[Foreign language] Guten Morgen, meine sehr verehrten Damen und Herren. Hiermit eröffne ich die ordentliche Hauptversammlung der SAP SE und übernehme als Aufsichtsratsvorsitzender satzungsgemäß den Vorsitz. Im Namen des Aufsichtsrats und des Vorstandes heiße ich Sie-
I will be presiding over today's meeting. On behalf of the Supervisory Board and the Executive Board, I'd like to bid you, our shareholders and shareholders' proxies, a warm welcome. We're delighted that once again, so many of you are able to attend. I also welcome our guests and especially the members of the press, who we'd like to thank for their objective and informed reporting on our company over the past 12 months. As usual, I first need to announce the formalities of this annual general meeting of shareholders. For the record, all members of the Executive Board and the Supervisory Board are here today. I'd also like to welcome Dr. Stefan Fuhrmann, notary public, who will be taking the minutes. Welcome. Today's meeting was called with due notice in accordance with legal requirements and the provisions of the articles of incorporation.
Notice of the meeting was published in the Bundesanzeiger, the German Federal Gazette, on Monday, the ninth of April, 2018. Copy of the notice available for inspection at the speaker's table will be annexed to the minutes. All notices required for convening the annual general meeting of shareholders were properly issued. No motions or candidacies were submitted by shareholders to the company. The official meeting zone includes this main hall of the SAP Arena, plus all other rooms and areas in the SAP Arena that are accessible to shareholders after passing through security at the entrance. These include the training hall opposite the entrance area, where you'll find the catering services, as well as the spectator stairs in the first floor, where there are more catering services. The meeting will be broadcast throughout the official meeting zone via loudspeakers.
There's also a big screen in the training hall on which you can follow the meeting. The attendance register is computerized and constantly updated. There is a terminal at the speaker's table at which you can inspect the register at any time during the meeting. If you wish to leave the shareholders meeting early, you can appoint the employees of the company present for that purpose as your proxies. To do so, please use the proxy and instruction card in the back section of your ballot card book. You are allowed to instruct the proxies provided by the company exclusively with respect to voting on the management proposals published in the invitation. You can, however, entrust your vote to another participant. To do so, detach the attendance card and proxy form from your ballot card book.
On your way out, hand your completed proxy form to the staff at the door and keep your attendance card. Give your proxy your ballot card book. If you wish to leave the meeting temporarily or early and do not wish to appoint a proxy to vote on your behalf, please hand in your attendance card and your voting cards at the exit. As in the previous year, online participation is also possible. Shareholders participating online can follow a live webcast of the entire meeting, cast their votes in real time and inspect the attendance register. Shareholders participating via the internet proxy appointment and instruction system have until the beginning of voting on management's announced proposals to send or amend their appointments and instructions regarding these proposals.
All shareholders and proxies who wish to speak or ask questions are kindly asked to report to the speaker's table as soon as possible. Please complete a speaker's request form. Please clearly and legibly write your name and the number of your ballot card book on the request form. I must insist that every shareholder or proxy wishing to speak, without exception, first hand in a request form at the speaker's table and then wait until called to speak. When it is your turn to speak, please come to the microphone next to the speaker's table. The entire annual general meeting of shareholders is being publicly broadcast on the internet. However, only what I'm saying now and the speech of CEO Bill McDermott will be recorded and posted on the internet after the meeting.
As in the previous year, we assume, with your approval, that we are allowing some television companies to broadcast highlights from the speech of Mr. McDermott. However, we are allowing the TV companies to show sections of his speech only. The entire meeting is also being documented in sound and video for the record. If a shareholder proxy objects to the recording of his or her speech, we will not record that speech. I'd like to remind all of you here and all those participating online that you are not permitted to make any sound or video recordings of the meeting yourselves. At item one of the agenda.
For the record, I can report that the 2017 SAP SE financial statements and the consolidated financial statements, the combined management report for the SAP Group and SAP SE, including the compensation report and the Executive Board's explanatory notes relating to the information provided pursuant to German Commercial Code sections 289a and 315a. The Supervisory Board and the Executive Board proposed resolution on the appropriation of retained earnings were available at the website www.sap.com/investors from the time the general meeting of shareholders was called. These documents are also available for inspection in the meeting room. You'll find the documents at the speakers' table at the main hall and at the booth by the entrance to the side hall.
The auditor, KPMG AG, examined the SAP SE financial statements, the consolidated financial statements, and combined SAP SE and SAP Group management report for fiscal 2017, and issued an unqualified audit opinion. The Supervisory Board reviewed and approved the aforementioned documents, and approved them on Wednesday, the 21st of February 2018. The Supervisory Board compiled a written report, which is published on pages 22 to 31 of the integrated report. The SAP SE financial statements for 2017 were thus formally adopted. This report describes the focus of our work in 2017 in detail, and the way in which we discharged our function of advising and supervising the SAP Executive Board.
Our work is founded on a close and trusting partnership between the Supervisory Board and the Executive Board, an efficient distribution of tasks between the Supervisory Board and its committees, and not least on the use of our own software, such as the SAP Digital Boardroom, which visualizes all financial personnel and process-related information across all company transactions for us in real time, whenever we need it. Let me go into more detail about some of the focus areas of our work. Last year, the Supervisory Board devoted considerable time at several meetings to discussing personnel changes on the Executive Board and the associated restructuring of the Executive Board. In the context of the decision to acquire Gigya, we also discussed the company's strategic alignment at length. Likewise, another line of focus was Executive Board compensation, which I'll return to in a moment.
I wish to stress that in the light of the slim approval rates for the acts of the Supervisory Board at the last annual general meeting of shareholders, we also looked at the subject of corporate governance. We took the results of the vote and the attendant criticism very seriously, and looked for ways to improve them, win back our shareholders' trust. Your trust. I approached some of our largest institutional investors in person with a view to collecting and gaining a better understanding of their criticisms. In response to the criticisms expressed, and in order to create greater transparency, we are now reporting more openly and in more detail about our work on the Supervisory Board.
Having initially reduced the number of deviations SAP declared to the recommendations of the German Corporate Governance Code, we can report that as of February 2018, the company now follows all the recommendations of the code. Ladies and gentlemen, on subjects that are the responsibility of the Supervisory Board, I'll continue to maintain an open dialogue with our shareholders and investors. While obviously I cannot conduct the dialogue with each and every shareholder, it is important to me that we make the subject matter and outcomes of our discussions with institutional investors transparent to all shareholders. With this in mind, you can read my open letter to investors in the investor relations section on the SAP website. It summarizes all the main themes of these discussions with investors, in which corporate governance and Executive Board compensation featured prominently.
I hope, and I'm speaking on behalf of all Supervisory Board members, that the steps we've taken will restore your trust in and support for the work we do. Ladies and gentlemen, I would like to turn now to a change in the membership of the Executive Board that the Supervisory Board resolved at its October meeting. The Supervisory Board appointed Christian Klein to the Executive Board with effect of January 1st, 2018. As head of the new global business operations portfolio, Christian is responsible for SAP's internal digital transformation and for driving core business process simplification. I'd like to welcome Christian Klein to the meeting and ask him briefly to introduce himself to the shareholders.
Thank you very much, Hasso. Dear shareholders and shareholder representatives, ladies and gentlemen. Well, I'm the new kid on the block here on this podium, but I've been on board at SAP for a very long time. I've been part of this company for 19 years. In 1999, I started working for SAP right after graduating from university. At that time, in those very early days and in those young days of mine, I wouldn't have imagined introducing myself to you. I was born in Heidelberg and grew up in the Kraichgau area. After having a dual student program, I visited various areas of SAP. It all began in customer support, and Gerhard Oswald very early on taught me to always focus on the customers, whatever I do. The years in this support area in development and controlling gave me a general and broad overview over SAP.
Today, I consider this an incredible benefit in my current role. In 2011, I became Chief Financial Officer of our SuccessFactors cloud acquisition. Those years gave me very good insights into the processes of a cloud company. In 2014, Luka Mucic asked me to take over full responsibility for SAP controlling, focusing on long-term financial planning, management, and analysis of our company's success. In 2016, Bill McDermott and Luka Mucic asked me to take over the role of Chief Operating Officer of SAP. Since the beginning of this year, it's been my honor to have been part of the SAP Executive Board. In my role as Chief Operating Officer of SAP, I primarily focus on transforming our business processes and system landscapes. The cloud business massively changes processes at SAP compared to our traditional on-premise business.
What now matters for me as a Chief Operating Officer to simplify processes for our customers and for our employees to make them continuous and also to simplify them. The point is to establish a dynamic and agile SAP in order to enable sustainable growth and a high degree of scalability, which is the basis for the financial success of SAP. In this context, it is very important to stay in close contact with our customers, employees, and partners in order to obtain continuous feedback on our processes and software solutions. In the second step, it is important to model the business processes within our systems. Here, once again, we have to make sure that these are end-to-end processes.
SAP wants SAP is an important slogan also for me, which means using our own software also internally, because we, as SAP, always have to be and want to be our first customers, which gives us early on the possibility to explore the possibilities and also the range for improvement in our software. Together with our standard development department and our end customers, we permanently focus on the further development of our software in terms of functions, integration, innovation, and user experience. Today already, innovations such as SAP HANA, the SAP Digital Boardroom, or SAP Leonardo deliver a significant added value within SAP. Furthermore, my organization focuses on ensuring product and service quality, portfolio planning, and global operation of our cloud infrastructure.
I'm looking forward to many successful years together with my dear colleagues on the executive board, I would like to thank you, dear shareholders, members of the supervisory board, and members of the executive board, most cordially for the trust you've placed in me. I hope we will all enjoy a smooth AGM today. Thank you very much.
Thank you, Christian. Ladies and gentlemen, there will also be some changes in the membership of the supervisory board. As you will have read in the invitation to today's annual general meeting of shareholders, the supervisory board proposes under item 7 the election of Ms. Aicha Evans, Dr. Friederike Rotsch, Mr. Gerhard Oswald, and Ms. Diane Greene as shareholder representatives on the supervisory board. Aicha Evans became a member of the supervisory board of SAP SE on the 21st of June 2017. Following Jim Hagemann Snabe's departure from office in May last year, Evans was appointed as supervisory board member by the Mannheim Amtsgericht for a term ending at the conclusion of today's annual general meeting of shareholders. As she is standing for election by the shareholders for the first time today, I'd like to ask Aicha to briefly introduce herself.
Dear shareholders and shareholder representatives, [Foreign language]. This is where my German stops, I go back to English. My name is Aicha Evans. I'm humbled and honored to be on the supervisory board of SAP. I work for Intel Corporation. I've been there for 12 years, where I serve as a senior vice president as well as the chief strategy officer. Both of our companies are looking forward with things like artificial intelligence, machine learning, the overall digital transformation that is going on in the world and with our customers. It's a great opportunity, I'm really psyched to be on this board. Thank you.
Thank you, Aicha. Ladies and gentlemen, with effect from the conclusion of today's annual general meeting of shareholders, Professor Dr. Wilhelm Haarmann has resigned his seat on the Supervisory Board. Professor Haarmann has been a member of the Supervisory Board since it was instituted in 1988, an incredible 30 years. Has been an invaluable source of advice for the company and for me personally throughout this time. On behalf of every single member of the Supervisory Board, I wish to thank him for all his hard work on the Supervisory Board, the General Compensation, Finance and Investment, and People and Organization Committees. We will miss his experience and expertise greatly. Thank you very much indeed. I am convinced, however, that we found an excellent successor to Professor Haarmann in Dr. Friederike Rotsch. I'd like now to ask her too to briefly introduce herself to the shareholders.
Ladies and gentlemen, dear shareholders and shareholder representatives. My name is Friederike Rotsch, Group General Counsel of Merck. In the past, it was also called the head of legal. In this function at Merck, I am in charge of legal and compliance, which also includes the brand department and data protection. I am 45 years old, married, and I've got two little boys. This year, Merck celebrates its 350th anniversary. I haven't been on board all that time. However, I believe that I have identified part of the success of that company. Over the centuries, Merck retained the capability of permanently reinventing itself. Over the last few years, for example, a traditional pharmaceutical and chemical manufacturer turned into an innovative technology company. I had the opportunity to closely support that process.
This experience, and also the knowhow about some ways of how to deal with permanent change, that's what I'd like to offer as my contribution to the work of the Supervisory Board of SAP. Successful work on a supervisory board, in my view, also depends very much on asking the right questions, thus giving an important impetus to the overall company. Doing so, above all, of course, I'm going to focus on my legal knowhow. I'm an expert in corporate law, especially corporate governance matters. Over the last two years, I have been involved in all of the takeovers and transactions of Merck on the legal side. The corporate governance rules, they have grown massively in scope and complexity over the last couple of years.
In addition to that abundance of rules and regulations, publicly listed companies not only have to comply with these German rules of the German Corporate Governance Code, they are also facing sometimes conflicting instructions of the proxy advisors. I know the game of brinkmanship which companies have to undertake in this regard. Therefore, I believe as a member of the Supervisory Board, I can help in how to deal with these challenges. I will also contribute my comprehensive experience in transactions to the SAP Supervisory Board. Not only am I able to assess the legal and commercial risks involved in a certain transaction, I also know which acquisition goals basically match the fundamental strategy of a company. Furthermore, of course, I'm also well experienced in the matters of compliance and data protection. The detailed question that I am dealing with at Merck may differ from those at SAP.
The fundamental matters and questions will always be the same. Here, once again, I can provide helpful insights on the basis of my experience. My legal expertise is complemented my experience as head of internal audit. That is a function which I also held for a couple of years at Merck. From those years, I still remember how an effective internal control system, risk management, and an internal audit system have to be set up. I can also assess when a system has got certain gaps which are not obvious but somewhat hidden. I'm looking forward to the challenges ahead, and I would be pleased if you place your trust in me. Thank you very much.
Thank you, Dr. Rotsch. Professor Anja Feldmann will step down from the Supervisory Board on the 31st of December 2018. Professor Feldmann has been a member of the Supervisory Board in 2012, and she has consistently contributed her proven expertise to the work of the board, notably in the Technology and Strategy Committee. Although Professor Feldmann is not due to leave the Supervisory Board until the end of the year, we'd like to take the opportunity to thank her now for her many years of support on the Supervisory Board. We are proposing that Gerhard Oswald be appointed as Professor Feldmann's successor on the Supervisory Board with effect from January 1st, 2019. I'm delighted that Mr. Oswald has declared himself willing to stand for election to the Supervisory Board following the two-year cooling-off period prescribed by German company law.
As a former member of the Executive Board with many years of experience of SAP, our customers, and our markets, he will be an enormous asset to our Supervisory Board. Gerhard, could I ask you to briefly introduce yourself?
Thank you, Hasso. Dear shareholders, I started my career at SAP when SAP was still a small startup company with 30 staff and about 100 customers. Over the years, I've seen SAP grow into the global business it is today, and it helped shape that growth. SAP from the start has been an innovative company, and it very early on addressed the many challenges businesses face. SAP has always been and remains a pioneer. During my 36 years at the company, I managed many parts of the business. I've served on the Executive Board for a long time, and in many of those positions, I helped shape the development of new technologies and new generations of applications. Chief among my responsibilities was looking after our customer base. Through this work, I acquired a deep understanding of our customers' requirements.
It's always been important to me to be an advocate for the success of every single customer. This is something I would like to contribute to the Supervisory Board of SAP. Though I retired from the Executive Board at the end of 2016, I continue to work as an outside consultant to SAP. I speak to customers, partners, and employees regularly. I turn their feedback into suggestions for improvements that I pass on to SAP's Executive Board and to Hasso Plattner as the chairperson of the Supervisory Board. Besides my consulting work for SAP, I've been involved in teaching at the Technical University of Munich, which I started in 2015. In May 2015, Professor Kretschmer and I established the Initiative for Digital Transformation Research Platform at the Technical University of Munich.
Through my teaching work and the research platform, I regularly offer student placements in major companies, so they gain, at the earliest possible stage, insight into the industry and an awareness of the significance of digitalization and the digital transformation. This work always keeps me up to date on the latest technologies and business models. I'm also a mentor and expert advisor to the Center for Innovation and Business Creation at the Technical University of Munich. This center offers a complete service for startups from the initial business idea to the IPO. Its program helps launch around 50 new ventures every year. As a mentor, I've been able to assist all sorts of businesses to get off the ground. I also mentor women entrepreneurs. I feel a strong connection to SAP, our SAP.
I want to bring to the Supervisory Board the knowledge and wealth of experience I have gained from my time as an employee and as an Executive Board member, and from my university work. By networking with SAP's customers and partners, universities, and employees at SAP, I can contribute a holistic view of the company to help it perform at its best. I would be delighted to receive your vote and your confidence so that together we can lead a strong SAP into the future. Thank you.
Thank you, Gerhard. Professor Klaus Wucherer will also resign his seat with effect from the conclusion of today's Annual General Meeting of Shareholders. Professor Wucherer was elected to the SAP Supervisory Board for the first time in 2007, and he has made his professional skills available, especially to the Audit Committee. We would like to thank him for the reliable support he has given the Supervisory Board of SAP over the years. The Supervisory Board proposes Diane Greene as Professor Wucherer's successor. Ms. Greene is unable, unfortunately, to attend today's meeting in person, but has asked to introduce herself to the shareholders via video message.
Greene, I'm so looking forward to joining the SAP Supervisory Board. I apologize for not being there today, but I'm giving a commencement speech at UC Berkeley that was scheduled a very long time ago, before I knew about this honor of joining SAP's board. But I'm just very excited about it. Let me first tell you a little bit about me. I started my career as an engineer, as a mechanical engineer, then I went back to school and became a computer scientist and then worked in the database industry. I worked for Sybase, I worked for Tandem. Back then was when there was System R/2. I remember the admiration I had for SAP back then. In fact, then after that, I went into being an entrepreneur, and a friend and I nearly started a company to build around the ecosystem of System R/2.
As an entrepreneur, I built the company VMware. I co-founded and led that company for 10 years, and now I am running Google Cloud. What we're seeing everywhere, as you know, is that companies are going through a digital transformation. I just think SAP has this incredible opportunity to take the 380,000 some customers and help them save costs, but also do things they never could do before with their customers around their products, through using artificial intelligence, machine learning, and all the other new tools available, and growing all the time. I really look forward to supporting SAP as a company, in any way that I can, and drawing on my knowledge from the technology industry. Thank you very much for this vote of confidence, and I look forward to meeting all of you. Thank you.
