 2020? Well, this year, we spent EUR 2.3 million on the AGM. The overall payment does not conclude cancellation costs that occurred due to the cancellation of the in-person AGM. If you would consider these costs, too, then we still have some savings, but not to the tunes of 35% to 40%. Mr. [ Kispert ] also have the following questions. In times of corona, SAP employees and many of them work from home. In media coverage, we could see that 90% to 95% of them are doing their activities in their home offices. Are there any plannings or forecasts concerning on what this means for office space? Will there be any further constructions or any changes to the office floor here in the premises? Well, it is too early to make any statements to the impact on our needed office space, but we assume that there will be a different need in the future. We want to support flexible work as we have done in the future -- as we have done in the past as well. And of course, we are in a close exchange with real estate companies and service providers. New construction projects will always be reviewed by the company and new projects will be set up if needed. The next question put to us by Professor [ Kispert ] will be answered by Mr. Klein.

Mr. [ Kispert ] had the following observations concerning the corona crisis. We are under the impressions that SAP was not very much affected by the corona crisis. There were no government assets, and you didn't send your employees into short-time labor. This is fantastic. However, can you see that customers are not very active in license business or rental business or other projects? Don't you think you should be -- you should support your customers in order to extend projects? Well, this is true. We did not send anyone into short-time labor nor have we applied for government assistance, and we are not planning to do this. However, we are also feeling the impacts of the corona crisis. This is especially true for the license business. Here, our revenue has gone down by 31%. However, our business model is extremely robust. Software license revenue in 2019 only make up 50% of our overall revenue and many purchase decisions are just postponed. Our own transformation into an intelligent enterprise puts us in a great position. More than 70% of our revenues are now part of the so-called -- of those revenues that recur regularly. Our data centers are completely operatable and our support center is there 24/7 for our customers. Despite these circumstances, we think that 2020 will be a success year. I think the situation will improve once economies will ramp up their economy again in April. We have adjusted our forecast with respect to the corona crisis, so against the backdrop of the crisis. Now being partner also means to us to be flexible. We know that many of our customers and partners are facing challenges and are struggling. So in every individual case, we review to what extent we can support them, for example, with the flexible payment modalities or flexible license models. Professor [ Kispert ] also had questions concerning the current HR planning. SAP regularly released prognosises concerning its HR numbers. In 2019, you said that you will have more than 100,000 employees by the end of the year. Even though an early retirement program kicked in, are they already forecast for 2020 and 2021? Or do you think that you cannot make any statement concerning this corona crisis? Well, the most important part of our success today and to the future, this is our employees, and they do a great job now. They're doing a great job now in the crisis. This is not mentioned often enough. I'm aware, as I said in my speech, that in our industry, our employees are the decisive piece of the puzzle. This is why we will go on to invest in our employees, and we will make sure that we have -- that we win the best talents for SAP. Even though the growth in HR is not as dynamic as in the years before, in 2020, by the end of 2020, we will have more employees on board than at the end of 2019, especially in our innovation areas and the development of new products, we are still hiring. Now the following questions come from private shareholders who do not want to state their names. I hand it back to Luka.

