UPDATE: CFO Leaves SAP America

SAP America's Chief Financial Officer John Milana has resigned to join an electronic-commerce, business-to-business procurement company, SAP announced yesterday.

The departure comes just over a month after ERP (enterprise resource planning) software vendor SAP announced a new incentive plan designed to staunch executive defections. The plan, involving a stock-option program, will only have value if the growth in SAP's preferred shares exceeds the performance of a reference index, and needs to be approved by SAP shareholders. [See "SAP Introduces Stock Plan, Names New U.S. Execs," Dec. 9, 1999.]It's not the first time that SAP has seen a key executive defection even after boosting an employee incentive plan. In 1998, SAP introduced a Stock Appreciation Rights Program, which wasn't enough to stop both company Chief Executive Officer Paul Wahl and President Jeremy Coote from leaving. Both Coote and Wahl last year ended up at Siebel Systems Inc., which also hired more than 20 other SAP employees.

SAP is currently in litigation against Siebel, accusing the company of trying to harm its business by hiring away employees. Siebel denies the allegations.

Milana wasn't immediately available for comment, but SAP officials said that he has requested that the name of the firm he will be joining be withheld until a planned future announcement.

Milana will join the e-commerce company as CFO, according to Kevin McKay, CEO of SAP America. McKay, who said he has worked with Milana for 14 years at different companies, attributed his colleague's departure mainly to the opportunities afforded by working at a startup operation.

"He'll be going there as CFO, but at a startup you get a chance to do a little of everything, so I think he has a chance to expand beyond his current role," McKay said. However, McKay acknowledged that there is "an element of compensation" in the move -- "Every high-tech company does what it can to get good people," he added.

As far as the brain drain from SAP is concerned, McKay said that the incentive plan announced in December is up before SAP AG shareholders for a vote next Tuesday. "I'm confident it will be approved and that it will add to our ability to offer long-term incentives to employees," he said.

The lawsuit with Siebel is in an early stage, McKay said. "In this business people hop from one high-tech company to another, but this was just a little too targeted; we wanted them to stop," he added.

SAP America Inc., a subsidiary of SAP AG of Germany, is located in Newtown Square, Pennsylvania, and can be reached at +1-610-661-1000, or at http://www.sap.com.

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