Thank you, Diane. The Supervisory Board is convinced that all the candidates standing for election today are worthy and suitable successors to those who are leaving their posts. Ladies and gentlemen, allow me to turn now to the matter of executive board compensation. As I said earlier, the subject is a focal point of the Supervisory Board's work and of my work as Supervisory Board chairperson. As you'll see from the agenda, we're asking you today to approve our executive board compensation system. The system forms part of our response to the criticism that was leveled at us by the institutional investors.
Following the disappointing result of the vote to approve our compensation package at last year's annual general meeting of shareholders, given the criticism we received at that meeting about our compensation system and how it is presented in the compensation report, we scrutinized each of the points of criticism individually. Executive board compensation featured prominently in the discussions I had with institutional investors in Europe and the U.S. Our in-depth look at executive board compensation has resulted in a number of changes. Starting in 2018, the short-term variable compensation component, the STI plan, will no longer contain a discretionary element, and the maximum possible target achievement level in the STI will be lowered from 181.3% to 140%. Also, in line with the German Corporate Governance Code, a severance pay cap has been defined and a clawback provision written into the executive board members' appointment contracts.
The investors also criticized the way in which compensation was presented in SAP's compensation report. Complaints about a lack of transparency and insufficient explanation prompted us to redesign our compensation report and present our compensation in a more transparent and understandable way. These are some of the changes we've made. We've disclosed the caps on Executive Board compensation and how we set them. We publish a vertical pay ratio that compares the total benefits granted to the Executive Board members with those granted to the executives and all other employees. We've published the target achievement levels for the last five years. Finally, we've presented the structure of the peer group index and provided examples to illustrate possible outcomes. We hope that these and other changes will make our compensation system much easier to understand.
As I've said, I'll continue to talk to our shareholders and channel their feedback into continuously improving the way we present Executive Board compensation. Ladies and gentlemen, the Supervisory Board is convinced that our Executive Board compensation is appropriate. When reviewing Executive Board compensation, the Supervisory Board primarily considers whether the compensation is commensurate with SAP's size and global reach, SAP's operational and financial performance, and directors' compensation at comparable international companies in the technology industry. The level of compensation has to be internationally competitive to reward committed, successful work in a dynamic environment. We can say with confidence that as Europe's largest software company in an industry dominated by U.S. American competitors, we are highly successful. SAP is the most valuable DAX company. The success of the work our Executive Board does is reflected in their compensation, which is aligned chiefly to how the share price performs.
Thus, when the share price goes up, the Executive Board's performance-related compensation increases, and we, the shareholders, benefit too. The Supervisory Board is convinced that our Executive Board compensation provides an adequate basis for achieving our goal of making SAP the world leader in the cloud with the current leadership team. We believe the compensation package offers the right incentives, reflects SAP's global orientation, and secures the competitiveness of our company. This applies both to the compensation paid for fiscal 2017 and to the new compensation policy that applies in 2018 and thereafter. The compensation system, including the latest amendments, which we are presenting to today's annual general meeting of shareholders for approval, is described in the compensation report starting on page 32 of the 2017 integrated report. Ladies and gentlemen, I will now ask Bill McDermott, our CEO, to address you.
His speech will be interpreted into German simultaneously so that everyone can follow. Bill's answers will also be interpreted into German. Please, Bill. As you can hear, I'm learning German. Things don't go too well.
In seriousness, thank you for the honor of addressing today's annual general meeting of shareholders. I speak to you as the world faces complex challenges. It can be easy in challenging times to become pessimistic. Instead, dear shareholders of SAP, as you saw in the opening video, we offer an optimistic view. SAP technology addresses the challenges because we view them as the biggest opportunities. Consider the following. SAP has 380,000 customers in nearly every country on Earth. They rely on our systems to support 77% of the world's transactions. SAP systems touch EUR 19 trillion in consumer transactions. We don't share these figures because we are self-important. We share them because with immense power comes significant responsibility. Our 91,000 employees, plus more than 2 million partner employees, are strongly committed to help the world run better and improve people's lives. SAP doesn't shrink from challenge. We rise to it.
We stand on the shoulders of giants, none greater than our founder and chairman, Hasso Plattner. Hasso's guidance has helped SAP become Germany's most valuable company and the world's business software market leader. His vision, intellectual curiosity, and courage motivate our company every single day. Please join me in saluting the one and only Hasso Plattner. We are also securing the future of SAP with our newest executive board member, Christian Klein. Christian, congratulations, and welcome once again to the SAP Executive Board. Dear chairman, dear supervisory board members, thank you for your continued support, your leadership, and your counsel. I am grateful. Ladies and gentlemen, please join me in a round of applause to thank the colleagues of SAP for their passion, their talent, and their unwavering dedication. Dear shareholders, let's discuss SAP's past, present, and our future. Beginning with the past.
Back in 2010, we made bold commitments. One was to transform the database market. Legacy databases were too slow, unable to meet the challenges of big data. Today, SAP has more than 20,000 customers growing at record pace on HANA. Independent analysts like Forrester have ranked HANA the number one database in the new database market. Two, we promised to lead the cloud computing era of business applications. To accelerate that ambition, we acquired only the very best cloud companies, and once they become a part of SAP, they grew even faster. We built a new enterprise resource planning system to bring ERP customers to the cloud. More than 8,300 customers are already on this journey, with many thousands more on the horizon. Overall, we have 150 million users of our cloud applications, more than any competitor in the business.
We said businesses should work together in the global economy. SAP was the first to champion business networks. The idea that companies should expand their digital partnerships to seize new opportunities. Today, these spend management networks are addressing trillions in market opportunity. As a result of this strategy, we have doubled or tripled the revenues, the profits, the number of customers, and the market value of SAP since 2010. That's pretty good. Our employee engagement, employees as shareholders, brand value, environmental performance, diversity, and inclusion metrics are all at all-time highs. Dear shareholders, the Executive Board promised to honor your trust by returning you a happy, healthy, profitable growth company. This would not have been possible without your support. I'd like to thank you, congratulate you from the bottom of my heart. Congratulations. Well done. Last year, we accelerated SAP's momentum once again.
The numbers I will share with you on non-IFRS percentages. These percentages are non-IFRS at constant currencies unless I state otherwise. Okay. Our total revenue was €23.5 billion, up 8%. Cloud and software revenue reached €19.55 billion, up 8%. Cloud subscriptions and support revenue hit €3.77 billion, up 28%. New cloud bookings, defined as cloud business we have signed but not yet collected, grew at 30%. Our operating profit hit a healthy €6.77 billion, up 4%. IFRS earnings per share was €3.36, an increase of 10%. Even though we don't guide on it, software licenses grew 2% while our competitors steeply declined. 2017 illuminated several positives about our evolving business model. SAP's fast-growing cloud business, together with solid growth in support revenue, continued to drive more predictable revenue.
We are now at 63% predictable revenue, we're on track to achieve our target of 70+% predictable revenue by 2020. As this business grows, the share of renewals increases, the overall cost of sales goes down, and margins go up. This is how we deliver the SAP trifecta: fast cloud growth, strong software sales, and operating income expansion. It's good stuff. Thank you. Let's talk about SAP share price development. If we look to the overall development of the share price in 2017, SAP shares grew 12.8%. That is faster than the DAX. However, the macro developments in the broader market did impact the share price. Specifically, tax reforms in the U.S. were enacted in December. At the time, SAP shares were trading at all-time highs based on our very strong performance.
In the weeks following this development, SAP shares decreased by 17%, while U.S.-based competitors generally increased. We were also impacted by a particularly strong euro. While these issues were in fact beyond our control, regaining momentum was within our control. To do it, we needed a strong start in 2018, and yet again, SAP delivered. In the first quarter, cloud revenues overtook license revenues for the first time and surpassed EUR 1 billion. Wow. Here we go. Cloud revenues soared 31%. New cloud bookings grew 25%, that was on top of a very strong year. Last year, it grew 50%, it was the toughest comparison, we still grew. Very strong. On the bottom line, SAP delivered 52% growth in IFRS operating profit, which was up 14% non-IFRS at constant currency. Let me spend a moment on the operating profit.
As you can see in the first quarter results, this is a big moment for us. We are returning to operating margin expansion for the first time since we began our cloud journey. This is one of the many reasons that momentum in our share price has been reestablished over the past several weeks. Our shareholders should in fact continue to benefit from this positive momentum. In 2017, SAP raised the dividend policy to at least 40% of profit after tax. The executive board and the supervisory board proposed to raise the dividend for 2017 by 12% to €1.40 per share. This represents a dividend payout of approximately €1.67 billion and a payout ratio of 41%. You will be asked to vote on this dividend payout and the other topics on the screen behind me in today's meeting. Allow me, please, to give you a moment to review this list.
let's let our customers speak for SAP. Enjoy the message.
[Foreign language] Für uns ist wichtig zu wissen, wohin sich SAP entwickelt und mit in diese Richtung zu gehen, damit wir weiterhin alles so gut machen wie heute, aber dabei immer noch besser werden. Colgate-Palmolive ist ein führendes Unternehmen im Konsumgüterbereich mit vier Geschäftsfeldern: Zahnpflege, Körperpflege, Reinigungsmittel und Tierfutter. Wir verkaufen unsere Produkte in 223 Länder. 1994 haben wir uns aus drei Gründen für SAP entschieden: Wir wollten integrierte Systeme. Wir wollten die Forschungs- und Entwicklungsfortschritte einer führenden Technologiefirma für uns nutzen und letztendlich haben wir einen echten Partner gesucht. Aufgrund dieser jahrelangen Partnerschaft konnten wir erreichen, dass inzwischen 100 % unserer Umsätze über die SAP Plattform laufen. Alles, was wir mit SAP vorantreiben, wägen wir ab zwischen dem, was uns und dem, was SAP wichtig ist. Danach entscheiden wir uns, Ressourcen in dieselben Projekte zu investieren und so positive Ergebnisse für beide Seiten zu schaffen.
[Foreign language] Mit SAPs Hilfe haben wir unsere Geschäftsplanung nicht nur schneller und für den Nutzer einfacher gemacht. Zusätzlich haben wir dadurch auch die Akzeptanz im Unternehmen deutlich verbessert. Eine Co-Innovation, an der wir mit SAP gearbeitet haben, war das Vorläuferprojekt zu dem, was heute der Digital Boardroom ist. Unser Ziel war es, anstatt in starren Perioden strukturierte Berichte zu erhalten, jederzeit und in Echtzeit zu sehen, was im Unternehmen passiert, auf Basis aktueller Daten. So können wir schneller Probleme identifizieren und schneller gemeinsam daran arbeiten, diese zu lösen. Wir denken, es ist sehr wichtig, den digitalen Kern zu vereinfachen. Wir führen deshalb gerade SAP S/4HANA ein, um unsere Systeme so einfach und effizient wie möglich zu gestalten. Wir müssen dies tun, damit unsere Mitarbeiter mehr Freiraum bekommen. Freiraum, neue Möglichkeiten und neues Geschäftspotenzial zu erkunden, welches dann unser Wachstum vorantreibt.
[Foreign language] Dabei spielt die SAP Cloud Platform eine große Rolle als Ergänzung zu dem, was wir mit SAP S/4HANA machen. Wir glauben an die SAP Strategie. Wir glauben, SAP hat recht damit, den digitalen Kern zu vereinfachen und neuere Technologien darauf aufzusetzen. Das Internet der Dinge und Machine Learning sind Beispiele dafür. SAP macht es genau richtig. Es geht nicht mehr darum, Softwarepakete zu verkaufen, sondern eine Plattform anzubieten, die es ermöglicht, neue Funktionen hinzuzufügen, auszubauen und alles über offene Schnittstellen miteinander zu vernetzen.
It's wonderful to see happy customers. We also have a happy company. Employees have never been more enthusiastic about working for SAP. Our employee engagement scores remained extremely high at 85%. Our leadership trust score, signaling employee confidence in management, increased four percentage points last year alone. By investing in professional development, our overall retention rate has improved to 94.6%. We reduced greenhouse gas emissions to 325 kilotons in 2017, achieving the goal to reduce emissions to our year 2000 level. Guess what? We did this three years ahead of schedule. We run a green cloud with data centers 100% powered by wind or solar energy. Overall, we are on track to fulfill our pledge of being fully carbon neutral by 2025. From a diversity perspective-- Thank you.
From a diversity perspective, we met our goal of 25% women in leadership positions, and now we have set a new goal of at least 30% by 2022. Thank you. The overall message from our past and our present, SAP is a strong market leader and we are only getting stronger. I like that, too. Let's spend some time discussing the large market opportunities where we are well positioned to accelerate growth. I'll summarize it for you this way: SAP will deliver the Intelligent Enterprise to our customers. Allow me to explain the key priorities of this strategy. First, seriously, how many of you are concerned about how businesses use your personal data? Raise your hand. Okay, quite a few of you. I am, too. In fact, I've yet to meet a consumer who isn't concerned at some level. If consumers are worried, so are businesses.
The question is, how can SAP help our customers do a better job serving their customers? This market is called customer relationship management or CRM. Here's what we've long known about this market. Competitor CRM solutions only manage data in sales departments. Even as technology has improved, competitor CRM solutions haven't really improved that much. As new regulations like GDPR take effect, competitor CRM solutions don't help businesses comply. This is why SAP has quietly been preparing a master plan to disrupt the CRM market. We started with a clear operating principle. Businesses need to have a single view of the consumer. The marketing and sales departments shouldn't keep their own records while the customer service department is in another silo. This is a challenge that only SAP can solve. As we built our plan, we brought together smart acquisitions.
SAP Hybris helps businesses engage consumers in any channel on any device. Gigya helps business protect that sensitive consumer data in the age of GDPR. CallidusCloud helps sales professionals focus on the right opportunities from lead to cash. These new additions come together with solutions built by SAP. SAP Cloud for Customer helps companies better manage sales departments. SAP Service Cloud helps business retain happy consumers. The combination of these assets will provide a seamless front-office value chain backed, and remember this, by the best user experience in the industry. We will call this SAP C/4HANA. C for customer, fourth for fourth-generation CRM. C/4HANA. As with SAP HANA itself, SAP will once again prove we are the last to accept the status quo, and we are the first to change it. This is it. This will be a major moment for SAP.
We are fired up and ready to go, we are ready to make you proud. Are you excited about C/4HANA? Let's go get 'em. You know right where we're headed. Our second priority is closely related to the first. No company can keep loyal customers if it can't deliver what those customers actually want. While SAP C/4HANA runs the front office, like marketing and sales, SAP's other business applications run the back office. Ladies and gentlemen, history is repeating itself once again. Remember when SAP delivered integrated applications to enable true end-to-end business process. As cloud is now maturing, there is a new agenda that's being driven by the CEOs of companies. They want to integrate their complex companies without sacrificing the best functionality. Yes, integration is back. For SAP, our completeness of vision will be delivered to our customers in a modular approach.
If a customer wants to use a single best-of-breed application, that's fine. For customers who want end-to-end common platform, also fine. We will deliver both best of breed and best of suite. We call this new cloud experience the SAP Intelligent Suite. Think about a small business, let's say in Berlin, just getting started. They may begin their SAP journey with SAP C/4HANA to protect their consumer data and sell more products. Over time, as the business grows, they need a sophisticated ERP system to handle financials. SAP S/4HANA. They need to build a great team. SAP SuccessFactors and SAP Fieldglass. They need to procure direct and indirect materials. SAP Ariba. They need to make it simple for their employees to travel the world. SAP Concur. They need to modernize how they build products to achieve global scale. SAP Digital Supply Chain and Manufacturing.
In cases where these applications work together, the users in Berlin will never need to change applications. The data model, security, and user experience are all consistent, enabled by the SAP Cloud Platform. I'm proud to tell you, there's no company in our industry who can integrate the front office to the back office like we can. There is also no company that is doing more with intelligent technologies than SAP. We do not want to substitute people in the workforce with computers. We believe in the notion of augmented humanity, where technology raises people up to a new level of human performance. To bring this potential to our customers, last year, we introduced SAP Leonardo. Every application in the SAP Intelligent Suite will be enhanced by SAP Leonardo Machine Learning.
Where it adds value, the same will be true for blockchain and Industry 4.0 technologies, which are also called the Internet of Things. To illustrate the power of these breakthroughs, please watch this short video.
[Foreign language] Wir haben mit Pace ein System entwickelt, das Autos zu Smart Cars macht. Wir haben sehr viele Funktionen rund ums Tanken, beispielsweise eine Tankstellensuche. Das heißt, wenn Sie tanken müssen, zeigt Pace alle geöffneten Tankstellen in der Umgebung an und die aktuellen Preise dazu. Sie müssen also nicht mehr lange suchen, finden schnell die günstigste Tankstelle.
[Foreign language] Der Markt ist im Wandel. Die Menschen sind heute zu einem großen Teil online vernetzt. In der Zukunft wird auch das Auto vernetzt sein. Das heißt, das Auto wird ein Teil des digitalen Erlebens der Menschen sein. Da haben wir uns mit SAP und Pace zusammengetan, um die ersten Funktionalitäten zu erstellen. Wir planen sehr kurzfristig jetzt 200 unserer Tankstellen in das Netzwerk von SAP einzubinden und werden dann zügig danach fast alle HEM-Tankstellen in Deutschland mit dieser Funktionalität ausstatten. Insgesamt haben wir in Deutschland etwas über 400 Tankstellen.
[Foreign language] Als neuestes Feature haben wir eine Connected Fueling Funktion, die wir gemeinsam mit dem SAP Vehicles Network entwickelt haben. Wenn Sie an die Tankstelle heranfahren, können Sie in der App auswählen, an welcher Zapfsäule Sie stehen. Dann können Sie den Tankvorgang initiieren. Das heißt, die Zapfsäule wird dann per App freigegeben. Sie können direkt tanken und nach dem Tankvorgang, wenn Sie die Zapfsäule wieder einhängen, wird automatisch der Bezahlvorgang abgewickelt und Sie können im Prinzip direkt weiterfahren.
[Foreign language] Der Vorteil für den Kunden, direkt an der Zapfsäule zu zahlen, ist in erster Linie Geschwindigkeit und Bequemlichkeit. Natürlich wollen wir den Kunden nicht als Shopkunden verlieren und das wollen wir dadurch gewährleisten, dass wir die Kundendaten nutzen, um den Kunden gezielt zu bewerben.
Die Angebote, die wir den Kunden machen können, können wir natürlich auf die Bedürfnisse und auf die Situation des Kunden ganz gut zuschneiden. Das heißt beispielsweise, wie lange er schon gefahren ist, kann man da mit einfließen lassen oder was für ein Auto er fährt. Die Wetterinformationen natürlich kann man mit einfließen lassen. Wenn es gerade geregnet hat, kann man ihm eine Autowäsche anbieten.
