FRANKFURT, May 6 (Reuters) - Leading shareholder advisors have called on SAP investors to oppose the supervisory board of Europe's largest technology company in a dispute over management pay.
Institutional Shareholder Services (ISS) took issue with the supervisory board's unwillingness to acknowledge any need to improve its remuneration system despite shareholder dissent.
The move comes ahead of SAP's annual meeting on Wednesday and follows successes that ISS has had recently in lobbying against excessive management pay.
Last month, shareholders rejected German reinsurance group Munich Re's pay policy, and energy group BP cut its CEO's 2016 pay package by 40 percent after a shareholder revolt.
ISS said in a note to SAP shareholders that a vote against signing off the actions of the supervisory board was "warranted due to the clear lack of oversight and good governance exercised."
The payout to Bill McDermott, SAP's American CEO - 15.6 million euros ($17 million) for 2016 - ranks at the top end of German corporate pay, but does not stand out alongside SAP's main U.S. competitors.
With the help of stock options, McDermott's maximum annual pay could, however, reach a maximum of 41 million euros.
Maximum executive pay levels were inappropriately high, said Hans-Christoph Hirt, head of investor and governance advisor Hermes EOS.
"We will vote against the approval of the supervisory board because we have significant concerns about the remuneration system and these have been ignored by the supervisory board," he told German weekly Der Spiegel.
Votes to ratify the decisions by company bosses are customary in Germany and are an opportunity for shareholders to express confidence in their leadership. But such votes do not free individuals from liability for their actions.
Many investment funds from the United States and Britain follow the recommendation of advisory firms such as Hermes and ISS at shareholder meetings.
SAP, the most highly valued stock on the German blue-chip index DAX, said in a statement on Saturday that its executive pay was geared to the company's size, its financial situation and rivals.
"SAP's remuneration system is in accord with that of DAX companies and international competitors," the company said, adding it would address shareholder criticism on pay at the annual meeting on Wednesday.. ($1 = 0.9096 euros) (Reporting by Arno Schuetze; Editing by Keith Weir)