SAP America CEO Quits In Wake of Poor Results

SAN FRANCISCO (04/19/2000) - The steady trickle of leading executives leaving the U.S. operation of ERP (enterprise resource planning) software vendor SAP AG continued today with the company announcing that the head of SAP America Inc. has quit.

Kevin McKay, chief executive officer of SAP America, resigned from the company effective immediately, SAP said in a statement issued today. McKay chose not to accept an offer from SAP's board of directors to become chief financial officer of parent company SAP AG, SAP added.

Yesterday, SAP AG reported a 43 percent drop in net income for its first fiscal quarter ended March 31, 2000. Company executives described the quarter as "challenging." Revenue in the Americas region fell 3 percent over the year-ago quarter. [See "SAP Posts Lower Q1 Net Income on Rising Revenue," April 19.]Wolfgang Kemna, managing director of SAP Germany, will take over as SAP America CEO, while Ernie Gunst, managing director of SAP Switzerland, will add Kemna's German duties to his current role.

McKay became SAP America CEO after Paul Wahl, the previous incumbent in the role, quit the company in September 1998. Prior to becoming CEO, McKay was SAP America's CFO and chief operating officer.

McKay has been rumored to be quitting SAP for the past few months, according to Harry Tse, vice president of enterprise commerce with market research company Yankee Group Inc. in Boston. Tse expects that McKay will head up a startup company.

"With SAP's incentive program, it's very difficult to keep talent," Tse said in a phone interview today. "SAP has changed its program a lot, but they're only halfway there to fix the deficiency compared to what U.S.-based companies offer."

In January, SAP AG shareholders approved a new stock option plan aimed at retaining key company staff. [See "SAP Approves Stock Plan to Stem Defections," Jan. 1.]However, Friday's crash in the stock market where technology shares were particularly hard hit might make employees think again about the benefit of pure stock option incentives, Tse added.

In January of this year, SAP America CFO John Milana left the company to join an electronic-commerce, B2B (business-to-business) procurement firm as CFO.

[See "UPDATE: CFO Leaves SAP America," Jan. 14.]Other SAP America top-level executives quit the company last year to join rival CRM (customer relationship management) software vendor Siebel Systems Inc.

Their defections resulted in SAP launching two lawsuits against Siebel in November and December 1999 alleging unfair hiring practices related to more than 25 ex-SAP staff who'd joined Siebel. SAP dropped the suits last month.

[See "SAP Ends Siebel Lawsuits," March 17.]SAP America, a subsidiary of SAP AG of Germany, based in Newtown Square, Pennsylvania, can be reached at +1-610-661-1000 or via the Internet at http://www.sap.com/. SAP AG, based in Walldorf, Germany, can be reached at +49-6227-747-474 or via the Internet at http://www.sap.de/.

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