Wir werden also keine langweiligen Massenpromotions machen, die Kunden in der Regel sowieso nicht haben wollen, sondern wir können die Angebote genau auf die Bedürfnisse der jeweiligen Kunden zuschneiden. Wir befinden uns erst ganz am Anfang der Digitalisierung von Geschäftsprozessen und der Bereitstellung von Fahrzeugtechniken, um das Kundenerlebnis zu verbessern. SAP ist ein Partner, der die entsprechenden Kompetenzen mitbringt, um hier sehr schnell innovative Lösungen für die Kunden anzubieten und hier weitere Dienstleistungen zu realisieren, die wir uns vielleicht heute eben noch nicht vorstellen können.
All right. Big picture. We believe that integration and intelligence will solidify SAP's market leadership for the next generation. We will win with integration front office to back office because we have SAP Cloud Platform to connect SAP and non-SAP innovation. We will win with intelligence because we have SAP Leonardo to sense every input and predict every outcome. This is what leads me to the expansion of SAP HANA. What started out as an idea, an incredible invention, is now a global movement, and we have clear opportunities to accelerate HANA. For example, full-use HANA is the only viable database to enable the benefits of the Intelligent Enterprise. HANA supports multiple data models, data virtualization, and extended capabilities such as Graph and Geospatial. HANA also represents a broader paradigm shift in data management. Historically, moving the data was the slowest part of already slow legacy database systems.
Now HANA can work with multi-source data without ever moving the data, thereby driving record-breaking speed and security. HANA has become the control tower of the Intelligent Enterprise. Ladies and gentlemen, it is a HANA world by any measure. HANA is ours. In summary, today we talked about a new strategy for CRM with SAP C/4HANA. A new integrated applications experience with SAP Intelligent Suite enabled by SAP Cloud Platform. An expansive new data management agenda with SAP HANA. I'll read you a quote from one industry observer. Incidentally, not always a big fan. He said, "SAP's product lineup has never been stronger. SAP has transformed itself to a fast-moving and market-driven leader." I guess the question now is really for you, are you as fired up and as excited as we are? Come on, let's go, SAP.
Dear shareholders, in service to our customers, SAP is a better company than we once were, but we're not yet the company we aspire to be. We're working hard. We have the best engineers in the business software industry, and they are building next big innovations. We have dedicated sales and services professionals putting innovation into action. We're focused on supporting 25 distinctly different industries for businesses of all sizes. On topics like data privacy, we are the first company in our industry to be certified by the British Standards Institution as GDPR compliant. Our ecosystem is expanding with new partners entering, while the longstanding partners steadily grow their SAP practices. All this combined should give you enormous confidence in SAP's bright future.
In closing, I'd like to share with you a personal conversation, very similar to the one I had with the top 250 leaders that met at our headquarters in Germany with me a few weeks ago. First, I told the leaders that trust is earned in drops but lost in buckets. Trust is earned one drop at a time, and it comes slow. You make all kinds of deposits in the trust account, and then one wrong thing happens, and it can disappear in buckets. It can be very hard to get back. That's why we need to do things the SAP way with honor, class, and integrity. When we make mistakes, we admit them so we can fix them. You may have heard about the situation in South Africa. Unlike other companies facing similar challenges, SAP responded with transparency.
We removed the individuals whose actions were not consistent with our ethical standards. We strengthened our compliance policies to prevent similar distractions in the future. Sometimes customers actually expect more from us, and we must always redouble our focus on their happiness. One example involves the pricing of indirect usage of products. Customers were not happy with pricing practices by any software company in the industry. They grew frustrated when companies conducted audits to reveal more licensing fees were owed. SAP led the industry as the first company to introduce a new way with new pricing options. We reformed how we conduct audits. Our customers will never be surprised by anything we do. I also told the leaders in good times or tough times, we must always find a way. Our will must always find a way.
We must commit ourselves totally with perseverance and discipline to live up to the world's expectations for SAP. We must take accountability to lead SAP into a new decade of profitable growth. This is what you expect from the market leader that you helped build. In the end, the true measure of a leader is not what we take from this world, it's what we give it. Let's watch one final video in this regard.
[Foreign language] Tsunamis, Erdbeben, Naturkatastrophen, die den Menschen alles nehmen. In Krisensituationen müssen Hilfsorganisationen wie die Welthungerhilfe schnell reagieren, um Leben zu retten und unter immensem Zeitdruck Personal finden, mit den benötigten Fähigkeiten einer passenden Persönlichkeit und der entsprechenden Erfahrung.
[Foreign language] In Krisensituationen ist es wirklich extrem wichtig, schnell die richtigen Leute zu finden. Sie müssen in einer sehr herausfordernden Umgebung etwas bewirken können.
[Foreign language] Die Mitarbeiter der Welthungerhilfe sind weltweit aktiv, egal ob es sich um Nothilfe handelt oder um Projekte für die langfristige Entwicklung. Nach Naturkatastrophen müssen Nothilfeteams innerhalb von 24 Stunden bereit sein, in das Einsatzgebiet zu fliegen. Zu diesem Zweck hat die Welthungerhilfe einen Emergency Staff Pool aufgebaut, der auf SAP SuccessFactors Lösungen basiert.
[Foreign language] SAP SuccessFactors hilft uns, schnell die richtigen Spezialisten für schwierige Einsätze zu finden. In Krisensituationen benötigen wir zum Beispiel Logistiker, Leute, die die Nahrungsmittelversorgung sicherstellen, oder Experten für den Aufbau von Camps. Leute, die Erfahrung bei der Koordination mit den Vereinten Nationen haben.
Menschen wie Mahamadou Issoufou Wasmaia, der für die Welthungerhilfe auf Haiti arbeitet.
Der Vorteil von SAP SuccessFactors: Wir können sehr einfach prüfen, ob Kandidaten die Kriterien erfüllen, was in Krisensituationen sehr wichtig ist. Wir haben zum Beispiel zwei oder drei Auswahlkriterien und bekommen dann automatisch die Kandidaten angezeigt, die am besten für die Aufgabe geeignet sind. Der Prozess ist schnell und transparent.
Haiti, eines der ärmsten Länder der Welt, zweifach getroffen von einem schweren Erdbeben und Hurrikan Matthew. Wie in vielen anderen Ländern leistet die Welthungerhilfe hier langfristige Unterstützung, um den Menschen dabei zu helfen, ihr Leben neu aufzubauen.
Kosteneffizienz ist für uns als Nichtregierungsorganisation sehr wichtig. Wir sind durch Spenden und öffentliche Zuwendungen finanziert und SAP SuccessFactors hat uns dabei geholfen, einen sehr transparenten und schnellen Bewerbungsprozess zu realisieren.
Optimierte Bewerbungsprozesse ermöglichen es der Personalabteilung, allen Bewerbern zu antworten und den exzellenten Ruf der Welthungerhilfe zu wahren. Die Implementierung von SAP SuccessFactors ist jedoch nur der Anfang einer größeren Transformation bei der Welthungerhilfe.
Die digitale Transformation ist ein zentraler Erfolgsfaktor für eine Hilfsorganisation wie die Welthungerhilfe. Unsere Mitarbeiter sind unsere wichtigste Ressource und wir wollen sie mit effizienter Technologie unterstützen.
Um so das Ziel Zero Hunger wherever we work by 2030 zu erreichen und die Welt zum Besseren zu verändern.
Ladies and gentlemen, here we see the ultimate truth of SAP. It is through the work of our customers that we help the world run better and improve people's lives. I began today with the world's greatest challenges. We are fearless in the face of those challenges. SAP will be the last to accept the status quo. SAP will be the first to change it. The headlines say some countries are retreating from the global community. Once again, that's not the SAP way. We are proud to represent Germany on the world stage. We are honored to advise heads of state on the biggest topics of our time so our company can make the biggest difference in society. Ladies and gentlemen, this is your SAP. This is where business and technology come together.
This is why 91,000 colleagues stand so proudly behind the motto and the maxim, "The best run SAP". [Foreign language]
Thank you very much, Bill, for these great insights and this fantastic outlook. I am now calling for speakers to item one and all other agenda items. That is to say items two to nine in the invitation to the meeting of which copies are available in the meeting rooms and which also contains the management's proposals. Regarding item number two on the agenda concerning the appropriation of retained earnings, please note that the executive board and the supervisory board have amended their proposal as advised in the meeting invitation to reflect the change in number of shares entitled to dividend. However, the proposed dividend of EUR 1.4 per share that qualifies for dividend has not changed.
The executive and the supervisory boards therefore now ask that the meeting resolve as follows, that the retained earnings of EUR 10,029,819,971.7 from the 27th fiscal year reported in the financial statements be applied as follows, that a dividend of EUR 1.4 be paid out for qualifying non-par value shares, which makes EUR 1,671,109,829.2. That EUR 0 be appropriated to other revenue reserves, and that the balance of EUR 8,358,710,142.5 be carried forward to the new account. The text of this amended proposal is also available on the speaker's desk. I hereby now open the discussion section of the meeting, which I will take as a general debate on all agenda items. Well, as in the previous years, I would now give the floor to Ms. Jella Benner-Heinacher. Please take the floor.
Thank you very much, Mr. Chairman.
Ladies and gentlemen, my name is Jella Benner-Heinacher, and I represent the Deutsche Schutzvereinigung für Wertpapierbesitz Düsseldorf, DSW. It's tough after so much enthusiasm, coming back and getting back to the basics, because shareholders are interested, especially in one thing, namely the share price and the dividends. Of course, the outlook that you presented to us is also relevant to us. We just saw it on the chart on the screen, ladies and gentlemen. On the 1st of November 2017, the share price of SAP was more than EUR 100. Then there was a temporary disappointing dip of the share price. The good news is we are back on track. Since the results for the first quarter have been published, the world of SAP is okay again from the shareholder's point of view.
We are back on the route towards success. The share price today is at more than EUR 96. Here too, we're on the right track, the right track towards 100+. For that reason, ladies and gentlemen, I cannot help but express some words of praise, which are quite abundant this year even. Well, in previous years, I kept complaining a bit at this point about the amount of the dividend. Even here, we are now toning down our criticism because now the proposed dividend is EUR 1.40, and we've got an overall payout ratio of 41% already. Here again, ladies and gentlemen, we're on the right track, namely towards a payout ratio of 50%. The first quarter of the year, ladies and gentlemen, has restored our faith in the SAP summer fairy tale 2020. Indeed. The core business was strong.
In the cloud business, we've seen fast growth. The good news is that the margin is now on the rise again as well. In operating terms, it's all good news and records. As we have just heard, SAP S/4HANA has really turned into a true success story. SAP's product diversity is something which not many others can offer. Bill, you've just mentioned the new outlook with SAP Leonardo, the new platform offering higher connectivity of tools, goods, and factories, IoT. That sounds great. That sounds highly enthusiastic. I'd like to know, when will these products also be available and ready to be sold on the markets? How and with whom are we going to sell and distribute those products? Who will be our partners in this regard? Well, partners, as we've learned during the last few years, partners are important.
We've got more than 16,000 of them all over the world. They also include Apple and Google. Since November 2017, SAP has even intensified its partnership with Microsoft, amongst others, in the area of cloud computing. Here, once again, I would like to ask you, Bill, what does this mean specifically? What do we expect in this regard, for example, in terms of the sales volumes and the profit contribution? We are also quite optimistic when we hear, ladies and gentlemen, that SAP intends to invest another EUR 2 billion for the company by the year 2020. Here, once again, I'd like to know, what is this funding specifically going to go into? What is your list of priorities for these investments?
You can see, ladies and gentlemen, there are lots of good and positive aspects, but I'm glad to find the one or the other detail where things could even be improved further. One thing is customer loyalty. This is certainly an area where we can catch up, and that's usually measured by the Net Promoter Score. The goal you had set for yourselves was to reach a score of 21%-23% last year. What you achieved at the end of the day was 17.8%. That is something where you unfortunately failed to reach your goals. The new goal for 2018, therefore, is still the old one. Again, 21%-23%. When it comes to customer loyalty, there's one thing that plays an important role. That's the fee model of SAP.
In the past, the intransparency of the SAP fees has been at the focus of much criticism. That's why it was also right to tackle this issue and to set up a new pricing model together with our customers. Therefore, my question to you is, now that the price model is up and running, what is the impact of this onto customer loyalty? What is the customer's response to this new pricing model? Internal growth, ladies and gentlemen, that's always one thing. External growth, that is takeovers, that's the second part of it. Last summer, Mr. Mucic, you said there is no need to take any action and to purchase any further companies. Something similar we had also heard about Salesforce. Then there were only smaller takeovers in 2017, Gigya and Abakus. I mean, that was it.
Ladies and gentlemen, surprise, in late January, we then heard the announcement of the takeover of the American cloud provider, Callidus. We really would call it a surprise because at $2.4 billion purchasing price, it is not peanuts, as some people call it, that price, a price for a company which as far as I know, doesn't generate any profits, but still we're paying a premium of 28%. However, I've also learned that in this industry, nothing's for free and nothing's inexpensive, and others, they pay even much higher prices. Callidus, ladies and gentlemen, that is something which will certainly massively influence the future of SAP. For that reason, I'd like to hear about some more details in this regard.
You had told us that the transaction would be closed in the second or the third quarter, you already managed to close that deal on the 5th of April. Chapeau, Mr. Mucic, that was record speed. Callidus is Latin, it actually means smart, clever. That's quite fitting, isn't it? It's quite appropriate for SAP. It's also appropriate for our region here. Tell us, what exactly did you buy there? It's software for sales management, that means we are once again on the trails of Salesforce. Bill, you've just mentioned yourselves. Your most important goal is to become the number one in CRM, customer relationship management. Therefore, my question for you is the following. We've bought Callidus. What's our current market position in CRM? Where do we now stand after having taken over Callidus? How is our competitor Salesforce doing?
How long is it going to take to integrate Callidus? What exactly is this synergy that you want to tap into? If you look at SAP's competitors, ladies and gentlemen, we can be satisfied in declaring that we are doing better in organic growth, definitely better at least than our competitor, Salesforce. They keep taking over companies at a constant pace. They grow through external takeovers, but it's never a real bargain. Larry Ellison also recently said there are no takeover candidates in the market anymore, he invested EUR 6 billion to purchase MuleSoft. That's not a bargain either, isn't it? That's why my specific question for you, Mr. Mucic, the CFO, is wouldn't this also have been a good candidate for SAP? Especially as we already held a minority interest in MuleSoft. Did we sell it at a good price?
Wouldn't MuleSoft also have been a good candidate for us? Would it have been a bit too expensive for us? Well, ladies and gentlemen, digitalization, that's on the agenda of all DAX companies, basically. Now we're glad to have a new board member, a board member who is also responsible for digital processes, Christian Klein. He introduced himself. Congratulations, by the way, on your appointment. Now, for us, this sounds a bit surprising. This is a digital company, and we still need somebody on the board for digitalization. Once again, it seems that we've got to do some catching up. Mr. Klein, at SAP, you are now supposed to streamline and standardize sales processes, which once again, will take us closer to our goal as One SAP as the best-run company in the world. Finally.
My specific question for you is, where do you expect the greatest impact from your work, and how long is it going to take for us to become the best company in the world, the poster child worldwide? Now, back to our agenda, ladies and gentlemen. Let me briefly look back on to last year, because we had ended up in a dead end in terms of corporate governance. I remember very well, Professor Plattner, that investors massively criticized the compensation system of the board, and you did not really understand it. You said, "We did everything right," and that's why only 15.9% of shareholders voted yes in ratifying the acts of the board of management. I've got to say I'm relieved because I was worried that you might be somewhat resilient in accepting advice, and now I'm happy to see that this is absolutely not the case.
Quite in contrast, you swept the plate clean and now you really came up with a strong coup in terms of corporate governance. You really dealt with all of the important issues. Not only did you revise the system of corporate compensation. No, your compensation report has become much more transparent. You also disclosed the peer group. The discretionary leeway for the short-term incentive was eliminated, and you even integrated now claw-back provisions in the board contracts. Whenever you do something, you'll do it right, Mr. Plattner. That's not the end of the story yet, ladies and gentlemen. When it comes to the supervisory board, as you have just noticed when the candidates introduced themselves, well, we're also experiencing a massive change there. You're rejuvenating the supervisory board. You initiated the generation changeover and the proposal to elect Mr. Oswald. It's not really a surprise to us.
We had expected that, and probably you have thus already arranged for your succession in good time already. Well, one more thing that was criticized about SAP in the past was diversity. It didn't really work out well with women and their strong positions in a company. Now, once again, Mr. Plattner, you've done it right. We used to have two women on the executive board and six on the supervisory board. Against this background, ladies and gentlemen, when it comes to item number seven of the agenda, elections to the supervisory board, we are going to support all of the proposals that have been presented. Now, I've got to admit gradually, I'm becoming a bit worried. You're becoming the A student, Mr. Plattner, in terms of corporate governance, something you never wanted to be. Honestly, I think it's great.
Today, the board compensation system is also something we're going to vote on. We, DSW, will also vote yes on this item, although with a bit of a grain of salt. That's the total amount of compensation, EUR 22 million for 2017 for the CEO. Here I've got to be honest. From my point of view, that still doesn't fit into the overall German landscape, thus, this might be the only point of criticism we might voice. It doesn't fit into the German landscape in terms of the total amount, that is not even the maximum compensation that is possible for the CEO. For the short-term incentive, we only achieved 88%. With the LTI, we're below the previous year. That means the potential overall compensation might be much higher. I personally, I don't care.
I think Bill McDermott could just earn as much as he can, still, it has to fit into the overall landscape of our society. Ladies and gentlemen, ethical behavior, that's also what the annual report of SAP says. Ethical behavior is one of the basic pillars of this company. You've also touched upon this matter yourself, Bill. It's compliance. Here especially, you referred to the allegations in South Africa. Obviously, there has been a case of corruption. Allegedly, about EUR 7 million have been paid to some dubious sources. Apparently, each of these transactions was below the 15% threshold, which would have required a mandatory approval. You've responded, that's good. Once again, I've got some more specific question. What specifically did you change about the compliance system to make sure that a case like the one in South Africa cannot be repeated?
There's one thing we mustn't forget, ladies and gentlemen. It's also a massive reputational damage which SAP has suffered. One thing you didn't mention were the problems which we read about in Oman and the United Arab Emirates. There are investigations about violations of anti-corruption and embargo regulations since they've been enacted by Mr. Trump. Here, once again, I'd like to know, which consequences have you drawn in these two countries? How can such cases in these countries be prevented in the first place? Or would it be best not to do any business in those countries in the first place? Ladies and gentlemen, 2017, that's been the year of transition, the year of transformation at SAP, it really brought about the change in our operating margin.
