SAP Drops Co-CEO Structure to Simplify Leadership During Pandemic

By Maria Armental 

SAP SE abandoned its dual-chief-executive structure, less than six months after the German business-software giant embraced the leadership model, as the company seeks to simplify its leadership structure amid the coronavirus pandemic.

SAP said Co-CEO Jennifer Morgan, 48 years old, would leave the company on April 30.

"More than ever, the current environment requires companies to take swift, determined action which is best supported by a very clear leadership structure," SAP said in a written statement. "Therefore, the decision to transfer from Co-CEO to sole CEO model was taken earlier than planned to ensure strong, unambiguous steering in times of an unprecedented crisis."

Christian Klein, 39, would stay on as sole CEO, SAP said late Monday in New York.

Ms. Morgan, who is American, joined SAP in 2004 and ran the company's cloud-computing business before being elevated last year to co-CEO. Mr. Klein, who is German, has been at SAP since 1999 and served as chief operating officer before his co-CEO appointment.

SAP, which is scheduled to report first-quarter results on Tuesday, this month cut its full-year guidance, warning that business activity in March had slowed. Rival International Business Machines Corp. also said Monday that it noticed a change in client behavior in March. "There was effectively a pause as clients understandably dealt with their most pressing needs," IBM Chief Financial Officer Jim Kavanaugh told analysts.

SAP's revised outlook includes full-year sales coming in between EUR27.8 billion and EUR28.5 billion ($30.2 billion and $31 billion) at constant exchange currencies from previous estimates of between EUR29.2 billion and EUR29.7 billion.

The abrupt change in leadership comes just months after the company decided to restore the dual-CEO structure as Bill McDermott ended his five-year run at the company.

At the time SAP Chairman Hasso Plattner called the work-sharing arrangement "time-tested at SAP with multiple prior instances of success."

Mr. McDermott has since joined ServiceNow Inc. as CEO.

The twin-CEO structure has had a mixed record at the few companies that have tried it over the years. Oracle abandoned its dual-CEO structure after the death of Mark Hurd last year, leaving Safra Catz as the database provider's sole chief executive. Business-software provider Salesforce.com Inc. in February said Co-Chief Executive Keith Block was stepping down from his role, just 18 months after taking the job, ending that company's brief experiment with dual CEOs and leaving Marc Benioff in charge.

A leadership duo at Deutsche Bank AG struggled after a series of financial missteps and regulatory penalties led both co-CEOs to resign in 2015.

Write to Maria Armental at [e-mail]

(END) Dow Jones Newswires

April 20, 2020 19:46 ET (23:46 GMT)

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