Thank you very much. So these are the final questions. One shareholder had a question concerning the virtual AGM. How -- what are the savings, virtual AGM 2020 as compared to the AGM 2019? And how is the money allocated? Do you think that the savings could be allocated for a good cause? Third, which individual questions will be answered at the virtual AGM 2020? How many questions will be answered in connection with other questions? And what questions will not be answered? Which advantages and disadvantages do you see in having a virtual AGM? Would you stick to this format in the future? Or would you be in favor of a legal amendments concerning this point? Well, the first question was asked many times about already and answered by us, but let me add one more thing. The savings will be used for other operating tasks. Concerning the second question, SAP is committed to its communities with many activities and measures with financial donations, which the company does and our employees very often volunteers in their communities and support projects. Such a use of the savings from the virtual AGM is not planned. However, please note, as I already said, that these savings due to cancellation costs for the in-person AGM are not as high as you might think. Concerning the third question, the number of the submitted question and the form we adopted to respond to the question has already been answered. And concerning the fourth question. We would like to go back to a physical in-person AGM because this provides us with a much -- or gives us a possibility to enter into a much closer dialogue with our shareholders, which they always appreciated. Another shareholder would like to know if there will be further share buybacks carried out by SAP, for example, instead of the centrally managed dividend where the Executive Board and the Supervisory Board decide on the inflow of income and thus, the tax levy. The Executive Board and Supervisory Board decide on the distribution through a share buyback program, where each shareholder can decide on an inflow of income for himself or herself, thus reducing the tax drag so that the income tax borne by the investment is in line with the tax rate and much higher than would be the case if a dividend were paid. When can we expect a complete changeover of the payouts? Now for this fiscal year, we are planning no further share buyback. Number one, we already completed EUR 1.5 billion that was -- we are expecting to see a solid result. And according to our dividend policy, we will pay out 40% of our IFRS results after tax. A complete changeover to share buybacks is not planned. And I can tell you that there are various preferences amongst our shareholders, so it's very difficult to find the balance here. Another shareholder wanted to know what is the revenue and profit development in portals such as Concur, Ariba and Fieldglass over the past? What was it like in the past 5 years? What would it be like in the coming 5 years? Well, in our integrated report, in the 5 years' overview, you can see that all of these have grown constantly and have increased their profitability. The individual growth plan of SAP Concur, SAP Ariba and SAP Fieldglass were not published. However, we believe that all 3 of them will be growth drivers in the future, both top line and bottomline. The portals, as I call them, are networks for business areas, independent of the industry. They cover different functionalities in a business. SAP Ariba, for example, procurement; SAP Concur, travel cost; and SAP Fieldglass, management of short-time labor. Now this is the network effect, which we are building on, which is based on the participation of our employees and the transaction volume. The accounting of these performances is based on the -- it should be based on the consumption. Another shareholder would like to know when did the last DPR order take place. And were there any DPR instructions or indications? Let me give you a short reply. The last DPR audit concerning the financial statements, which included the group management report, was conducted in 2017. The quality was determined undoubtedly for the fiscal year 2017. A shareholder had a question on the availability of the integrated report, specifically, the printed version. I am missing the integrated report in printed form. It's much easier to read than the 293 pages of the online version. Will SAP in future provided its annual report in digital form? The answer is no. And the report is actually available in German and English in printed form on the SAP Investor Relations website. You can order copies. We stopped sending the annual report automatically because the return rate was very high, and we also noticed that fewer and fewer people have a demand for printed reports and the download rates go up. At the moment, however, we do not plan to discontinue this practice. So you can still order the printed version via the website. Then one shareholder had a question about the sending of the invitations to the AGM. Why can SAP not send AGM invitations electronically like many other corporations do, maybe per via e-mail? This is something I also answered a couple of times in recent years, so let me do it again. In Germany, there are 2 types of shares, registered shares and bearer shares. With registered shares, the company has a virtual share register with the names of the shareholders and can contact them directly. With bearer shares, and SAP is a company where this applies, the procedure is very different. The contact with shareholders and also the request to participate in the AGM can only be made through the custodian banks because we do not have the information about the shareholders. Now this may be a bit cumbersome and outdated but it's the law. And the custodian bank also decides on the format by which the invitation or the registration form are sent off, printed or electronically. Another shareholder asked about the future of the AGM. Do you -- have you considered the option of holding the AGM only as a virtual AGM in the future? Or do you want to return to a real AGM with physical presence in the future? I already said that we can hold a virtual AGM this year because the German legislature has enacted an exception law that allows companies to hold virtual AGMs without the physical presence of its shareholders. This is only applicable in 2020 during the time of the corona crisis. And we assume that next year, we will hold our AGM as a normal AGM with physical presence. We hope it will be possible to. Last but not least from my side, one shareholder asked what targets does the increase in AGR costs serve especially in admin and infrastructure. I think we already answered that partly. The rise in general and admin costs in IFRS terms is basically due to acquisition-related growth in the number of employees and more staff and shared services to support our growth plans and further the IFRS-based general admin costs. IFRS base are affected by the rise in stock-based compensation expenditure. The next question goes to my colleague, Adaire, please.

