Other remuneration components

Should the price of Company shares increase following a takeover bid resulting in a change in shareholder structure, each member of the Executive Board will receive a bonus in the amount of 0.5 percent of the increase in the Company’s market capitalization. If the increase in market capitalization is less than 2 percent, no bonus is paid.

In the event of illness, the five members of the Executive Board will receive full pay based on the annual target remuneration for a period of six months. After six months, the variable remuneration component will be reduced by 1/12 for every month that follows. Salary payments will cease at the end of the term of the contract in any event. Any health insurance benefits received by the Board member must be credited against such payments. In the event of illness, one member of the Executive Board will continue to be paid 90 percent of its average after-tax annual remuneration for the preceding three years for a period of six months.

In case of permanent disability, the employment contract of the Executive Board member concerned will terminate at the end of the month in which the permanent disability was determined or at the end of the month in which the Executive Board member has been incapacitated for work for an uninterrupted period of twelve months. In such case, severance pay will be provided for one Executive Board member in the amount of €158 thousand, plus an additional severance payment equal to the total of the members fixed salary for the remainder of the contract for a period not to exceed six months. The remaining Executive Board’s members will receive no severance pay in such case. From the time of their departure until completion of their 65th year of age, the German members of the Executive Board will receive a disability pension of €11 thousand per month, and the CEO will receive €15 thousand per month. British members of the Executive Board are subject to the provisions of the Permanent Health Insurance Plan applicable in the United Kingdom. Under this plan, British members of the Executive Board will receive 90 percent of their average annual after-tax remuneration for the preceding three years until they reach the pensionable age of 60 years. This entitlement will be adjusted to reflect inflation in years in which the inflation rate is less than 5 percent. If the inflation rate exceeds 5 percent, the entitlement will be adjusted by 5 percent annually.

The Company maintains life insurance policies for all Executive Board members. For five Executive Board members, the insured amount equals €500 thousand in the event of death and €1,000 thousand in the event of disability. For one Executive Board member, the insured amount equals four times his fixed annual remuneration.

Five members of the Executive Board will receive pensions of €11 thousand per month for life after completing their 65th year of age, regardless of their number of years at the Company. The CEOs pension amounts to €15 thousand. This pension commitment also comprises a widows annuity of €6 thousand per month, with €9 thousand per month for the widow of the CEO. In the event an Executive Board member leaves the Company prior to the age of 65, such Executive Board member will still be entitled to pension benefits, but they will be reduced on a pro rata temporis basis. The beneficiary will not be entitled to claim an adjustment or indexation of the entitlement. One member of the Executive Board will receive a pension for life after completing his 60th year in the amount of 1.66 percent of the average remuneration for the preceding three years multiplied by the members number of service years. This entitlement will be adjusted to reflect inflation in years in which the inflation rate is less than 5 percent. If the inflation rate exceeds 5 percent, the entitlement will be adjusted by 5 percent annually.

In addition, all members of the Executive Board are entitled to be provided with a suitable company car.

No additional commitments have been made regarding severance pay in the event an employment contract is not extended or a change in shareholder occurs, nor regarding bridging payments, continuation of salary payments in the event of early termination of employment, or interest on severance payments. There are also no entitlements to payments based on customary practice.

Supervisory Board remuneration

Remuneration for Supervisory Board members is made up of fixed and performance-related components. Members receive separate remuneration for their work on the Committee for Compensation and Succession Issues and the Audit Committee.

Effective January 1, 2006, a long-term performance-related component was added to the previous remuneration system for Supervisory Board members by the Annual Shareholders’ Meeting of May 12, 2006.

In addition to reimbursement of their expenses, members of the Supervisory Board receive a fixed annual remuneration in the amount of €25 thousand as well as annual performance-related remuneration of €2 thousand for each percentage point or fraction thereof in excess of 5 percent by which the growth of currencyadjusted net income has exceeded the previous years figure. (Variable Remuneration I).

The figures reported in the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) for the relevant fiscal year or fiscal years are utilized for calculating performance-related remuneration.

Furthermore, Supervisory Board members receive annual compensation based on long-term corporate profits in the amount of €200 for each percentage point or fraction thereof by which the growth in value of Software AG stock exceeds the growth of value of the TecDAX30 index for the same period (Variable Remuneration II). The growth in value of the stock will be assessed on the basis of a 3-year comparison of the XETRA closing rates starting in fiscal 2008, and the growth in value of the TecDAX 30 will be assessed on the basis of a 3-year comparison of the index.

Remuneration is payable one week after approval of the financial statements for the year by the Supervisory Board or, if applicable, the Annual Shareholders’ Meeting. Members of the Supervisory Board who were on the Board for only a part of the fiscal year will receive one-twelfth of the applicable remuneration for each month or fraction thereof of their tenure.

Remuneration of Supervisory Board members for fiscal 2006 is composed as follows:

in €	Fixed remuneration	Variable remuneration I	Variable remuneration II	Remuneration for committee work
Frank F. Beelitz (Chairman)	50,000.00	28,000.00	18,400.00	5,000.00
Karl Heinz Achinger (Deputy Chairman)	37,500.00	21,000.00	13,800.00	4,000.00
Dr. Andreas Bereczky	25,000.00	14,000.00	9,200.00	0.00
Justus Mische	25,000.00	14,000.00	9,200.00	3,000.00
Monika Neumann	25,000.00	14,000.00	9,200.00	3,000.00
Reinhard Springer	25,000.00	14,000.00	9,200.00	1,500.00

Total remuneration for members of the Supervisory Board amounted to €378 thousand in the year under review.

Remuneration of the Chairman/Deputy Chairman

The Chairman of the Supervisory Board receives twice the remuneration stated, and the Deputy Chairman one and one-half times such amount.

Other arrangements

In addition, members of the Supervisory Board receive an attendance fee of €1,500 each time they participate in person in a meeting of one of their committees. Attendance fees are paid only once for multiple committee sessions occurring on the same day or for a session that takes place on consecutive days. The attendance fee is €2,500 for the committee chairmen.

Auditor’s fees

General and administrative expenses include auditors fees for BDO Deutsche Warentreuhand AG totaling €293 thousand. €260 thousand of this amount relates to the audit of the domestic companies and the Groups financial statements, and €33 thousand to tax advisory services.

Events after the balance sheet date

Software AG restructured the Executive Boards areas of responsibility as of January 8, 2007. The traditional database business, ETS, now forms its own division headed by David Broadbent. Moreover, the market has been divided into two sales regions. Executive Board member Christian Barrios Marchant, previously responsible for the Southern and Western Europe/Latin America region, left the Company effective January 8, 2007.

On February 13, 2007, members of the Executive Board and officers exercised a total of 327,067 stock options. This resulted in an increase in the share capital of €981 thousand and an increase in capital reserves of €4,441 thousand.

Declaration of compliance with the German Corporate Governance Code

The Company published the declaration of compliance on February 22, 2007 in accordance with the German Corporate Governance Code and Section 161 of the German Stock Corporation Act.

Date and authorization for issue

Software AG’s Executive Board approved the consolidated financial statements on February 28, 2007.

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