| SAP Chief Quits, Company To Return To A Dual-CEO Structure |
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08/02/2010 15:35 (725 Day 18:53 minutes ago) | |||||
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The FINANCIAL -- SAP AG Chief Executive Leo Apotheker abruptly resigned Sunday after the German software company's supervisory board refused to renew his contract and announced that it would be returning to a dual-CEO structure.
The company said Apotheker would be replaced by Bill McDermott, head of field organisation, and Jim Hagemann Snabe, head of product development, in a joint CEO structure, Financial Times reports. "The supervisory board has come to a mutual agreement with the spokesman of the management board, Léo Apotheker, not to extend his contract as an executive board member.
"Léo Apotheker has laid down his post as member of the management board with immediate effect," the German group said, according to the same source. SAP failed to provide a reason for the departure, but a senior company executive told the Financial Times that the supervisory board did not think Apotheker would be the right person to repair morale at the company after an employee survey last September revealed a dramatic loss of confidence in SAP's senior management.
Apotheker, 56, presided over the first annual drop in revenue at the company since 2003 as customers faced with the economic slump put off investing in new software, Bloomberg reports. SAP, whose software is used for payrolls, customer relations management and Apple Inc.’s iTunes download system, is fighting off competition from Oracle Corp., which in December said it is winning customers at the expense of the German company.
“When you look at SAP’s performance in 2009, it was really dismal, from a financial perspective,” said Paul Hamerman, an analyst with Forrester Research in Virginia, according to the same source. “I think the 2009 earnings call less than two weeks ago signaled the beginning of the end of Apotheker. Apotheker projected a persona that was defensive rather than a man of vision.”
SAP has long been the leader in the $67 billion market for enterprise software, but the global economic downturn, intense competition and the fast-evolving business software field have threatened to crimp SAP's growth, The Wall Street Journal reports. The company is also still recovering from delays in its attempt to move further into the growing market of software-as-a-service, in which more companies are buying Web-based software and paying monthly fees to a software company that hosts and manages it.
Last month, SAP reported that its fourth-quarter net income fell 12% to €727 million ($995.3 million) but said that it expects a better 2010, according to the same source. German media reports have said that Hasso Plattner, the company's chairman and co-founder, had favored returning to a dual chief executive team similar to the structure when he served in the role with co-chief executive Henning Kagermann but that Apotheker had resisted returning to sharing the role. Apotheker couldn't be reached for comment.
Under Apotheker's reign SAP has had to announce job cuts of 3,000 staff, a first in the company's history, Reuters informs. With the appointment of new co-CEOs SAP is now trying to right the ship and to support that move it appeared that Plattner would have a larger say.
In its statement the company said at the board's request Plattner will advise the new leaders on technology and product development, according to the same source. In addition, SAP said, Vishal Sikka, chief technology officer, has been appointed to the executive board.
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