A shareholder states, the implementation and license costs of SAP products are so expensive that many companies are delaying implementation or even deciding for the competition. The shareholder asks, wouldn't it make sense to achieve growth in the market with scarce resources during the corona crisis and to retain more customers in the long term, to rethink your pricing policy and reduce prices? If the investment and licensing costs were lower, the reduced profit could be more than compensated for by the increased sales figures. As a rule, companies also stay with SAP once they have implemented it, and also go along with release upgrades. Pricing is indeed a very high priority for us. And naturally, we regularly review our policy based on market contentions, so that we can best meet our customer needs. We have been exploring different models to optimize the alignment of customer value, the technical nature of the product and SAP's economic framework. Recent changes on cloud have shown tremendous success. Of course, the pandemic and the resulting changes to the way customers do their business is something we are considering. Also, we are offering selective solutions at no cost to support our customers during this crisis. We have been making changes to ensure customers experience faster time to value. We build value cases for customers as a trusted adviser and work closely with them to showcase a value-price ratio. For example, our SAP Model Company services help customers to realize SAP projects faster, easier and cheaper. Now looking at SAP's move to the cloud. We've already seen customers shift from large upfront capital investment in licenses towards ratable, monthly or yearly fees as cloud subscriptions. This changes the allocation of capital for customers as they account monthly ratable fees as operational expenses in their income statement rather than reporting depreciation on their balance sheets. There's no upfront investment cost either as customers can maintain flexibility in line with our own business momentum. That's actually the beauty of cloud. Moreover, the increased level of standardization, such as in the public cloud offerings, generate scale effects on the provider side, and therefore, lower cost per user on the customer side. We need to consider the competitive landscape and demonstrate the unique value we offer. We feel that the calculation of our prices, be it software licenses or cloud services is, therefore, very well balanced. Finally, the stability and the resilience of SAP is based on the commercial model, and our growth rates and success with our transition to the cloud prove our strategy. Thank you so much for that question, and I'm handing back over now to Christian.

SAP is and will continue a growth company. Despite the current situation, we expect that 2020 will be a successful year for us. Our growth planning for top line and bottom line is transparent. We have a strong core business and a fast-growing cloud portfolio that would generate continuous growth for years. To achieve this goal, we will focus increasingly on organic growth and further increasing profitability. One shareholder had a question about investment focus in times of corona. What investments will you make to keep SAP competitive and future-oriented during the corona pandemic but also afterwards? As I said in my initial address, our focus will continue to be on innovation, integration and customer success. They are at the core of our strategy. Without innovation, there will be no growth. And without deep integration and seamless processes, companies cannot implement new business models and not generate new revenue flows. The corona pandemic confirms that digitalization and changing into the cloud are no longer options. They are a must. Companies that use the innovative technologies and use all the different data available to offer digital business models or optimize processes and decisions already had a decisive competitive edge before the crisis. And now during the crisis, they are much more resilient and provide higher performance. Innovative solutions for the digital transformation is our goal. Only in this way can we implement new business models for more growth and competitiveness. And even if headcount growth will not be as dynamic during the crisis as in previous years, at the end of 2020, we will have a higher headcount than at the end of 2019. Especially in our innovation areas and product development, we are hiring new staff. These were my answers. And with that, I'll hand over to Friederike.

Thank you, Christian. Luka mentioned that we are slowly approaching the end of the question blocks. And before I start, I would like to point out at this stage that you can use the password-protected shareholder portal to appoint proxies and give voting instructions or alternatively exercise your voting rights via electronic means. And after the questions have been answered, we will shut down these functions, and they can no longer be used. So on to the next question, another shareholder had a question on board compensation. Why are you making pension commitments to board members? The fixed and performance-related compensations are so high for Executive Board members that they could easily pay for their own pension schemes. The Supervisory Board want to be -- to offer compensation packages for board members that are internationally competitive to support us in our global quest for highly qualified managers. And this includes market-compatible pension commitments. We also had a question on the retirement age. Why is the retirement age for Board members 62 years? It would be more appropriate to have a retirement age threshold of 67 years. The answer is that the Supervisory Board stipulated that the standard retirement age should be 65 years for Board members. The pension arrangements of SAP SE, which is also in place in Germany or valid in