For that reason, we are confident, ladies and gentlemen, after looking at the first quarter numbers, we are confident that now it's all going to pick up massively for the overall year 2018. Bill, you said that a market capitalization of EUR 300 billion, that would be a reasonable goal for SAP. Currently, ladies and gentlemen, our market cap is slightly above EUR 100 billion, which makes us the number one within the German DAX 30 companies. We're dreaming of tripling our market capitalization, the share price. If you break this down onto the share price, if you assume that we currently have got EUR 100, that means we are talking about a share price of EUR 300. Here I really would like to know, Bill, when will we get there? Is it also going to be 2020?
I think you hadn't give us a precise timing, but you can do so now. If we reach EUR 300 of a share price in 2020, well, I wouldn't say no to that, ladies and gentlemen. Well, it sounds like a pie in the sky. I often thought so when I was standing here because it's part of our German nature to be somewhat skeptical. You're somewhat stunned by the enthusiasm and the excitement, but you cannot escape it, really. I've been up here on this podium for many years, and I've got to tell you promised a lot, and you always delivered. For that reason, ladies and gentlemen, I believe that the future of SAP, well, it's really the summer fairy tale 2020 coming true.
Really the future looks good as the first quarter numbers have confirmed, and the growth forecast has been raised even further also thanks to the new company taken over. I tend to be rather skeptical and cautious, but now I'm almost enthusiastic. I call upon you, deliver in 2018 as announced, and we, the shareholders, will have nothing to complain about in terms of share price. Thank you very much. Thank you very much, Ms. Benner-Heinacher. Little note, the market capitalization in euros is EUR 119. Almost EUR 120 billion. That would have been more appropriate than just saying slightly above 100. Well, it's only 20%. This brings me to the next speaker, Mr. Markus Kienle from Schutzgemeinschaft der Kapitalanleger.
Professor Dr. Plattner, Mr. McDermott, ladies and gentlemen of the management, dear shareholders. My name is Markus Kienle.
I'm the member on the board of the Schutzgemeinschaft der Kapitalanleger. Mr. McDermott, you and your team, once again in the past fiscal year, you achieved the goals that you had communicated. Once again, in terms of IFRS and non-IFRS bases, you were able to increase sales and profits. Based upon IFRS, we've got a return of 15.8% after taxes, which is also a slight improvement over the previous year. Well, I'm not going to be as enthusiastic as the previous speaker about the payout ratio because you're staying at 41% as in the previous year. Now, ladies and gentlemen, this is still within the overall guidance of 40%-60% of the shareholders associations. Nevertheless, this payout ratio, as I've told you before, is rather below average for such a mature company as SAP.
Now, in the sustainable manner, we do expect a payout ratio of 50% that is splitting the profits 50/50 between the shareholders and the management. That's something which we would consider appropriate. When do you intend to reach a payout ratio of at least 50% of the annual profit for the year? Now, let me stick to that return on equity. Now, for the minority shareholders, it amounted to 122.58% for the previous year, whereas the return on equity for us shareholders only is 15.8%. Now, what's the reason for this massive difference in return on equity? Now sales revenues, IFRS and non-IFRS based are very close to each other. However, when you disclose expenses, there's a major difference. Non-IFRS expenditures are 10% below the IFRS expenditures. Nevertheless, I'd like to clearly point out that the costs have increased stronger than revenues.
Last year, when I asked that question regarding the annual financial statements 2016, you responded by saying that this above increase in growth, in cost is mainly due to the expansion of the cloud business, and that as of 2018, you would already expect a significant improvement of the margin. Comparing the past fiscal year, 2017, to the one of the year before 2016, where we already had suffered a major slump in margins, however, shows a further deterioration of the margin, although the first quarter now seems to promise a recovery. Although it's been just one quarter of the year 2018 and the future is still uncertain. Do you still stick to your forecast, namely that in the current fiscal year 2018, we can already expect a significant increase of the margin and could you please also give us your target margin for the year 2018?
Our company, ladies and gentlemen, as the previous speaker has said, is on a competitive, you could say testosterone-based growth track. At some point one can also ask, when have we reached a balanced state in our business and our business model? In that balanced state, what would the overall margin then be? The financial result, which has increased by more than 700%, allowed you, based upon IFRS, to increase earnings before tax by 3.35%. However, in the annual report regarding the financial statement, you also declare that this was impacted by special effects such as the sale of equity titles of the Sapphire Investment Fund. What does this mean, equity titles, actually? The effective tax rate has been increased from 25.03% to 19.03%. It is six percentage points IFRS-based and non-IFRS-based. What do you actually mean by effective tax ratio?
What are the main reasons for this clear reduction of the effective tax ratio? What is the effective tax rate that you're expecting in the long run? What is the impact of the U.S. tax reform onto the effective tax rate? Digitalization and in their continuation then also artificial intelligence is part of the core business. Actually, I would even say the DNA of our company. Using AI seems to be the logic next step in further optimization as part of digitalization. What revenues and profits do you expect in which product areas by using AI? Can you give us specific industries or jobs which are kind of the pioneers and which will most benefit from AI, at least in the early stages? Mr. McDermott, in your letter to the shareholders, you've written that there are also aspects of AI which are beyond human control.
That is not really comforting to me. What exactly do you mean? What are those areas? What have you in mind when you're writing this? AI will be a key driver for the future, and for this reason, the following questions arise. Who has got the responsibility for AI on a board level? What overall investments do you expect up to the year 2020 for development and further development of artificial intelligence? Professor Dr. Plattner, you openly report on two compliance issues which you have handled in a very professional manner, as we've heard. One of these issues also has got an external trade consequence, which is probably inevitable considering the current ups and downs in economic sanctions. Could you please be more specific on that case? Which regime or which rules do you consider when there are different international rules and regulations?
The current proposals of the EU Commission President Juncker has even fired up that discussion because he said we want to force companies to resist U.S. sanctions. How exactly he wants to do that, he did not elaborate on. The U.S.A. exiting the Iran contract, is that going to impact our business? What specifically is the impact in amounts? At last AGM, you also talked about the compensation model. We can clearly say that the complexity, especially in terms of the discretionary decisions, has been reduced. However, the current compensation model still is not really simple. I think it can still be improved further if you just compare it to the systems of other DAX companies.
In our legal view, it is still unacceptable to implement a variable compensation component based upon just one year of performance, and you still have the PSUs and RSUs for the individual compensation component. As far as we know, the RSUs are not success-based, but are just a kind of given. How can the sustainable development of the company be promoted on the basis of the RSUs? You still seem to find pleasure in establishing anachronistic control regulations, which are hardly even used anymore in American and British companies. The current compensation system, of course, also includes as a central element, old age prevention for the board members. What is the old age provision level which is thus insured?
If I look at the compensation system, and if I understand it properly, Mr. Plattner, then the LTI component is not paid out on a pro rata basis, but in the year that the vesting period expires. At the same time, you also introduce clawback provisions. Which independent area of application do these clawback provisions have in the current compensation system, which is not already covered by the existing legal instruments? What additional benefit do we have from the clawback provisions, for which specific cases? Reading the supervisory board report, we can see that you also talk to specific investors about the compensation system, and you reported also on this orally, although in a more general way. These contacts with investors, ladies and gentlemen, are currently considered a progressive tool of corporate governance. Nevertheless, their legality under German corporate law is at least at a dispute.
Experts even believe that such contacts are even illegal. The question is, when we talk about the compensation system, that might not be that obvious, that problem. However, especially, there's a problem in terms of insider know-how when we talk about strategies, personnel planning, future changes on the executive board, for example. Which specific topics did you discuss with which investors, Dr. Plattner? How can you make sure that you don't run the risk of disclosing insider-related facts and data? Please don't tell me what I've heard a few weeks ago at the AGM of another major DAX company, which said, "I've been the CEO of a DAX company for so many years that I know the insider law inside out." That is wrong, and it's also negligible. There's a permanent coming and going on the supervisory board.
Out of the eight shareholder representatives, four, that means half of them have resigned before the end of their term, including Mr. Snabe, which is unacceptable from our point of view because he didn't give us any reasons. For which reasons did these four candidates now resign early? Out of the four candidates proposed, Diane Greene is in charge of the cloud business, one of the companies of Mr. Gerhard Oswald has got a consulting contract with Google. Isn't there a kind of conflict of interest with Ms. Greene considering her work for Google? What is your view on this? The consulting contract of Mr. Gerhard Oswald's company with Google, is that going to be continued once he's been elected to the supervisory board?
We felt that it's always been a special criterion of quality of the auditor of this company, that this auditor did not render any non-audit services, only to a very small account. We can also only see fees for the year-end audit on the bill. However, if you then take a closer look at the full report and the audit opinion, we can also see non-audit services. Are these costs that are billed there still costs which would be covered by audit? Here are my recommendations. We are going to support the proposal for the appropriation of profits and also the ratification of the act of the members of the board of management. We are also going to support the proposals for the new candidates. This also applies to Mr. Gerhard Oswald.
Usually, however, a three-year cooling-off period is required, we will still support Mr. Gerhard Oswald's election. Although his cooling-off period has only been two years. This also applies because he was not proposed for supervisory board immediately after he left the executive board, he at least accepted that two years cooling-off period and just entered into a consulting contract with SAP. In spite of massive improvements, the proposed compensation system will not be supported by our association, the SdK. We still believe that this model is still too complex, it still contains variable compensation elements with a one-year vesting period and also change of control clauses. Based upon the current information we have, the proposal for the election of the auditor cannot be supported by us yet.
If, however, the contradiction that I have identified between the notes and the audit opinion can be reconciled and explained to us, we are also going to support that proposal. The reauthorization of buyback own shares is not supported by us, because we prefer to pay out higher dividend rather than buying back shares. Therefore, we think it is obvious that before buying back own shares, a satisfactory and appropriate payout ratio has to be achieved. For companies such as SAP, we think that this adequate payout ratio is rather 50% and not 40% or 41%. If the buyback of own shares serves the dynamic and flexible capital allocation optimization in terms of equity, we also would consider it possible to approve that item. Approving the proposal for rendering the term of the supervisory board members more flexible is something we are going to support.
Ladies and gentlemen, it's now our responsibility to get proper explanations from the Supervisory Board and Executive Board members if any deviation from the regular term is asked for, because then we have to see whether this is properly substantiated. Ladies and gentlemen, we'd like to thank all of the employees and the Management for the excellent results of the fiscal year 2017. I'd like to ask the Management Board to pass on our congratulations and gratitude to all employees. Thank you very much for your attention.
Thank you, Mr. Kienle. I now have the list of participants of the capital stock of the company of EUR 1,228,504,232, divided into just as many shares. 884,890,559 shares of the same number of votes are represented here, which is 72.03% of the capital stock. For 538,167 shares, votes have been requested by mail. They will later on be taken into account when determining the voting outcome about the proposals of the administration. Hence, 885,420,726 shares are either present or represented by voting mail, which is 72.07% of the basic capital. I'd like to invite the third speaker, Mr. Hendrik Schmidt.
Thank you very much. Professor Plattner, I would have joined you on stage had you asked me, but I think it's rather crowded on stage, so let me stay down here.
Mr. McDermott, Professor Plattner, ladies and gentlemen of the Supervisory Board, Executive Board, and shareholders of our SAP. I represent DWS, one of the biggest European fund company. We hold more than 5 million shares in SAP, which I'm representing here for the first time also on behalf of our clients. As a long-term oriented responsible investor, we are obliged to act in the best interest of our customers, which includes critical discussions about strategy, major influential factors, and corporate governance with our customer. The last item also is an essential point of contact with the Supervisory Board, and unless, or contrary distinction to what Mr. Kienle said, we do so bearing in mind that we are not going to exchange insider-related information. We are professionals enough to know that. We heard about the development of the business year.
Before we join in the exoneration, I'd like to talk about a few aspects. Development of the share price. Over three years, we have an increase by more than 60%. DAX over the same period managed merely 29%, so we can be satisfied. The past 2017 fiscal year, well, we see +12% of the share price compared to the DAX. So they managed to this. More room for improvement since the beginning of the first quarter, nearly 3%. More is possible, but we've heard a lot of positive information about that, and we'll keep track of the further share price development. Dividend development. The result of the past fiscal year made the administration to propose EUR 1.40, and to adapt the dividend policy for the near future, 40% or even more development we would approve.
That development we hope will be just as sustainable and will reach the 50% mentioned. A few ideas about the performance: 6% increase in revenue, EUR 3.7 billion were due to cloud subscription and support revenue, EUR 17.8 billion software license and support, EUR 3.9 billion to services. These results reflect a continued robust demand for the SAP-developed software for industry. The SAP HANA platform and the associated products are likely to continue to support this positive trend. But the development of these solutions also means high investments, especially high growth in cloud-based solutions, which has had a negative impact on margin development. The operating result in 2017 improved by only 2% to EUR 6.7 billion. The operating margin dropped to 28.9%, 2% roughly.
We think it's most important for the further share price of the SAP SE that the traditional software license business is kept stable and investments of customers in cloud-based solutions, growth rates of about 30%, will be continued and expanded. Stable development of maintenance revenue should be borne in mind. Negative margin development, where there was a sign for stabilization in the recent past, there is to be a turn of affairs. In addition to persistent cost discipline, the revenue mix would be improved to have a positive impact on margin development. Now for governance. We are long-term-oriented investors. Mechanisms of corporate governance in our mind are major components of our assessment, and they are also reflected in our guidelines. We base ourselves not just on national regulation and policies, but also international best practices. Here, the Supervisory Board plays a decisive role representing our interest as owners.
What's relevant in our case is that all Supervisory Board members realize what their mandate implies and objective indicators, participation in the meetings of the Supervisory Board and its committees. In expanding the governance roles, SAP introduced that point to improvements in the governance area also include the D&O insurance, and also the rules of procedure of the Supervisory Board are now available on the internet. Progress which I'd like to praise. The compensation system, which is now to be discussed for the Executive Board, is progress indeed, and we welcome the effort made in this respect. Professor Plattner, I'm sure this was quite an effort for all parties concerned, but I think you can be satisfied with the outcome. We're pleased to note also that critical aspects like the clawback mechanisms, which we as investors now consider relevant and demand, has been entered into the existing system.
In your letter, Professor Plattner, you transparently and understandably answered a number of questions, a kind of transparency that convinces us. In terms of content, however, there's one point where our opinion differs. The non-financial key figures. SAP is a model case, making non-financial figures transparent and including them in corporate governance. Page 243 of the annual report tells this in a convincing sense. But also the non-financial key factors play a role, and they should also be taken into account in the compensation of Executive Board. We must take a decision on this pay system, which must be in the best interest of our clients. We therefore recommend to the Supervisory Board to at least expose in the reporting about the compensation paid out to make the non-financial aspects transparent. Prospective planning of successorship, we think is a major contribution to long-term assurance of the success of the company.
I'd also like to emphasize the competencies represented in the supervisory board. The qualified descriptions of candidates, which we heard here today, are a good addition to the supervisory board, adding to its qualification, and we are sure that the supervisory board and its present composition will solve its problems. Mr. Schipporeit, I'd seen on page 20, is the financial expert. Now that Mr. Wucherer is going to leave, we need a new member. Would you tell us who will be the member of the audit committee and what candidates of the supervisory board would fulfill the qualifications under the German Stock Corporation Act? Now for independence. This major element about the critical control of management also serves to protect the interests of minority shareholders.
Independence of the supervisory board and its majority and its members, especially in the control committees and in the chair and on the audit committee, in our opinion, is a basic necessity. For us as DWS also, the term of mandate is one of the criteria determining independence, and members who are more than 10 years members of the supervisory board, we feel are no longer independent. We've nothing against these experienced supervisory board being available to the supervisory board, as long as 50 plus 1% are independent. We cannot accept what's said on page 19. Four members have been supervisory board members for more than four years. Mr. Oswald, at the beginning of next year, is a former executive board member who will become a supervisory board member of SAP. Let me ask what the consultation agreements between Mr. Oswald and SAP contain.
Mrs. Diane Greene and her connections with Google and others is something we'd like to see critically. What is the scope of the business relations between Google Cloud and SAP? What are the possibilities of Diane Greene to take decisions in business relations with respect to Google Cloud and SAP? How will the supervisory board handle any conflicting interests? Let me conclude. I would wish all members of the boards and the staff all the best of success, and thank all staff members who also in the past year have contributed to the positive development of SAP business. I'd like to expressly thank all retiring members of the supervisory board for their services. Wish all the best to new members. My organization will follow all proposals of the administration. Thank you for your attention, and thank you for answering my questions.
Which brings us to number 4 on the list, Mr. Hans-Martin Buhlmann of the Vereinigung Institutioneller Privatanleger. The floor is yours.
I'm number 4. I'm Hans-Martin Buhlmann, chairman of VIP, the Vereinigung Institutioneller Privatanleger. I represent 6,850,887 votes. Well, either the floor is too high or the desk is too low and maybe I'll fall into a hole in between. I've covered two or three shareholder meetings in my life with presentations by executive board members. Some of them had difficulties, others did not. Mr. Christian Klein, the way you presented yourself, just standing up here and saying, "I've been with the company for nearly 20 years, so I know it all. I think we're very good. We need to improve. We need clients. We must be scalable." Such a young man full of opportunities. It's fun to see you.
Mr. Christian Klein, should you replace Mr. Hasso Plattner once this has been taken, then the stock price will be past 300. We'll not have a low dividend of EUR 1.40, but a dividend of EUR 14, which is a good thing. Most probably, we'll argue about the quota for male members, given the many women. We are critical with the quota of male members. What will come after SAP HANA, Mr. Chairman? Will there be Hannes, the male version? Are you thinking of something? Have you prepared anything or is SAP HANA still usable enough and expandable enough? We'll remain modest, the executive board said. They even wrote it down. We'll remain modest. The compensation report. Well, I'll be coming back to this. We've brave, courageous dreams, but the margin of SAP was better some time ago. Now comes growth.
If you hadn't done away with the quarterly result of Q1 the way you did, I would have been afraid Revenue increases and the margin drops. That's no good. Is it not agreeable? The executive board said years ago, at the beginning, when I instituted cloud, I have less money, but as time goes on, earnings will be better. Now the margin dropped, and now you want to raise the margin back to yesterday's level. There must be a gap somewhere, like here between this panel and the floor I've been asked to step on to talk to you. Actually, the margin automatically would improve. All you do, and you do right, should be added on top. 25% growth. Incidentally, others managed that too. They grew by one quarter. There was one whose cloud business improved by more than one quarter. 150 million cloud users.
