SAP’s new bonus system sparks outcry over rewards for underperforming bosses

Published Fri, Feb 27, 2026 · 04:56 PM

[BERLIN] SAP’s new bonus system ended up rewarding underperforming managers while holding lower-ranking workers to a higher standard for their payouts, prompting an outcry from employees and leaders alike at the German software company, people familiar with the matter said.

SAP has since set aside millions of euros to appease angered staff and improve the new global system, which wound up rewarding senior-level employees who did not meet all expectations in their roles, according to documents reviewed by Bloomberg and people familiar with the situation. The people asked not to be identified because the matter isn’t public.

The compensation programme riled SAP employees, who have already signalled in surveys that they are losing trust in the company’s executive board amid job cuts and a restructuring process that dragged on for months.

As artificial intelligence tools threaten traditional enterprise software models, SAP’s stock has lost about 135 billion euros (S$201.7 billion) in value after reaching an all-time-high a year ago. SAP reported on Thursday (Feb 26) that chief executive officer Christian Klein made 16.2 million euros in 2025, about 14 per cent below his compensation a year earlier.

SAP confirmed that it had introduced a new performance-based compensation framework. During the rollout, the firm “identified additional areas for refinement related to stock-based compensation for non-executives,” a company spokesperson said. The topics were reviewed and addressed “to the extent possible prior to the process finalisation,” he added, saying that “fair and competitive compensation for performance is a priority for SAP.”

Klein had set a goal of overhauling the employee reward system in 2023 to better incentivise high performance. He put chief people officer Gina Vargiu-Breuer in charge of the development of the new stock incentive plan, which was rolled out to employees this month, two of the people said.

Klein told Vargiu-Breuer’s team to rework the system after employees and managers complained that it was unfair, the two people said. The fallout could threaten her future at the company after her contract ends in early 2027, they said.

“As is standard practice, SAP does not comment on individual personnel or contractual matters,” a company spokesperson said by email. Gina Vargiu-Breuer did not respond to a request for comment sent through SAP.

SAP categorised its general staff in five levels, ranging from the lowest (T1) to managers or senior employees (T5), the documents reviewed by Bloomberg show. While the three bottom ranks had to surpass expectations to receive stock-based bonuses, T4 and T5 employees who did not meet all their benchmarks still qualified for incentives, according to the documents and people familiar with the situation.

SAP has seen high executive board turnover in the past six years, and several contracts were terminated prematurely, costing the firm millions of euros in payouts. Klein’s co-CEO Jennifer Morgan left after months in the role in 2020. Starting in 2023, chief financial officer Luka Mucic and executive board members Sabine Bendiek, Scott Russell, Julia White and Jürgen Müller also departed.

Separately, Muhammad Alam, who leads product engineering, does not plan to renew his contract when it ends next year, the people said. Alam did not respond to a request for comment, and SAP declined to comment.

In an internal survey in November, 59 per cent of employees said they trusted the executive board, down six percentage points from half a year earlier, according to an internal email sent by Vargiu-Breuer and seen by Bloomberg News. In April 2021, more than 80 per cent of employees said they trusted the executive team.

The turnover at the top level has added another layer of instability as SAP works to rearrange its business around the threats of the new AI era. Some early users of the company’s flagship AI assistant, Joule – designed to help users navigate complex SAP systems and make tasks like coding easier – have been disappointed, customers and partners have said, asking to not be identified discussing their relationship with the vendor. BLOOMBERG