Germany, enables us to receive or enables staff members to receive a pension when they reach the age of 62. So after people step down from Board functions, they are regular staff members, and they can reach higher at 62. Then there was a question on the maximum compensation. How high is the maximum compensation of individual members of the Executive Board if all criteria are met by maximum? And please present this broken down by members of the Board and broken down by short and long-term variable components. The theoretical maximum remuneration, including all theoretical maximum fringe benefits is, for the individual board members, as follows: with Christian Klein, the maximum possible compensation is, theoretically, EUR 21.6 million. The maximum short-term variable component is maximum 6 -- EUR 2.67 million; and the long-term maximum variable component, EUR 14.67 million. The fixed remuneration is EUR 1.1 million and the maximum fringe benefit is EUR 3.16 million. For Adaire Fox-Martin, the maximum possible compensation can be EUR 50 million. The maximum short-term variable component is EUR 1.68 million; and the maximum long-term variable component, EUR 10.67 million. The fixed remuneration is EUR 800,000, and the maximum fringe benefits amount to EUR 1.82 million. For Luka Mucic, the maximum possible compensation is EUR 10.24 million. The maximum short variable component in this is EUR 1.58 million, and the maximum long-term variable component is EUR 6.33 million. The fixed remuneration is EUR 700,000 and the maximum fringe benefits can amount to EUR 1.63 million. For Juergen Müller and Thomas Saueressig, the maximum possible compensation is EUR 9.71 million, and the maximum short-term variable component is EUR 1.58 million. And the maximum long-term variable component is EUR 5.8 million. The fixed remuneration is EUR 700,000, and the maximum fringe benefits amount to EUR 1.63 million. The same shareholder had a question to the efficiency test. When was the last efficiency test? What was the result? Was an external service provider commissioned to do that? And what were the costs incurred? Well, this question refers to the so-called efficiency test, which the Supervisory Board members of German publicly listed companies have to do regularly based on a recommendation by the German Governance Kodex to assess how efficiently the Supervisory Board fulfills its task. Due to this recommendation, the Supervisory Board of SAP SE regularly assesses the efficiency of its activities every 2 or 3 years, both the entire Supervisory Board as well as the committees. This efficiency test was done for the last time in October 2018, and we came to a positive vote with a view to the efficiency of our task. The efficiency testing was supported by internal resources, not by an external service provider, so no additional costs incurred. One shareholder had a question to the Board remuneration. Total compensation for the Board of management according to the integrated report Page 115 amounted to EUR 52.6 million in 2019. The changes of the compensation system under agenda Item 7 affects the compensation system. And I'd like to know the changes that would result in the new changes, both total payment as well as additional expenses for the percentage increases. The compensation system that we put to vote does not lead as such to the amount granted here. The LTI and STI factors have been supplemented by performance criteria. For the STI, in particular, these are sustainability goals. And with the LTI, these are financial KPIs derived from the long-term strategy of SAP. In addition, the peer group intakes that used -- what was used for the LTI was replaced by a broader comparative with the NASDAQ 100. The higher number of KPIs leads to a flattening of the opportunity risk profiles. A simulation based on the figures for 2019 is not possible since the newly introduced KPIs were not available for 2019 and no charter parameters were defined. If you compare the 2 compensation systems, we can say that as of 2020, we've introduced a ceiling. The discretionary power of the Supervisory Board were limited, and the maximum compensation was reduced. The same shareholder has a question to the compensation for the Supervisory Board. Total compensation for the Supervisory Board SAP according to the integrated report Page 116 amounted to EUR 3,770,000. However, new compensation system under agenda Item 8 affects the total payment based on the figures for 2019, total remuneration and additional expenses. And the agenda Item 8, there's no new remuneration system that is tabled for decision or put to vote. Quite to the contrary, the existing compensation system for the Supervisory Board is to be confirmed, so it is to remain unchanged. So today's resolution will not result in any changes for the calculation of the compensation for the Supervisory Board members. And the compensation for Supervisory Board members is fixed compensation not linked to the result of SAP. One shareholder made the following comment. The decision back to a single CEO is something I like very much. What about the compensation from 2020 to 2023 for Jennifer Morgan? What claims would arise newly based on the new compensation systems? And which LTI forfeiture conditions would apply? Well, first of all, I'd like to add that Jennifer Morgan and the Supervisory Board mutually agreed to end the contract at the end of April. In this context, for the remaining period of her term, she received severance payment in the amount of EUR 50 million. This severance payment is in line with the target compensation based on the fixed compensation and the annual bonus for the remaining term of office. This payment was factored into the compensation payment for the post-contractual noncompete clause. The granted rights for the LTI Plan 2016 and 2020 were treated in line with the performance criteria and the payout plan. The