That's every German hand there, roughly, just to make it tangible. Ladies and gentlemen, we are receiving a dividend and a dividend policy. It says on page 10 of the annual report, "We would like to pay our shareholders." Who is we? Well, we are the shareholders who decide on the dividend at the end. You elaborated. No, 8,543 people have worked for this dividend being generated, and our gratitude to these staff members should be received by them and should be made plain. The company, SAP, is the most valuable, not the most expensive, the most valuable company on the DAX. Well, there are some less successful companies than the DAX. The most valuable German company. There's something to pass by. Alphabet, Apple, and Amazon are more expensive. Why they are more expensive by many orders of magnitude. Are they more valuable?
How could SAP be 10 times as valuable to be comparable with others in other countries, other structures? Is that impossible to imagine by you? Will it be the outcome of a Chinese investment? We have an executive board, which has been changed now. There are seven who work, and then there's the chairman and the person in charge of financial. Now, does every active executive board member have a business line to handle, or how has the organization been changed and what is the effect you have in mind? This is not for the executive, but for the supervisory board to answer. Somebody asked, I think Markus was it's a matter of artificial intelligence. Coming back to a margin. Artificial intelligence, this is like a machine becoming brighter all on its own. That does not entail any wage costs.
By enriching the artificial intelligence, I would become better and better, faster and faster. It's only true that the software author who writes that AI must be taken into account, how do you see this in terms of revenue? How can you point out AI in terms of a product? You can't hold it up for us to see, but you can comment. Item five. Here we'll be coming back to the open hand extended for peace, Mr. McDermott. Don't take it personally, when a double-digit EUR million amount is carried off here, I can understand how it's done. How an individual, an amount of so many EUR million, earn it in 365 calendar days. Have the money you worked well, then use it to do good deeds. Return part of it to society or to yourself.
You said that true greatness is shown not by what you take. True greatness is also shown by what you give. Your own words. This is at least what you should abide by. You can't work all by your own. You want to have partners, they cooperate with you to do something nice and something better. Partners, not just in Walldorf. They act all over the world, including South Africa. Happens. Now they operate worldwide. What do they do? Are they only selling, applying OEMs? Would you describe this as could also have an interaction with the price model that it changes, adapts. Partners must stay on the move so that they climb up in the course of their movement, revenue with partners, et cetera. In order for something to be done, you have to invest.
You spend a lot of money, you buy computer, set it up somewhere, put another one up in Walldorf. Maybe you'd like to move into a colder region. Maybe you need a computer in the U.S. because there's somebody who, first of all, wants to have a computer at home, U.S. first. How are you planning? How are you structuring this in your expenses and in also your earning of money? Yes, you also invested into the environment. You showed characters which I think are cardboard characters. That's no good for the environment. Maybe it's the new kind of stuff made by BASF that will decompose automatically. I said, "Maybe your wall socket will also spill out something green." It doesn't really happen.
You said, "In our green cloud, there will only be sun and wind." If there is no sun and there's no wind, will then there be no cloud? If the sky is cloudy and the sun doesn't break through, or the wind, what then? You need stability in power supply, and this may take more than sun and wind. How will you arrange for that? Whenever Mr. Buhlmann speaks into the mic, it's green speech. Wouldn't that be a marketing gimmick, doubtful with respect to reputation? The world has not become any easier. EUR 10 billion over the years. EUR 1 billion tax benefit. The nice gentleman, Washington. EUR 4 billion revenue in Asia. Asia is quite large. There should be more revenue. There should be planned faster growth than is now the case. Are we accepted in China, will the Chinese come to us soon?
We should have a better strategy to balance that out. I think somebody said that the operating result had been worse in 2017. Like that hole between my support and the pulpit. The performance per share improved by 10%. The other improvement is by 5%. Can you explain the difference? The operating result would also have to be broken down by shares. All this then associated with the seniority of the cloud business, which must produce a better result automatically. Financial performance was good. More could be said about it. We won't say. You bought Callidus Software, Dublin, but it says California, so it seems to be America after all. What about this acquisition? What are you doing and why did you enter this into the new organization of One SAP? I'm not going to enlarge on this.
Why did you invest now and what is the outcome? There's one other worry. Next week, there will be new rules about data protection. Data protection will be rearranged. Will it make us poorer or richer as SAP? Things that communicate with themselves, the Internet of Things. Will it make us richer or poorer from the point of view of data protection? These things, which let me pass by a gas station, and while I pass by, I pay my petrol. They know my requirement in advance. How do they know I suffer from migraine now? To make an offer in order to make me go into a shop and buy something. This spread of programmed world, the Internet of Things, SAP Leonardo, and whatever you call it, you'll have to invest something.
How do you calculate this type of investment, in particular, under the premises of the exaggerated data protection rules we'll experience as of next week? Mr. Wucherer, time is of the essence. Also applies to Mr. Haarmann. One would have to say two more sentences. You have benefited the company very much. We've discussed it in the past repeatedly. Shareholders must be grateful and are grateful to you. Mr. Plattner, these general meetings are also particularly charming because of the way you chair them. When you have an open dialogue with shareholders, I'm sad Hearing you talk only to institutional investors. Talk to all of them. We are there. We are the people. Carry on an open and frank dialogue with all of us.
I'll make room for that after having said that if everybody in this room will build on 1% of their shares, then there will be a good week and with a share price of more than EUR 100. Go on in this way. Thank you.
Thank you, Mr. Buhlmann. We will now continue with number five, and after that, we will start giving the first answers. I call Anna-Dorothea Polzer of the German Women Lawyers Association. Professor Plattner, Mr. McDermott, ladies and gentlemen, dear shareholders, male and female.
I am Anna Polzer, a member of the German Women Lawyers Association, DJB, and as a lawyer, I practice in Mannheim. The DJB still advocates equal rights and equality for women in all areas of society, which includes careers, the same opportunities for men and women, and our project, Shareholders Demand Equal Rights, supports that. We have attended more than 400 AGMs in Germany and extended our project to other European countries. The implementation of a binding quota for new Supervisory Board members was a real breakthrough.
Women now have nearly 30% of the mandates on Supervisory Boards in Germany, you are also proposing a by-election to fulfill the legal quota of 30%. The shareholder side will even have four women and five men next year. In view of the past, where reservations that there might not be enough qualified women, this is quite remarkable. On the Executive Boards, there are still no or not enough women. The share of women on the first two management levels below Executive Board is also low. Women and men are not paid equally for the same kind of work. The necessary development of an equitable policy of a company means that structural changes are needed. I have the following questions on your policies to the members of the Executive and Supervisory Boards. The first question regards the composition of the Executive Board.
The Supervisory Board must set a target for the appointment to the Executive Board. The DJB demands a quota of 40% for Executive Board members, you decided that in the future you will have two women, as before. Since you are extending the board to 9 members from 8, this means that the share of women is reduced from 25% to 22%. My question is, why do you not strive for a higher share of women on the Executive Board? My following questions relate to the first two management levels below the Executive Board. The Executive Board must set a target for the first two management board levels. You have opted for 25% for the second and 20% for the second level. This means that your targets are more ambitious than in the previous year. Why is this share lower on the second level of management?
Next question, how many women and how many men were raised to the first and second management levels last year? Please specify in absolute numbers and in percentages relative to the total number of people working in Germany in your company. On the corporate policy, I have a question. What do you do to make sure that men and women receive equal pay when they work at the same level? Your report that you introduced this year on the equal treatment of men and women, you are now submitting a report, as we have been able to see. Our question is, since January 2018, people with more than 200 staff, to make sure that they comply with the principles of equality, have to provide information.
How many companies of more than 200 employees are there, and in how many companies do we have how many male and female employees who requested information? Who gave that information, the works council or the employer? Finally, a question on the introduction of monitoring and audits to make sure that people are paid equally. Are you planning to implement such a process? If so, please specify whether this system will be uniform across the group or will it be specific to each individual company, and whether that auditing procedure relates to all groups of employees in those respective companies. I'm sure that for this challenge, you have also found or will find an intelligent solution and also maybe set an example for others. Thank you very much for your attention.
Thank you, Anna-Dorothea Polzer. Can we now start answering the questions, Luka? Yes, we can.
I would take some of the questions first by Jella Benner-Heinacher, and maybe colleagues can answer some more of her questions. First of all, the priority of the investment in the SAP group. Yes, of course, we have to continue investing into innovations and into our solution portfolio to be able to maintain our strong position on the market. Some of the main priorities that we have in our portfolio are, of course, still investments into our digital core, into our flagship solution S/4HANA, where we're investing into on-premise and into the cloud solution. The application area is our absolute core business. Of course, we will make sure that through innovation, we will be able to maintain and enhance our leading position in the world.
Bill said in his speech also that the SAP Cloud Platform is important because it is a central integration and innovation platform for SAP, both for our ecosystem. It's of fundamental importance for that ecosystem, but also for our customers for seamless end-to-end process integration. Of course, we continue to build up our portfolio in the SAP Cloud Platform. Also SAP Leonardo, the innovation modules around IoT and machine learning, advanced analytics and other areas, blockchain, to name just a few, are also receiving strong investments. In addition to that, we're also investing into further competitiveness of our cloud line of business solution portfolio.
Solutions such as SuccessFactors, but also our customer experience area where our customers, we are bundling with Gigya and Callidus, our solutions, and we are strengthening our position there also organically and through investments to be able to attack in that area and to challenge the market leaders in those areas. You had a question about customer retention and the Net Promoter Score. There you had the question how the figures are supposed to develop further. These metrics, this is a scale from -100% to +100% in 2017. As you said rightly, we could, of course, report a new Net Promoter Score, but our target of 21%-23% was not quite achieved. This had to do, among other things, with the fact that within our group, in the case of one acquired company, we had to adapt the metrics, which we did last year.
Without that adaption, our value would actually have been higher. Nevertheless, of course, we want to report in a uniform way and according to our standards. It was important to us to harmonize those methods, even though that did have a negative impact on the Net Promoter Score given. What are we doing to ensure that in the future, our Net Promoter Score will rise? For one thing, of course, we're optimizing our communication with customers. We are working with our customers on commercial models and solutions, as we have presented in the area of pricing. We are also working on relationship management with customers as part of a Customer for Life program, which Jen and Adaire Fox-Martin with Michael Kleinemeier head to make this really seamless and especially with regard to our recurring revenues in the cloud and maintenance business. We are going for very high customer satisfaction.
All this based on a very close interaction and dialogue with our customers, which has always been important to us. You had a question about Callidus and the premium. Why was it a good acquisition? For one thing, Callidus is, and this is certainly something that's not true for all cloud companies, on non-IFRS basis, this is a profitable company. We expect in 2018 to have the opportunity to make a positive contribution to the operating result with Callidus, which is much more than many companies in our sector can boast. Strategically, it's an ideal acquisition. Why? Because we know Callidus really well. We have been using the solution internally for sales management and for order management. We also have an established sales partnership with Callidus, so we know that the cultures really go together really well.
We will then have an absolutely seamless solution portfolio in lead to cash. Maybe it wasn't really a small tuck-in acquisition in terms of size, but in terms of characters, and there's hardly any overlap, very high synergy potential on the solution level. You also asked about the acquisition of MuleSoft through Salesforce.com and whether this would have been a candidate for SAP. Whether we sold our participation at a high price or whether MuleSoft was simply a bit too big for us, too expensive. I can state on this, MuleSoft is actually an interesting name, because a mule is actually something like a donkey or an ass, and we really like racehorses, like Callidus at a very high price. Seriously, MuleSoft is a company that our Sapphire Ventures fund invested into early on.
For many years, we actually had a similar offering in our portfolio of the SAP Cloud Platform, so there was no interest to acquire. The Sapphire Ventures team, again, had a very good instinct here, and suspected that someone else would need such qualities at some point. We had a very nice profit from the sale, which had a very nice impact on our financial figures. We would have acquired a complete overlap, so it wouldn't have made sense. This candidate was never a real candidate. You asked two questions about compliance. For one thing, you asked what we did to prevent a case like South Africa from happening again, and how we can prevent damage being done to our image. Let me say a little bit about our compliance management system.
For a long time, we've had a very comprehensive compliance management system, which is based on compliance detection and information. Despite internal controls and an existing system, we cannot always exclude 100% that individual people circumvent control mechanisms or act fraudulently for their own advantage. This may, of course, have a severe impact on our reputation and business activities. The root causes of all cases of non-ethical or fraudulent behavior have been investigated and compliance processes have been improved to prevent further violations of our codes and standards.
In addition to reactive and control measures, we focus on preventive measures as the most effective means to prevent compliance risks or to lower compliance risks, providing training and setting very clear standards by the executive board to state what we expect in terms of ethical standards from our staff and demanding that they be complied with and to promote such behavior among staff members. We also expect our partners and suppliers to observe our high standards on integration and sustainability. I will come back to this in a minute. To make sure that this is done, we have a partner and supplier code of SAP which specifies this in detail. What did we specifically in the case you referred to?
Both in export compliance, and I'll come back to that in a minute, but also in our compliance organization in high-risk countries and at headquarters in Walldorf, we have stepped up the control groups and adjusted sales processes. There's a complete ban on provision commission business, and we are updating continuously our compliance programs to make sure that our staff follow and know our code. We are conducting trainings on a regular basis, and we have the compliance and integrity office with a team that ensures that this is adhered to. I wanted to respond to the question on the United Arab Emirates and Oman. You also mentioned corruption in the United Arab Emirates. We are not following any corruption cases, but possible violations of sanctions and export restrictions.
The Iran agreement, which was now terminated by Mr. Trump, means that we have a different situation, but violations can result in high fines or other measures, and we're currently investigating allegations that certain independent SAP partners may have violated SAP contractual conditions and sold in embargoed countries, SAP products, that is. These SAP partners probably did not adhere to the strict standards and embargo bans. An independent company, which however, SAP has very limited means to prevent activities by non-SAP companies violating these standards. We are still monitoring the situation and try to find ways to improve the situation. We are also looking at customers who may have been involved in sales to embargoed countries. The legal compliance and integrity office, in collaboration with a law firm, is investigating this.
In 2017, we voluntarily informed all departments about the measures, and we've taken additional measures to block any unlawful acts. We are improving our catalog of measures for export control. As I said, we are improving, among other things, our export control compliance team with another focus on high-risk countries. We are at the beginning of comprehensive and long investigations and countermeasures. Given the complexity and the large number of open questions, the risks can currently not be identified or quantified. Further information you will find under number 23 in the notes to the annual financial statement. Further, one remark. SAP Leonardo is a toolset for customer individual projects. It is not a standard software project or a box with standard software product. It is a supplement to the standard software that we sell.
To build software based on the most modern software tools we have, be it SAP HANA, be it analytics, be it machine learning or something else. These are not ready products. It is possible, however, that products are produced, and if the IP rights between the customers and SAP have been clarified, then these can be turned into standard products. It has been mentioned several times in the context of corporate governance, executive board remuneration. Ms. Benner-Heinacher mentioned $21.8 million remuneration in 2017 for Bill McDermott. I must explain what this means. This is the money for 2017. It is not his income, which consists of a fixed salary and the STI and LTI. That is EUR 13,167,000 and is more than EUR 800,000 less than last year. Why was this inflow so high, that additional amount? Because the LTI is doubly indexed.
One, in grant years, the LTI grant depends on the commercial success of the year under review, and then the LTI is granted in the form of shares. If the share price rises over the years and Bill McDermott has shares from 2012, 2013, 2014, 2016, and after four years when they are disbursed and the share price has doubled, then like you, long-term, long-standing shareholders, Bill McDermott has also made money. This is not the annual salary of Bill McDermott. It is the money that was accumulated through these long-term share program shares. May I ask the press, when they report about this, to report correctly on it, and maybe you want to contact the responsible department, Luka Mucic, to actually differentiate. We are happy that the SAP share price has gone up.
The executive board members who hold shares get a share of that. The fact that there is this waiting period is something we all thought was right, that they don't get the shares right away, but there's actually an allocation plan which runs over four years. This is something we all agreed with. Much for that. South Africa and corruption. I can only contribute because I have personal links with South Africa. My daughter has lived in Cape Town for many years. I've written an open letter where I apologized on behalf of SAP for what happened there, and I promised that from my position on the supervisory board, I would do what I could do that the executive board initiate investigations. These investigations are still ongoing, but it is actually clear what happened there, and measures have been taken by SAP as a response. Right.
So much for that.
Three questions from Mrs. Jella Benner-Heinacher. Beginning with When will SAP Leonardo products be ready for the market? How and with whom do you plan to partner regarding sales and marketing? Who are your partners? As Hasso mentioned, Leonardo embeds the intelligent capabilities into the breadth of the SAP portfolio. This includes intelligent capabilities like machine learning, IoT, and advanced analytics. Leonardo has actually been in the market since 2017, though many of its underlying products have been in the market much longer. Leonardo is built, for example, on the SAP Cloud Platform, which is a mature offering and already has thousands of successful customers around the world. Regarding partners, we are cooperating with other leading technology innovators. The idea is to deliver the most comprehensive portfolio to our customers. This includes companies like Google, Nvidia, and Amazon Web Services.
All of these were announced at Sapphire 2017 and are being leveraged by customers today. We're also working closely with leading systems integrators. These include Deloitte and Accenture, for example. What they're doing is they're building applications and accelerators on the Leonardo portfolio to deliver differentiating capabilities and additional value to our customers. The second question, and thank you specifically for this one, was, we have a dream of a threefold increase in SAP share price. When do you expect to reach this? Do you think the share price will reach EUR 300 billion in 2020? First of all, you know me, I don't set easy targets, the executive board of SAP doesn't set easy targets. We're a very ambitious group of executives. Please know that we're fighting hard and working hard for you.
While we're not giving a specific timeframe, we're certainly charging forward with this in mind. It's probably worth noting, we've done pretty extraordinary things before. Since 2010, that was the year you might remember Hasso appointed me co-CEO of SAP, we have tripled the market cap and, obviously outperformed the DAX. The increase has made SAP, we're proud to say, Germany's most valuable company. We're humbled by it, and we know we need to fight hard for it every day. Besides increasing the value of the company, we've also returned EUR 11 billion to shareholders through buybacks and the dividend, while also increasing the payout ratio. We're in very strong shape as a company. You've heard a lot about the huge opportunities ahead of us today. Digitization, artificial intelligence, reinventing CRM, expanding our ambitions with HANA among the focused areas. Your third question, which I also appreciate.
If you look back, you will find that when we have always delivered when it really mattered, you said always, and why would it be different this time? Thank you. We don't expect it will be different this time. There's clearly the potential to triple the value of this company. There's clearly the potential to do this. While we haven't put a timeframe on it, we believe that it is only a matter of time. Thank you.
Thank you both. Let me answer two questions from Frau Jella Benner-Heinacher. Your most important target is to achieve the number one position in customer relationship management. Now, you acquired Callidus. What's your market position in CRM? Where do you stand after the acquisition of Callidus? What about your competitor, Salesforce.com? We are very excited by the launch of C/4HANA. Even before we acquired Callidus, our customer experience and commerce division was growing faster than Salesforce.com. Acquiring Callidus and Gigya enabled us to strengthen the solution considerably to create excellent business opportunities for SAP. Salesforce revenue was $10 billion in 2017, making it the largest CRM vendor. Let's not forget that much of its solution and portfolio is now outdated. SAP has an immeasurable advantage in that its entire suite of applications Is integrated and its processes run end to end.
From the front office to the back office, connecting seamlessly. What's more, the CRM market is so large that there is plenty of money to be made even if you are not the largest vendor. The second question, how long do you think you'll need to integrate Callidus? Where and when do you expect synergies? We expect to be able to integrate Callidus much faster than was the case with any of our other acquisitions. Because we know Callidus well and have partnered with it for many years. SAP already uses some of Callidus products, which are adapted to our products. That makes the technical integration much easier. Callidus will be part of our C/4HANA organization rather than a separate entity, so we are aiming to integrate it completely. We expect to complete the integration by the first quarter of 2019.
As you expect, we prepared a business case for Callidus that evaluated the benefits. At this point, it's a little too early to put a value on those synergies.
All right. I've got two more questions by Ms. Jella Benner-Heinacher. The first question was about our new pricing model and customer satisfaction about it. On the first hand, it's important to understand that our existing price model, which is based upon the number of SAP users, will not be replaced. Now, in the age of digital transformation, however, it made sense to offer customers a supplementary pricing model. Now, we have observed that with new technologies such as IoT or machine learning, the number of machine access to SAP ERP systems has increased. With the new complementary pricing model, we now offer our customers legal certainty and planning certainty in order to master digital transformation together with SAP. Customer satisfaction. This model was developed together with all SAP user groups all over the world in order to give top priority to customer feedback from the very beginning.
For that, I would like to thank all of the SAP user groups for the great collaboration with my team. Your second question was about my role and which effect my work is going to have onto SAP. Now, we've heard this morning already which great chances in terms of growth and profit SAP has got. Now, that presupposes a high customer satisfaction. What customers expect from SAP are end-to-end processes. Especially in the cloud, it is of fundamental importance that from the sale of the software all the way up to implementation and use of the software, and also renewal of the contract, a uniform SAP experience is what customers have. That's one of the jobs of my team. The second task is to connect our 90,000 employees in the best way possible to scale and streamline the processes.
Which better way to do it is by using SAP systems. Thus, thousands of customers visiting us in Walldorf every year can thus experience how we set up an intelligent company. This can then also be a reference for our employees in sales, because then customers can see live and on-site which great opportunities arise through the use of SAP software. Thank you very much. Ms. Benner-Heinacher, you also asked about our alliance or partnership with Microsoft and the significance of that partnership on profit and also profit contribution. Now, as so often in our industry, we are competitors, partners, and sometimes customers at the same time, depending on which specific area of business you're looking at. Now, we compete with Microsoft in e-commerce business, where Microsoft offers their dynamic solution. When it comes to databases, we can also see definitely an overlap.
The SQL Server of Microsoft is a relational database which currently is otherwise but in the installed base of SAP. It is exactly that one which is now going to be replaced by SAP HANA. That is by a modern, high-performing in-memory database. The partnership with Microsoft against this background includes two areas. On the one hand, Microsoft itself specifically supports the migration of our customer base from the Microsoft SQL Server to the SAP HANA database. Of course, this also boosts our share price. Microsoft themselves will also integrate our SAP S/4HANA suite, and thus team up with SAP in this regard. So much for the competitiveness of SAP S/4HANA. In exchange, we as SAP make sure, if the customer requests so, that our solutions are installed in the computing centers of Microsoft, based upon Microsoft Azure.
The second aspect, by the way, is also part of our multi-cloud strategy, which makes sure that upon our customer's request, the SAP solutions are installed not only in SAP computing centers, but also at leading cloud infrastructure providers such as Google, Amazon, Microsoft. In the Asian market, we are also forced to do so by politics, here we are currently talking to Alibaba about a potential alliance.
Well, thank you very much, Bernd. If I am right, we have covered all of the questions of Ms. Jella Benner-Heinacher, I would like to start by answering some of the questions of Mr. Markus Kienle. On the one hand, there was the question of when do you intend to reach a payout ratio of at least 50% of the annual profit for the year?
Let me first start by telling you that we are absolutely convinced that our shareholders should receive their due share in the company's success. I think over the years we have moved into a very positive direction, which was always pointing upwards. In the year 2017, our previous dividend policy was updated, not too long before that, we had already done so. At that time, we had gone up to 35%, we're at least 40% of the net profit for the year after taxes. This percentage is something we want to maintain according to our current plan for the medium term. However, considering our goals to increase the margin and also to reach an above-average profit growth, this still can lead to a further attractive dividend policy in the future. Let me add some more comments on this.
In terms of dividend payout, of course, we have to thoroughly weigh the ways we want to use our funds. Top priority for our investments is still into organic growth, because this will only secure our strength and viability in the market, which is then the basis for future increases in profits, because that really ensures the viability of SAP. Secondly, SAP has always been on the cautious side, especially when it comes to financial liabilities. Here, we still pursue the goal of reducing and covering our financial liabilities in the shortest time possible. That is then followed by a paying out of a dividend. Other liquid assets are used for smaller takeovers. Then, of course, we also want to retain sufficient funds in order to compensate for potential economic fluctuations.
As a world market leader for business management software, we have to compare ourselves to leading U.S. groups in terms of the dividend policy. In this regard, we definitely can say that our payout ratio and our return obtained by the dividend is above the average. You had also asked about the minority shares and the return on equity for shareholders, you asked why there is a major difference between these returns on equity. Well, the answer is simple. Profit after taxes, which is to be allocated to the minority shareholders, indeed increased from a loss of €13 million to a profit of €38 million in 2017. This increase results from the Sapphire Ventures investment funds. The profits are allocated to SAP to a large extent, but not entirely, because the management of Sapphire Investment funds also participates in the profits.
Last year, that fund generated outstanding profits, which was partly also allocated to their management. You asked whether we still uphold the forecast, namely that in the current fiscal year, 2018, we continue to expect a significant increase of the margin, and you also asked us for the target margin that we are aiming for. Yes, that is correct. That is also in line with the outlook which we provided in the beginning of the year. After the first quarter, we even increased that outlook. This means that in spite of a slightly negative impact onto the margin resulting from the Callidus takeover, let me once again underline, it is not an impact onto profit because according to IFRS, Callidus is already profitable. Nevertheless, we still expect an increase of operating non-IFRS margin of more than half a percentage point after currency adjustments.
Then you had also asked when we are going to reach a balanced state in our company and the cloud-focused business, and you also asked about the overall margin within that balanced state of the company. Now here, we clearly underline that we expect for the next four years an ongoing, continuous improvement of our operating non-IFRS margin. Typical for the cloud business that in the early phase, you have to go through periods of drought, and then there will be an increase, but that increase will not end in 2018. We now have a possibility for scaling. In the year 2020, as our medium-term targets show, we already expect, once again, a margin of more than 30%, but then going beyond 2020, we will expect this to improve even further.
Honestly speaking, I hope that this balanced state of low growth rates in the cloud business is something we are going to reach as late as possible, certainly not in the next five years, because here we believe that double-digit growth rates will still be achieved. As long as this is the case, one can hardly call it a balanced state. If you reach that kind of balanced state in the cloud business, then usually in our industry, there is the next big hype, the next big new technology coming, which hopefully we'll also be able to benefit from massively. Against this background, any forecast about a long-term margin development in terms of a kind of annuity would not be really reasonable, which is why I would not even like to give it to you in the first place.
You also asked about the financial results and its positive development, and here there was also mention of a special effect through the sale of equity titles of the Sapphire investment fund. The question is, what is an equity title? I know this is a bit of a somewhat cumbersome term. Actually, these are just the interests held in publicly listed and not publicly listed companies, which were held by the Sapphire investment funds and were sold by them in 2017. There was a question about the effective tax rate. Actually, there were two questions. First of all, what is the effective tax rate, and what are the main reasons for that significant reduction of the tax rate in 2017? You also asked which sustainable tax rate we are expecting in the long run. First of all, the definition.
The effective tax rate is the ratio between the IFRS corporate taxes to be paid and compared to the IFRS profit before taxes. In 2017, that tax rate was 19.3%, which is clearly below the 25.3% of the previous year. The reduction results especially from one-off positive tax effects in the connection with an internal transfer of copyrights onto SAP SE, it's also due to the tax reform in the U.S., which to some extent, however, was compensated for by deferred tax asset adjustments and changes in the regional distribution of the group profit. Without these positive one-off effects, which we do not expect for this year, we expect an effective tax rate for 2018 from IFRS and non-IFRS between 10% to seven and 28%.
Beyond that year, we kindly ask for your understanding that considering the massive changes taking place in international taxation, there's also many things happening on the OECD level. We kindly ask for your understanding that we cannot make any forecasts in terms of taxes to be paid after 2018. There was a question about the impact of the U.S. tax reform onto the effective tax rate. For 2018, we currently do not expect any major impacts onto the effective group tax rate stemming from the U.S. tax reform. For 2019 and beyond, we are still in the phase of analysis, once that analysis has completed, we will disclose those results. There was also a question about the compliance cases.
There was a question for more details on these two compliance cases, you also asked according to which international regulations we act, if there are differences in the international rules and set of rules in terms of external trade. Both of these cases are absolutely independent. In the U.S., we are currently examining our business with the public sector. The results obtained so far confirm that payments have been made to companies with relationships to the Gupta family, which has become somewhat infamous in the U.S., indications of misbehavior with Gupta firms and irregularities in the compliance with compliance processes. However, we did not find any indication for payments, attempted payments being made to South African government officials or employees of South African state-owned companies, which are connected to the Transnet and Eskom transactions.
However, we are now going back to the year 2020 examining all of the public contracts we signed. In Iran, a leading manager in the region of Middle East and North Africa left the company on 18th of November 2017. Other employees in the region are currently suspended. Currently, we are performing a review of our business activities in the region in terms of potential violations of sanctions, this applies above all to third party and partner actions. Apart from that, indeed, we, in terms of export control rules, of course, on the one hand, are obliged to comply with the laws of the Federal Republic of Germany and European Union. However, as our products typically also include parts of U.S. intellectual property that is software developed in the U.S.
For that reason, we are also obliged to comply with U.S. export control rules and regulations. For that reason, in this context, we also collaborate very closely with the U.S. regulators such as the SEC, the U.S. Export Control Board, that is the so-called OFAC, the U.S. Department of the Treasury, and the United States Department of Justice. In accordance with the reporting rules, according to Form 20-F of the SEC, we are obliged to do so as a foreign equity issuer at the New York Stock Exchange. You asked whether the U.S. decision to terminate the Iran agreement impacts our business. That is not the case because, as we've told you before, we do not run any business in Iran. Any use of SAP software in Iran would not be permitted and would violate SAP license and end-user contracts.
You also asked about the total investment volume for artificial intelligence. Hasso already briefly touched upon this. Let me once again mention that with that business of artificial intelligence, we're pursuing an integrated approach. We don't want to set up a standalone system. The building blocks for artificial intelligence are rather to be integrated into the SAP Cloud Platform and into our applications, allowing customers using these applications are directly benefiting from them. We want to integrate AI into the end-to-end product, which means they are also part and parcel of the respective portfolios and do not represent any kind of standalone business, and that's why we do not separate it also internally in management and balance sheet. There were also the question about auditors' fees and the question of what are the audit and non-audit services.
Well, the services mentioned in the audit opinion of KPMG, which go beyond the specific audit fees, are listed under the heading of audit related services. However, as always, these services are so insignificant and low that they were rounded down to zero on the group level and expressed in millions, and that's why you see a zero there. I hope that you still have the trust that we have in our auditors and that we really have teamed up with a racing horse and not with a mule or rather donkey. Well, let me continue by answering some more questions by Markus Kienle. He referred to compensation board, and he said, "You're splitting up the LTI into PSU and RSU. According to our understanding, RSUs are not success-based and are just a standard given.
How can the sustainable development of the company be promoted by the RSUs?" The performance share units and retention share units, which are issued in accordance with our LTI plan, they meet different objectives. The retention share units, which represent the smaller part, well, they aim for increasing the board members' loyalty with the company. That is, it's a retention tool, and they are paid out only if the board member is still an employee of the company at the time of payout. The amount paid out is massively dependent on development of the share price of SAP within four years, which means it may increase, as it did in the past, and it may also decrease. Of course, we hope that this won't happen. The higher the share price of the SAP share, the higher its value.
This, thus, is the incentive to increase the value of the SAP share, which of course is then something which the shareholders benefit from. So that means RSUs are not just a given, but they are also coupled to the long-term success of the SAP share price. Next question. Which independent areas are covered by the clawback rules in your board compensation system, which are not already covered by existing legal instruments? We've discussed it for a long time. The investors had demanded that our board contracts should include an independent legal tool allowing us to claw back any compensation components which have been paid out and which were unjustified. That means we have now followed up on the demands of the investors, which now gives the company a legal basis for asserting such claims against the board members.
Mr. Kienle also asked, "Which topics have you discussed with which investors?" When I talk to investors as a chairman of the supervisory board member, well, this was about board compensation, corporate governance, and the composition of the supervisory board. After the satisfactory results of the votes at the last two AGMs, it was important to me to enter into a dialogue with investors who had voiced criticism against our corporate governance and board compensation. During those discussions, above all, I explained our compensation system, and I also heard the criticism brought forward by the investors. As you can see from our invitation for today and our compensation report, some of the criticisms about Board compensation have now been followed up by us. These discussions were held with representatives of various institutional SAP investors from Germany, the U.K., Canada, and the U.S.
As I cannot have such meetings with all investors and shareholders at the same time, I've tried to summarize the central elements of these discussions in a transparent manner for all shareholders, and that is the content of the open letter to all shareholders, which you also find on our investor relations website, where you will find also further details. For which reasons did the supervisory board members leaving the supervisory board early do so? The reasons for these early departures differ on an individual basis, but no member is forced to disclose any reasons. Jim Hagemann Snabe took over a supervisory board position with another company, and that's why he stepped down early on. I think we have found a very good success with Aicha Evans, who was initially appointed by the court and will hopefully be elected by the shareholders today.
The very same institutional investors or shareholder investors who insisted on the application of the corporate governance rules, they should then not be surprised if Professor Dr. Haarmann, after 30 years, then resigns from the supervisory board. I have been approached several times by these investors or shareholder representatives about the age structure on the SAP supervisory board, which in their view, was open to criticism. Which means I responded to that kind of criticism, and that means we wish to see a supervisory board composition as proposed under item number 7 of the agenda. There was a question about Ms. Greene. Isn't there a conflict of interest with her current employer, Google?
Currently, there's no competition between SAP and Google in the cloud business because the cloud offers of Google are mainly directed towards consumers, whereas the focus of SAP in the cloud business is with corporate customers. That is why we do not see any potential conflict of interest for Ms. Greene, especially not due to the strategic partnership with SAP and Google in the cloud business. If the relationship between SAP and Google should become a topic on the supervisory board, there is always the possibility for Ms. Greene not to participate in such specific discussions, which means that we thus could avoid any potential conflicts of interest in the first place.
The possibility of conflicts of interest, which we consider to be very low, can thus be handled at any time and in an adequate manner, which is why, all in all, we do not consider this to be a problem. Will the consulting contract with Mr. Oswald be continued once he's elected to the supervisory board? No. The term of the consulting contract with Oswald Consulting GmbH, the general manager and single shareholder is Mr. Oswald, will end at the end of the 31st of December 2018, which is before the start of his term as a supervisory board member of SAP SE. When he takes over this new office, there's no plan for him to continue as a consultant at SAP. There was a question about the old age provision at SAP. Which old age provision is aimed for with this concept?
The old age provision at SAP for the executive board members is based upon annual contributions, depending on the seniority of the individual employees, and is not derived from an old age supply level beforehand. The higher the seniority of a board member, the higher the entitlement. Taking into account a board membership up to the start of old age, that is the age of 62, German executive board members have an old age provision entitlement between 3%-14% of their basic compensation. For the U.S.-based board members, SAP pays contributions into an external old age provision plan. The amount of these contributions of SAP is on the same line as the amounts paid by the board members themselves. For Bill McDermott, this amount is EUR 606,200, for Robert Enslin, EUR 194,100, and for Jennifer Morgan, EUR 8,900.
How can you, Mr. Plattner, make sure that in your discussions with investors do not run the risk-- Was there any risk over here? No, just a mobile phone. Once again. How can you, Mr. Plattner, make sure that in your discussions with investors do not run the risk of disclosing insider facts or data? Well, as in every discussion, if I may say so, which I have with investors. The representative of Deutsche Asset Management International GmbH, Mr. Schmidt, has already told you from the point of view of the investors. Of course, in such meetings with investors, which I participate in as the chairman of the supervisory board, no insider information will be touched upon and disclosed.
I mean, this is something which we are not allowed to by law, rest assured, we always make sure that we go by the law at any time. Well, that's all I had to say about the questions from Mr. Kienle. Are there any questions left?
Questions from Mr. Markus Kienle. In his letter to SAP stakeholders, Mr. McDermott indicates that there will be aspects of artificial intelligence that are capable of operating outside of human control. This does not exactly inspire confidence. What does Mr. McDermott mean by that? How does SAP intend to prevent artificial intelligence from developing a mind of its own in the near future? Our responsibility here is to ensure that the building blocks of artificial intelligence, the algorithms, are as transparent as possible, and that the data used to train these algorithms is protected. We are therefore working closely with our selected customers on developing our artificial intelligence applications, such that we can be sure the systems will operate as they were intended and that the users can communicate easily with them. What's more, our research team is working on various ways to enhance data protection and privacy.