compensation system reflects our current contractual compensation system. So no new claims arise for our Executive Board members. Now, the new compensation system is a continuous development of the existing systems, such as the integration of sustainability goals, the introduction of a cap, the limitation of discretionary powers as well as the introduction of financial performance indicators and a broader competitive index to assess the share performance for LTI. One shareholder had the final question. Why is no individual vote possible for agenda Item 3 and 4? Well, this refers to the resolutions on agenda Item 3 and 4 to approve the act of the members of the Executive Board and the Supervisory Board for 2019. It's our opinion that there is no need to vote individually on the approval of the acts of the members of the Board -- of the Supervisory Board. That is why we decided to vote on the entire Board, respectively, which is in line with the current practices of DAX 30 companies. Ladies and gentlemen, shareholders, others, thus we have answered all the questions that have been submitted in advance of the Annual General Meeting of Shareholders via the shareholder portal. I would like to emphasize once again that we have answered all the questions we received and have not exercised our discretionary right to preselect the questions. This is because we wanted to ensure that the essential right of shareholders to ask questions was treated in the same way at this virtual meeting as it would have been at a normal annual general meeting. We hope that we have answered all of your questions satisfactorily. In this connection, I would like to inform you that all shareholders who have properly registered for our Annual General Meeting and exercised their voting right, as provided for in law, have the right to object to one or more of the resolutions to be passed at this general meeting via the shareholders portal. I now have information on the attendance. So let me read out the current figure. From the capital stock of the company in the amount of EUR 1,228,504,232 divided into the same number of bearer shares, during today's AGM, we have present 756,210,881 bearer shares with the same number of votes. That amounts 61.56% of the capital stock. We also have votes in writing for 138,961,651 bearer shares. They will be released later on when we come to the establishment of the votes and vote on the agenda items 2 to 8. So in total, we have 895,202,532 bearer shares at present or represented by written votes that equals 72.87% of capital stock. Ladies and gentlemen, now we'll come to the votes on the management proposal in respect of agenda items 2 to 8, including sub items A and B in Item 6. The agenda items are now displayed in their short versions on your screen again. As I explained earlier, you now have one last opportunity to appoint and instruct the proxies designated by the company to change your proxy appointments or cast your votes electronically via the password-protected shareholder portal. If you want to make use of this opportunity, please do so now. We will close the corresponding functions in the shareholder portal in a few short moments. The company proxies appointed by you will then cast your votes by releasing your voting instructions as they have been entered in the system. The postal votes received before the deadline will also be included in the final count. A simple majority vote is required for the resolutions in connection with agenda items 2 to 5, 7 and 8. The vote on agenda Item 6A and B requires a majority of at least 3/4 of the capital stock represented during the voting on the resolution. With regard to agenda Item 3 and 4, I expressly draw your attention to the voting exclusion in the Section 136 of the German Stock Corporation Act. Ladies and gentlemen, I assume that all shareholders and shareholders' representatives have had sufficient times to cast their votes. The functions for voting and for appointing and instructing proxies in the shareholder portal have been closed. The proxies appointed by the company are now casting your votes by releasing your voting instructions in the system. And this concludes the vote. I'll interrupt the general meeting while the voting results are determined. Notary Mr. [ Formed ] will supervise the counting of the votes. I will announce the results of the voting as soon as I have them. Ladies and gentlemen, I now have the voting results and will proceed with the meeting. I will now determine and announce that the percentage majority achieved by each of the proposed resolutions and whether they have thus been adopted by the Annual General Meeting. Further details regarding the voting results will be published without delay on our website. I would also give the notary public a print out of the detailed voting results for his minutes. I declare that the AGM has adopted all resolution proposals on the agenda items 2 to 8 with the necessary majority. The majorities were Item 2, appropriation of retained earnings, 99.09%; 3, formal approval of the acts of the Board, 98.21 %; 4, formal approval of the acts of the Supervisory Board, 94.38%; 5, auditors and group auditors election, 96.28%; 6A, creation of Authorized Capitals I, change of Section 4 (5) of the articles, 96.12%; 6B, creation of a new Authorized Capital II, change of Section 4 (6) of the articles, 93.62%; 7, approval of the remuneration system for Executive Board members; 87.42% (sic) [ 78.42% ]; 8, confirmation of the Supervisory Board remuneration system, 99.14%. Ladies and gentlemen, all agenda items have now been addressed. I will now close this virtual Annual General Meeting. On behalf of the Supervisory Board and the Executive Board, thank you very much for attending. I would like to add my own thanks and those of the shareholders to the Executive Board and employees of SAP. Thank you very much. Stay safe and stay well. Goodbye.