One of these involves what's called federated learning, in which algorithms are trained locally without personal data being passed on to third parties. Our efforts to compile a code of ethics and our cooperation with the International Electrotechnical Commission and the European Union are aimed at advancing approaches like these and having them adopted as standards. Second question, does SAP have a board member who is responsible specifically for artificial intelligence? The title of the 2017 SAP integrated report is Intelligent Enterprise. This reflects SAP's belief that artificial intelligence will gradually permeate every aspect of a company's operations in the coming years, it must therefore also become an integral part of our entire solution portfolio. This has implications for us at both the development and organizational levels.
From the development perspective, we believe that it's not sufficient enough to simply hand our customers a set of analytics tools that can be fed with data and then derive recommendations from it, but largely outside of operational processes and based on algorithms that are often only partially transparent. We have to go further and embed AI decision support within business processes and the corresponding applications. This is something that SAP, with its broad solution portfolio and renowned market leadership, is better equipped to do than any other provider. From the organizational perspective, it is therefore clearly impossible for a single development unit alone to drive this topic in isolation because it touches every single application area at SAP and is something that a large number of employees are already engaged in today.
Having said that, responsibility for driving SAP's machine learning and artificial intelligence capabilities on the development side does, of course, lie within a central unit of focus, and this is headed by our Chief Innovation Officer, Jürgen Müller. Jürgen reports directly to me, which is further evidence of the importance that SAP attaches to artificial intelligence itself. Thank you.
Before answering further questions, we've got some new requests for the floor. I now give the floor to Mr. Johannes Niebler. Mr. Niebler, the floor is yours.
Professor Plattner. Mr. McDermott, ladies and gentlemen of the supervisory board and executive board, ladies and gentlemen. I'm a simple graduate engineer in electrical engineering. I studied at Darmstadt. I'm not an expert in economics and things like that. I have two questions. I regret to admit that this is the first time that I read the invitation to this meeting carefully. I found that the balance sheet profit is about 10 billion and the number of shares entitled to a dividend is 1.2 billion. In this way, the balance sheet profit per share can be calculated to be around EUR 8, roughly. As I recall from the last meeting, that 30%-40% of the profit will be paid out. I took the trouble to have a look at the financial report on the internet.
It wasn't easy to find because the link was hidden somewhere in a communication under the heading of Investor Relations. The outcome of my examination was that the result in euro, not watered down, was EUR 3.36, which is then related to our dividend in a specific way. If you read up the documents, there are quite a number of profits, balance sheet profit, net profit, pre-tax profit, after-tax profit. It came to my mind what the philosopher Voltaire once said, "If you want to talk to me, then you must define your terms and I define mine." Hence my question, what is the reason for the different results per share? Wouldn't it make sense in both documents to show the same figures and use the same terminology? To a simple shareholder, it is quite difficult, again and again, to find the differences.
Let me give you one example. Maybe a proposal might be made to the effect that certain key figures are listed in a table appended to the invitation all shareholders receive when they apply for the admission tickets. Maybe as with BASF, I appended an example of my case. You receive a table of the most important key figures for the run-of-the-mill shareholder. If the undiluted result is then multiplied by the number of shares entitled to a dividend, you roughly arrive at the values shown on page 163 under IFRS. That was one question. Question number 2, which I'd rather leave to the shareholder representative, but nobody of them has yet raised them. That is the payment of the dividend without capital earnings tax.
I'm also a shareholder with the German PTT, and at their meeting on the 24th of April, their shareholders meeting, I was told that dividend there would be paid out without capital earnings tax and without any deductions, so that the dividend would be paid out as the gross amount for the net amount. They use Section 27 of KStG, in brackets, that is payments not to the capital stock, and the payout, in that case, would be made without the solidarity bonus and without capital earnings tax. My question now, wouldn't it be possible for SAP to find a similar approach for the benefit of its shareholders? In that case, we would receive a higher financial contribution. Of course, I hasten to say that the government is not making any presents. The purchasing value of the share will be reduced by that amount.
Assuming we would have paid a share at EUR 100, dividend EUR 1 paid out without any extra tax, then the purchasing price would only be EUR 99 for tax purposes. When selling, we would have to pay an ex post facto tax. For those shareholders who hold their shares for a longer period of time than since 2009, it would not have any impact because the increase in value would not fall under speculation tax. The question would be whether one couldn't think about this, of course, it also implies the question whether this could mean any benefits or could be detrimental to SAP. I cannot judge that, and I'd like you to examine whether this would be meaningful for us shareholders. Thank you very much for your attention. Thank you very much, Mr. Niebler, for these two questions.
There's an answer outstanding to Markus Kienle, this question about artificial intelligence. Bernd Leukert will answer. That was about the volume. With an impact on our business when KI, the artificial intelligence tool, which looks at artificial intelligence and machine learning, not detached from our applications, unlike IBM are doing with Watson, a separate platform, in addition to business processes. We integrate these building blocks into our applications through this platform so that our customers can benefit directly of this technology. To us, this is not an intransparent approach. We discussed it with customers and analysts, so they know about it. We integrate artificial intelligence into business processes, solutions, to make those more attractive, more powerful. For this reason, we cannot directly allocate these technologies to the business results. We do see focal points that as pioneers in our portfolio that will benefit most of all.
Recognizing buying signals and interactions with customers are important applications wherever there's direct interactions with final customers. Here, applications with artificial intelligence can provide better results faster. Also, in finance and accounting in SAP HANA, in SAP S/4HANA, we now have, again, for the first time in the first quarter, balanced and offset orders, invoicing, and incoming payments. This was processed by artificial intelligence. Intelligence results have been good. KI assumes standardizable activities not inspiring to humans. There's more time for creative and analytical jobs. Another area of application is service. When a customer reports online plus a description of the problem by KI can automatically propose solutions.
The number of hits is very high right now, and we not only have a relatively small use of resources for a high number of reports. In 2018, more than 50 such applications are to be marketed. That was it.
Next request for the floor, Mr. Karl Ernst Feiten. Please come to the microphone. Good afternoon, ladies and gentlemen of the executive and supervisory boards, shareholders. I'm Karl Ernst Feiten. I'm a minority shareholder. I have three questions about the group statement. In the group statement, it says for 2016 that there are operational expenses of EUR 16,228,000. In 2017, the operating expenses are EUR 18,584,000. Relative to the return on sale, this means for 2016, 76.7%, for 2017, 79.2%. We have an increase by 2.5%. Could you explain what the reason for this increase is? If you could give me an offhand reply.
Another question is about the tax rate. In the calendar year of 2015, you report earnings tax of EUR 935, pre-tax profit EUR 991, which would result in a tax rate of 23.4%. In 2016, the earnings tax is EUR 1,229,000 on a profit of EUR 4,863,000, which means a tax rate of 25.3%. In 2017, earnings taxes are EUR 970,000 on a profit before taxes of EUR 5,026,000, which means a tax rate of 19.3%. In particular, the decrease of the tax rate between 2016 and 2017, could that be explained? Is that associated with the tax reform in the United States? That would be one explanation, because in that country, taxes were reduced. My last question is on page 39 of your annual report. You show pension claim of the CEO for 2016 of $106.5. For 2017, the pension claim is only $89.5, so there's a decrease by $17.
Could you please explain the reasons for that decrease? Normally, pension claims do not fall. They tend to increase.
Thank you very much. The chairman. Thank you very much. Feiten. Mr. Feiten or Feiltan? Feiten. Feiten. I heard correctly. I'd like to invite the next speaker, Mr. Peter Schubert.
Professor Plattner, Mr. McDermott, members of the executive and supervisory boards, co-shareholders. I think enough praise has been heaped today, so I'll just follow suit and make a footnote and ask a question. The footnote is about the dividend. I'd like to recall that SAP was the first or most important companies which a long time ago started to pay dividends.
You advanced on this way, now you arrived at 40%, which is a good way. I'd be happy if you could continue along that way. Well, 50-plus% would be an aim worth following on the long term. For all shareholders, it's interesting to recalculate the prices when we had a general shareholders meeting in Wiesloch. These were returns which were simply dreams, which has a positive impact on a pensioner's life. Again, thank you for your policy. I'm happy that you applauded on your own. I could have done it like Bill McDermott, starting by setting a good example, then you would have followed. Now for my question. You said that you invested or want to invest into blockchain. What I'm interested in is, what are the industries you are envisaging? What processes?
What business models will be influenced or could be influenced by this new technology? It's a technology which extends into the future. Are you thinking of developing a special banking software, or what are your main points? To some of you who don't really know what blockchain means, perhaps you could help us by explaining. Mr. Klein is smiling at me. He's the youngest member of the board, so he knows probably most about it. One question in this connection. If that were a considerable share of the future activities of SAP, what would be the impact on your computer centers? One hears that this technology requires a lot of computation. That was my question. By way of conclusion, let me again say, continue to go along the way I described.
A company which is characterized by rising profits, rising share prices. As far as I'm concerned, I will rest peacefully and sleep peacefully if things go on like this. Thank you, Mr. Schubert. Now I'd like to invite Mr. Georg Schalin.
Dear ladies and gentlemen, I don't speak German, I will be using my iPhone and Google Translate to help me out.
[Foreign language]
My name is George. I know five languages, not German. I'll use Google Translator. Just a moment.
[Foreign language] Ist das wahr, dass da so viele abgegangen sind?
Just a moment. Okay, just a moment. I finish just iPhone. Thank you.
Just a moment. [Foreign language] Entschuldigung.
Apologies. Is that a lecture which you prepared in advance and had translated? It's been customary since 1988 for presentations and questions being presented live. So far, I haven't been able to see that you asked a question, so please ask your questions and stop that lecture. Well, then you must be at the wrong general meeting of shareholders. No questions were asked by the last speaker. Thank you for your rather unusual contribution. This brings us to the, for the time being, last request for the floor. Dr. Ladies and gentlemen of the executive and supervisory board, I am a convinced minority shareholder of SAP. Two questions. Question number one is about litigation against Oracle in the past. Has that litigation been completed?
If not, are there other pending lawsuits which still need to be processed and which require the appropriate provisions to be made? Question number two. It's about the excellent presentation by Mr. McDermott about the SAP platform. You know better than I do that more and more networking increases the hazard that hackers may intervene. Nowadays, hackers are most professional, just waiting for a gap opening. What have you done in order to protect against these hazards from the outset? Thank you. Thank you, Mr. T, says the chairman. We will now return to answering the questions. We'll now deal with the questions by Mr. Hendrik Schmidt. May I start? What is going to be the future staffing of the audit committee? What candidates or supervisory board members meet the requirements of the German Stock Corporation Act as financial experts under Section 107, Para 4, Section 100, Para 5?
As you are able to learn from our explanations, Mr. Schipporeit, as chairman of the audit committee, meets the requirements as a finance expert according to German law and the U.S. regulations, which are also applied in the U.S. Mr. Schipporeit will continue this role. Mr. Wucherer will leave the company at the end of this meeting, so his position at the audit committee is becoming vacant. Provided this, Mrs. Rotsch will be elected today. She'll replace Mr. Wucherer on the audit committee. As you heard, she was the head of the internal audit department of Merck KGaA, so she can add to the power of the audit committee. Next question. What is the extent of the consultation contracts between Mr. Oswald and SAP? There's a contract, Mr. Oswald and his company, and in 2017, he received EUR 271,320. The contract expires at the end of this year.
How does the supervisory board judge the independence of Ms. Diane Greene? What are the business relations between Google Cloud and SAP? What were the powers of Ms. Greene when she joined SAP's supervisory board? What about potential conflicting interests? We answered them. Independent. The assessment of the supervisory board, all current members are independent in the sense of the Codex recommendation. Scope of business relations, SAP and Google have a strategic partnership between the two companies and enterprise cloud. That partnership includes a more pronounced future use of cloud infrastructure of Google by SAP. By customers being made available SAP products like SAP S/4HANA, SAP BW/4HANA, SAP Business Suite, and SAP Business Warehouse on the Google Cloud Platform. I think something has been missing here. Decisions by Ms. Greene.
She's head of the Google Cloud, and in this capacity, the main partner for SAP in Google with respect to this partnership, and this will continue also. Conflicting interests, we've handled that. This was my part of the answers to Mr. Schmidt's questions. I have nothing else. I think this takes care of all questions, at least as far as I can see. Mr. Buhlmann. I have a number of answers to some of his questions. There's a contradiction between able to grow and improving the margin, or is there not? No. Growth and margin increase are not contradictory. The start of cloud business last year, we had to make major investments, and revenue in the cloud business became economical only over time. We saw that development of the margin suffered from that.
Of course, as we said, in the years to come, now that the scaling level has been reached, which we need, we want to improve profitability. We reached the low point last year. We're expecting continuous increases in margin, and there will be no contradiction between the revenue growth and the margin following suit. You asked about the dividend policy, who is us or we? Of course, the general meeting of shareholders decides on the use of profits and the dividend that is. We refer to the fact that the supervisory board and executive board made proposals to the general meeting, hence our report or remark in the annual report, which refers to the SAP SE and SAP AG boards. You asked why Amazon and Apple still are more expensive than SAP. We could be 10 times as valuable.
First of all, we must say that we like this top position in Germany for quite some time and an improvement in the share price by almost 14% like early last year. We do not have to be afraid of a comparison with our direct competitors in standard business software. Here we have a higher market capitalization than Salesforce or Salesforce.com and Workday, our direct competitors. Some companies like Amazon have even higher market capitalization, but you must bear in mind that they work in very different areas, different scopes, B2C normally, like Apple. In our direct environment, we have caught up. In the past few years, also reduced the distance to our main competitor, Oracle.
Indeed, for SAP, we see major growth potential as Bill McDermott told us. As I know him, I am sure that we will have another ambitious goal once we've reached our first goal. Our partners local or global, and what do they do? They're doing a lot. Some of them are local, some are global. It's quite a question. We have a broad network of partners, more than 16,000 partner companies, one of our major competitive edges. We have sales partners helping us to get our solutions offered to small and medium-sized enterprises. We have technology partnerships which could try introducing solution compatibilities, that is, the application of standard interfaces, but could extend to the mutual use of partner technologies, either in our solution portfolio or in those of our partners.
This is called OEM partnerships, which also create or add a lot of value. The plastic bags question. You're right. We want to become more and more ecological. There's internal SAP project about our merchandising projects like these bags, which are to be checked for their environmental compatibility. Your feedback will be added to the project. In this way, we might better reach our environmental goals. What about data protection? You said as of next week, we have to suffer from the data protection regulation. I think it's different, the right to informational self-determination. Our customers should feel and could feel safe in their relations with SAP. We think we can now offer a high level of safety and protection. Over the past two years, we have profoundly prepared our organization to the upcoming regulation.
Bill said that we are the first company in our industry which was certified according to the new standard. Our products underwent a profound revamping, and our SAP products meet all provisions under the new basic data protection regulation. Customer confidence is most important to us, has been for a long time, and hence, we had less expense in this field than other market participants in preparing to the new regulation. Let me briefly say that data protection or privacy doesn't make us any poorer. We had very clear-cut expenses on data protection because that level had been high anyway. I personally feel that data protection, as far as we're concerned, is an opportunity for us because our customers have trust in us. We've had the highest level of data protection for many years you can find in Germany.
We feel that also in the light of our solution portfolio containing solutions like Gigya, our customers can benefit from extensive functionality. It's an excellent business opportunity. You asked for the green cloud, what does it mean? Well, it means that our data centers are 100% supplied electricity from renewable sources. Why is that important? More and more companies and their business activities want to achieve a maximum of environmental compatibility. If customers can run their operations in our data centers or in theirs, they can leave their green footprint, which is a factor to some customers. In our main computer centers, we have most efficient energy users. At St. Leon-Rot, for instance, we have a truly excellent level of the power usage effectiveness factor of 1.36, which is a major contribution to our vision of helping the world run better. You asked about the operating result.
The result per share had increased. Could we explain the difference? The operating result non-IFRS has clearly increased +4% non-IFRS, corrected for currency. You referred to the IFRS result of -5%. There was a negative impact due to currency fluctuations, especially because of the devaluation of the USD. We had a major increase in expenses for share-based pay, which was due to the strong share price development over the year. Despite the slight decline in the nominal IFRS operating result, to correctly assuming, with a clear increase in profit after taxes and the result per share of +10% each.
That was due on the one hand to the improvement in the financial result, mainly due to higher income from the sales of our interest in Sapphire investment funds, and the reduction in the effective tax rate from 25.3% to 19.3%, which we discussed at length, inclusive of the reasons. Yes, that's mainly to do with the tax reform in the U.S., but also was due to in-group transfer of rights and intellectual property to Hybris, one of our former acquisitions from Hybris to SAP in Germany. That was a positive one-off effect. Mr. Buhlmann also asked what will come after HANA. A lot has come after HANA, I can only recommend to watch the Sapphire event in Orlando, Florida, early in June, either personally or on the internet. Many things will be explained there, which will come after HANA or which we developed alongside HANA.
In addition, in many places in the world, research is being conducted about the more efficient or better programming, which is our key business, that we are working with computers. If there are any pioneering developments, I'm sure we'll present them. Does every executive board member have a business line for which he or she is responsible? How has the organization bit changed? The organizational changes were communicated in early April to the staff. Our strategy for the intelligent corporation or enterprise has meant simplification of the organization, aligned to 6 lines of business. Platform technology, digital core, customer experience, personnel management, manufacturing, logistic network, and Leonardo and analytical functions, which is to ensure that SAP has the necessary technical skills in each field, adding to the trust of its customers.
The sales organization, Global Customer Operations, GCO, and the service and support organization, Digital Business Services, DBS, were realigned by means of a central contact to the customer. Anybody, anything for Mr. Buhlmann?
Asia to grow faster. Are Chinese customers hesitant towards SAP? The total revenue of the region in APJ, Asia Pacific Japan grew by 12% at constant currencies, supported by all revenue streams. This growth is significantly above total revenue growth of the entire SAP group, that shows +8% at constant currencies. These numbers prove the success of SAP's products in Asia, Pacific, Japan, and therewith, also in China.
Hans-Martin Buhlmann. Topic acquisition, Callidus Software. Why have you acquired this company? Callidus completes the front office suite, customer data, marketing, sales, commerce, and service. Callidus cloud solutions give companies the tools to inspire and empower the sales professional. Intelligently following leads to cash, compensation, and career success. Through the Callidus acquisition, we have gained 6,000 customers. In non-IFRS terms, Callidus is already earning money, and we expect a positive contribution to operating profit in 2018. That is more than many comparable companies in the sector. Because Callidus products fit so well with our portfolio, because we have gotten to know this company over many years, we are working towards a speedy integration, we will soon have a complete and optimized solution portfolio for CRM.
There's a question by Mr. Buhlmann about artificial intelligence. What are the advantages? What products? Well, I answered this in a similar direction as Mr. Kienle's question. Mr. Buhlmann asked about data protection. The things which make me pass a service station and voila, pass, I'm paying for the petrol. You know in advance what I'll need after on. How do they know in advance that I suffer from migraine to make an offer to me, which means, creating sales for them by buying a drug against migraine? It's about data protection. Handling and processing personal data are most important parts of our products and services. The responsibility of SAP is realized. Protecting data, especially personal data, are taken very seriously. We've taken internal measures, started programs, so that our services are agreed to existing data protection regulations, especially the new ones after the 25th of May.
Maybe additional licenses and rights have to be acquired, for instance, when using special maps, geo data, et cetera. All the use of this data and the right to use these data must be obtained. It's quite a problem in compliance matters, but to SAP, it's more an advantage than a drawback. The chairman, thank you.
Finished? Okay. Mr. Kienle has one or more additional questions. Thank you.
Thank you again. Thank you again, also for the quality of the answers, which shouldn't be taken for granted. My question may have not been precise enough. It's about investor contact and compliance. Of course, we assume that you, Mr. Plattner, with your integrity, stand for the fact that you will not pass on anything which you learned as a party on the internet.
What I'm interested in is, how do you ensure that within the investor contacts, you can identify information as investor-related? You have a back office which examine your answers in the light of whether this passes on insider information. That's not a problem because this is a public event. In a spontaneous contact with an investor, you'll have to decide on an ad hoc basis to find out whether it's relevant to an insider. No corporate news or ad hoc statement is published by your company without this having been scanned by the legal department, maybe even by a special advisor in the field. How do you make sure that information which is insider-related is known as such and then may not be passed on?
Thank you. I'm not going it alone, but I'm accompanied by our CFO. The persons, plural, responsible for investor relations.
I'm not alone, and I'm positive that I'm in good hands and protected. If you feel I should not talk to investors, then some of the improvements, for which I've been praised today, wouldn't happen like this. Rest assured that we do it correctly and carefully and not stumble into some insider relations trap.
All right. Let me continue. These are answers to questions by Dr. Polzer. The first one was, and it referred to the composition of the first two management levels on the board. You referred to a women's share of 25% for the first management level and 20% for the second one, which means we increased these targets compared to the previous year. Why do you, however, think that we have still so few women on the second management level? On both management levels below the executive board on the 8th of June 2017 was set for the current target level. According to that, the women's share between July 2017 and July 2022 is to increase to 25% on the first management level and to 20% on the second management level.
Earlier, other targets had applied, namely 17% for the second management level below the executive board, which we have already achieved. The new target for the second management level will then be 20%, which means it's an increase of 3 percentage points. Which for us is certainly an ambitious goal, which we have set ourselves on the basis of the potential we have identified. Your second question was about how many men and women did you promote to the first and second management level? Please specify the number of men and women in absolute numbers and also as a percentage related to the overall number of employees in Germany and the number of men and women employed in Germany in your companies. The answer is as follows. On the first management level in the year 2017, 13 men and no women were promoted.
Related to the overall number of employees in Germany, this means that 0.06% of men have been promoted to the first management level. Related to the total number of male employees, this results in a relative promotion ratio of 0.09%. On the second management level in the year 2017, we had seven women and 25 men being promoted to that level. Related to the overall number of employees in the company, this translates into a promotion ratio of 0.03% of women and 0.12% of men. If you now compare this to the total number of female employees, you will thus get a relative promotion ratio of 0.11%, and related to the overall number of male employees, this gives a ratio of 0.18%. Next question.
What do you do to make sure that you pay men and women equally at the same level? According to our own wage and salary system, there are certain salary ranges, and that system makes sure that all employees working in a certain function are paid within those salary bands or ranges, regardless of whether they're men or women. In fall 2016, we carried out a salary analysis focusing on the differences in pay between men and women, and the comparison between the genders in the different wage groups or salary groups revealed that in Germany, at SAP, men and women are paid equally for the same work. Your next question related to a new act, dated January 2018.
Companies with a payroll of more than 200, according to that law, they have a right to obtain information individually and how many companies with more than 200 employees are there, and in how many of those companies have employees requested information? Who gave that information? We can give you the following answer to that. Employees of the following companies have a right or are entitled to individual information, SAP SE, SAP Deutschland SE & Co. KG, and Hybris GmbH. In total, we received 533 requests for information. The requests are distributed as follows: SAP SE, 422, of which 229 from men and 193 from women. In SAP Deutschland SE & Co. KG, we received 105 requests, 70 from men, 35 from women, and at Hybris GmbH, a total of six requests, three from men and six from women.
The information was given by the employer in all cases. The final question was on an audit system to make sure that the equality law is complied with. Is this implemented? Please specify whether there is an audit or monitoring process for each company individually, or if this is harmonized, and does it relate to everybody or only certain groups of employees? The answer is that so far, SAP has not implemented an auditing or monitoring process as meant by that piece of legislation. It is important to note that all wage components are based on rules subject to co-determination and are thereby in conformity with the corresponding regulations. We regularly carry out salary and wage analyses, and we'll do so in the future, focusing on the differences in pay between men and women, and if necessary, we will take the necessary action.
The question that is then left is from Dr. Anna-Dorothea Polzer, "The supervisory board has to provide a target for appointing women into the executive board. The DJB demands 40% for the supervisory board and executive board. So far, you have two people in the executive board. Why are you not going for a higher target when you extend the board?" Answer. It is the objective of SAP to maintain the current share of two women on the executive board. This is something the supervisory board resolved in April 2017 for the time until 30th of June 2022. Adaptation or change in this target is currently not considered just because the executive board is made larger. I'll take Mr. Niebler's question. One on the balance sheet, the balance sheet gain EUR 333 versus EUR 83.
If you relate this to the balance sheet profit, would it not make sense to use the same terminology in both documents? The earnings per share relates to the group earnings of the current business year divided by the weighted average number of shares. The balance sheet profit or retained earnings of EUR 10 billion includes, in addition to the current account of SAP SE, also the profit carried forward from previous fiscal years, which is why the amount is higher. We cannot use the same number in both documents because the resolution on the appropriation of retained earnings relates to SAP SE at the balance sheet key date, and the result per share or the earnings per share relates to the result of the current year for the whole SAP group.
We also have an overview of all important metrics of SAP published in the annual report. When you fold out the first page, you can have a look at the table there. The second item was the question, dividend without capital gains tax and gross for net. Could SAP not do something similar that apparently Deutsche Post are doing? The corporate tax law has provisions on the capital components. For dividend payments, the profit carried forward for tax purposes is a relevant number. We cannot deviate from this. SAP does not have a choice. For SAP, there are no advantages or disadvantages. Sorry, I wanted to leave you one question. The first two questions were the operating expenditure from 2016 to 2017 to EUR 18.5 million, where does this increase come from?
Yes, according to IFRS, the operating expenditure rose because of the following factors. In 2017, we had an increase in the restructuring expenses, mainly for the reorganization of our service business, very successfully so, by the way, and in 2017 and 2018, also in the non-IFRS result that resulted in an increase of the service business profit. Also, the share price development meant that there were no higher expenses for share-based remuneration and also a negative impact from currency fluctuations, especially the devaluation of the US dollar. Furthermore, our operating expenditure in 2017, as expected, was impacted by the less profitable, but in the long term, highly attractive cloud business. We talked about this also in 2018. We are seeing the effect of our measures there. There's a second question. The tax rate went down. Is this because of the tax reform in the U.S.?
We already said yes, this is to do with a positive one-off effect as a result of the tax reform in the U.S., but also because there's another one-off effect because of IP transfer from Switzerland to Germany, which also had a positive one-off tax effect. Right. The final question from Mr. Feiten. The chairman of the executive board has 106.5 pension accrual and for 2017 only 89.5%, and can you tell us for Bill McDermott, the pension claims are US dollars and the reduction is due to currency fluctuations. There was a question from Mr. Peter Schubert on blockchain and whether we can explain this and if there are any focal areas. Blockchain technology, generally speaking, means that transactions are stored in a network on distributed databases and secure transaction exchange is enabled between independent parties. Independent, this is important, not just one company internally.
Their central database would still be superior. It has become a buzzword in the context of cryptocurrencies, and the question is: Are we developing something like this? The answer is no, but the technology does have a potential in the collaboration between companies, also between different industries, since we can bring together companies through our networks. In contrast to single databases, which is owned by one organization and is operated according to that organization's rules, blockchain means that you have a sort of democratization of data. Early this week, we had a customer meeting where 63 customers agreed or signed a co-innovation agreement. The 63 customers are distributed between different industries. Supply chain management, logistics, and manufacturing were the main areas, and here the requirement was with regard to collaboration between individual different companies. Right. I have one answer to give to Dr. Thie's question on litigations.
One is against Oracle, is that concluded? The answer is yes, the litigation of our TomorrowNow has ended, generally speaking, not with Oracle, but with other companies. I fear that SAP will probably be involved in litigations at any time, but the provisions are made according to our estimations, and they are in the financial statement. You will find this in our integrated report 2017 in the notes under numbers 18 and 23. I have one answer to the question by Mr. Thie. The question was, the more networking, the more the danger there is for professional hackers who are just trying to find a security leak. This is a very valid question because more and more business is going to the cloud. We are investing large amounts to combat hacker attacks for predictive defense against such attacks from the internet.
This is why customers decide not just for our software solutions, but also for SAP as a partner to counteract those threats. Our cybersecurity strategy is very comprehensive and includes the following aspects. We guarantee security of our products. Our security software development life cycle stipulates a methodology, how we integrate security functions in our applications. Before release, our software is checked by independent IT security experts, but also secure application system operation. We provide a security framework for the cloud and for IT operation. This includes system and data access, increasing system security, managing security patches, monitoring security, and responding to security issues. Right now we're almost alone among us.
There are no further requests to speak. Does anyone still wish to speak? Does anyone wish to take the floor? I'm looking around. Please shout if you do. Where? There's one. You're standing in the dark, as it were.
Will you please come forward to the microphone if you want to take the floor, please. I'm Hans Hermann.
I have lived in the Walldorf, Wiesloch region for more than 40 years. I worked for a bank for 45 years, and in that capacity, I recommended buying SAP shares to my customers and to my family, too. Today I'm happy that seemed to have been a good idea. I would like to thank the Executive Board and the Supervisory Board for their good work. I need to mention something that has not been mentioned sufficiently here. We heard a lot about profits or net earnings. We heard about remuneration of board members, Executive and Supervisory Boards. The employees, the staff, they, to me, are also as important and as valuable as the capital. I belong to a generation that learned that work and capital are equivalent.
We are the so-called 68ers, the students who took to the streets in the late 60s in Germany, protesting against the system. A little while ago, we heard a bit of a bizarre contribution from the gentleman who was sitting at the front here. That was a bit unusual in presentation. I regret, although this took some time, that was cut short. I would have liked to hear more about this. It seems that there is something going wrong. I understood something like something is going on in the Czech Republic, so there's something going wrong with the staff members there. Maybe the Executive Board who is responsible or the member of the Executive Board who's in charge of HR could maybe check this. Thank you very much for your attention. A very quick answer. I asked Luka Mucic, how about our retention rate there?
He says it's one of the best in the world. We'll look into this. It just wasn't the right format, the way in which this was presented. If there is anything that needs looking into, this is certainly something that the HR manager has to check. Maybe to qualify this a bit. What I said is that SAP has one of the best retention rates in our industry. It is at 95%, so we have a fluctuation rate of 5%, which is very low for our industry. Nonetheless, I need to state this clearly too, in our shared service center organizations overall, not just in the Czech Republic and Prague, but also in the other shared service centers, we generally do have a higher rate of fluctuation than in other areas of the company.
This has to do with the fact that we tend to have people who just start to work and after a few years, they change to other functions. Also, they take on other jobs outside the company. Nevertheless, I can assure you, also the gentleman who made those remarks, making use of Google Translate, that I will personally look into that situation and that in the next months, I will also have a talk to the people there in Prague to see if there are any issues that we need to focus on and maybe change.
Yes, I will repeat the question. Is there anyone else who wishes to take the floor? Does anyone wish to speak? Hasso, as HR manager, can I say something? Thank you for that contribution.
At the time when the Google translator was presenting that prepared speech, I decided with my team that, of course, we're going to look into this. Rest assured that we have a very trusting relationship with all employee representations, not just in Germany, but also beyond the German borders. In Czechia, we are currently in a dialogue with the colleagues there also on founding a works council. As we have done before in other locations, in other countries, we will speak and find a solution together. This has always worked in Germany, in Europe, anywhere where there are employee representation bodies, and this will be our line in the future as well. Thank you.
I have no more requests for the floor. One last time, does anyone else wish to speak? That is not the case. I say for the record that no one else wishes to speak.
Am I right in assuming that all questions from the floor have been answered? My text tells me to pause for a moment. This is the case. For the record, I declare that all questions have been answered. I'm closing the discussion on all agenda items. Has the attendance changed? No, then I don't need to read it again, do I? Ladies and gentlemen, we will now come to the votes on the management proposals in respect of items two to nine on the agenda. As last year, we will take all of the votes on the management proposals for items two to nine on the agenda at a single pass. I will now explain the voting procedure. The vote here in the meeting area will use multi-item voting card one, which you will find near the front of the ballot card block.
Online participants will use the multi-item voting card one, which is provided in the form of an online voting card and which you submit by pressing a button. The voting results are determined using the subtraction procedure, in which only the no votes and abstentions will be collected and counted. In other words, you only need to submit multi-item voting card one if you vote no to one or more of the management's proposals or if you wish to abstain. The yes votes are then calculated by subtracting the no votes and the abstentions from the current attendance count. Multi-item voting card one shows each item by number from item two to item nine, including sub-items A to D in item seven for electing the supervisory board members individually. Beside each item and sub-item requiring a resolution, there are no and abstain checkboxes.
If you wish to vote no or abstain from voting on a proposal by the management, please put a cross in or click the no or abstain box, respectively. If you wish to vote yes on a management proposal, do not put a cross in or click either box for that item. If you wish to vote yes on all agenda items and sub-items, you do not need to hand in your multi-item voting card one. I now advise all shareholders and proxies in the official meeting zone that voting cards will be collected here and in the main hall only. If you wish to vote no to one or more of the proposals that are now before the meeting, or if you wish to abstain, please come to the main hall to vote now.
Raise your hand when the vote is called and have multi-item voting card one ready to put in the ballot box. I would like to emphasize once again that with the chosen method of voting, any shareholder or proxy who is present in the official meeting zone or is participating online and who does not submit a voting card is voting in favor of all of the management proposals concerning the items two to nine. I would like to inform shareholders who appointed employees of the company as their proxies that the proxies present will cast your votes by releasing your voting instructions as they have been entered in the IT system. On release, the instructions flow into the vote counting system and are reflected in the results.
Some of the institutional investors and shareholder associations have used the facility we offer to have no votes or abstentions pre-entered in our computer system. Votes submitted by regular mail are likewise pre-entered into our computer system and are reflected in the results. To help ensure that attendance counts are accurate, I would kindly ask shareholders and proxies not to leave the official meeting zone and not to end their online participation during voting. I'm now calling for votes on the management's proposals in respect of items two to nine on the agenda. Item two on the agenda. As I explained earlier, the Executive Board and Supervisory Board have amended their proposal concerning the appropriation of retained earnings. I already informed you about the details of this amended proposal now being put to the vote. The text of this amended proposal is available on the speaker's table.
The wording of the management proposals for items three to nine is the same as was published in the announcements in the German Federal Gazette, the Bundesanzeiger, on Monday, the 9th of April 2018. In the interest of avoiding repetitions, I refer you to this announcement. The wording is also provided in your invitation to this annual general meeting of shareholders. With regard to agenda items three and four, I expressly draw your attention to the voting exclusion in Section 138
Of the German Stock Corporation Act. A simple majority vote is required for the resolutions on items two through seven. A three-fourths majority vote is required for the resolutions on the items eight and nine. From this point, shareholders who have appointed proxies in our internet system cannot give or change voting instructions. I now put the management's proposed resolutions on the items two to nine to the vote. All shareholders and proxies present today who wish to vote against any or all of the proposals made by the management for items two to nine, or who wish to abstain on any of them, please go to the main hall, raise your hand and put your completed multi-item voting card 1 in one of the ballot boxes. I would like to ask the staff to start collecting the voting cards now. Voting can now begin.
Shareholders and proxies participating online who wish to vote against any or all of the proposals made by the management for items two to nine, or who wish to abstain on any of the items, please submit your completed online multi-item voting card 1. Well, now that we've had enough time to collect the voting cards, let me now ask, have all voting cards been collected? Would anybody now like to have their voting card collected? For the record, I declare that the online participants have now had enough time to send their online multi-item voting cards. The time for submitting online multi-item voting cards will end shortly when I close the voting.
Have all shareholders and proxies present in the official meeting zone who wish to cast a no vote or an abstention on any of the management proposals, been able to submit their multi-item voting cards 1 yet? I'm not going to repeat that question as my script says. I see that they all have, I'm hereby now closing the voting. I will announce the results of the voting as soon as I have them. We're going to have a short break. You don't want to listen and wait for the results? Well, sometimes, especially in a soccer match, the goals are scored in the very last second. We decided that next year, during this waiting period, we're going to play some music or some video of the company. If you've got any specific requests for what kind of music, send them to SAP Investor Relations.
Here we go, ladies and gentlemen. I now have got the results of the votes. The annual general meeting of shareholders has accepted management proposal resolutions at items two to nine of the agenda with the required majority. Full details of the voting results can be obtained by all shareholders and shareholder representatives who are interested in that at the speakers table. If there are no objections, I would like to state for each resolution simply that the required majority was obtained. I've got to read out something. I don't get that. What's this? I've got four pages to read out to you if you'd like to hear that. That's a nice improvement, a result of 99.91%, or here 98%, 90%, 96%, 99%, 99%, 96%, 98%. I'd like to thank all the shareholders and shareholder representatives specifically for allowing me not to read out these pages of numbers now.
That means there's little left for me to you. We have now addressed all agenda items. I close the annual general meeting of shareholders. On behalf of the Supervisory and Executive Boards, I'd like to thank you very much for attending. I also would like to thank all of the employees of SAP. Thousands of them are working here, also on behalf of the shareholders. In particular, I'd like to thank the leaving supervisory board members. After 30 years, Mr. Haarmann, I'm going to miss you. Maybe you're going to miss something as well? He already threatened to come here as a speaker next year. I really have got to get well prepared for that. Ladies and gentlemen, the meeting is closed. Have a safe journey home.