40 Share-based payment Share Matching Plan Since the 2011 financial year, specific executives have been contractually obligated to invest a minimum of 10 percent of their short-term variable remuneration component, which is based on the achievement of targets set for each person for the financial year (Short-Term Incentive/Variable I), in Deutsche Telekom AG shares. In the 2019 financial year, the upper limit for personal investment was raised from 33.3 percent to 50 percent of the short-term variable remuneration component. Deutsche Telekom AG will award one additional share for every share acquired as part of this executive’s aforementioned personal investment (Share Matching Plan). These shares will be allotted to the beneficiaries of this plan on expiration of the four-year lock-up period. Since the 2015 financial year, further executives who are not contractually obligated to participate in the Share Matching Plan have been given the opportunity to participate on a voluntary basis. This offer is only made when the Group’s free cash flow target for the preceding year has been achieved. The conditions of participation in the voluntary Share Matching Plan were updated in the 2019 financial year. Since then, participation has been open to all executives in certain management groups. To participate, the executives invest at least 10 percent and – since the 2019 financial year – a maximum of 50 percent of the target amount (100 percent) of the short-term remuneration component (Short-Term Incentive) in shares of Deutsche Telekom AG. Deutsche Telekom AG will award additional shares for every share acquired as part of this executive’s aforementioned personal investment (Share Matching Plan). The number of additional shares granted will depend on the management group to which the executive is assigned. The additional shares will be allotted to the beneficiaries of this plan on expiration of the four-year lock-up period. The individual Share Matching Plans are each recognized for the first time at fair value on the grant date. To determine the fair value, the expected dividend entitlements are deducted from Deutsche Telekom AG’s share price, as there are no dividend entitlements until the matching shares have been allocated. In the 2019 financial year, a total of 0.9 million (2018: 0.7 million) matching shares were allocated to beneficiaries of the plan at a weighted average fair value of EUR 12.06 (2018: EUR 10.64). The cost is to be recognized against the capital reserves pro rata temporis until the end of the service period and amounted to EUR 7.7 million in total for all tranches as of December 31, 2019 (December 31, 2018: EUR 6.1 million). In the reporting year, reserves were reduced by transfers of shares to plan participants in a total value of EUR 5.5 million (2018: EUR 2.6 million). The capital reserves recognized for the Share Matching Plan as of December 31, 2019 amounted to EUR 17.2 million (December 31, 2018: EUR 14.6 million). For the compensation system of Board of Management members who also participate in the Share Matching Plan, please refer to the “Compensation report” in the combined management report. Long-term incentive plan Executives from the Deutsche Telekom AG Group can participate in a long-term incentive plan provided they meet certain eligibility requirements or have an individual contractual commitment. At the inception of the plan, the participating executives receive a package of virtual shares with a value between 10 and 43 percent of the participant’s annual target salary depending on the extent to which defined criteria are fulfilled. The number of virtual shares is contingent on the participant’s annual target salary, management group assignment, and, since the 2019 financial year, on the achievement of the collective targets (financial and strategic targets) of the organizational unit to which the executive is assigned. Over the term of the four-year plan, the value of the virtual shares changes in line with Deutsche Telekom AG’s share price development. The number of virtual shares will change on achievement of the targets for four equally weighted performance indicators (return on capital employed, adjusted earnings per share, employee satisfaction, and customer satisfaction), to be determined at the end of each year. In addition, a dividend is granted for the virtual shares over the term of the plan. This dividend is reinvested in virtual shares, increasing the number of virtual shares held by each plan participant. At the end of the four-year plan term, the final number of virtual shares will be converted on the basis of a share price calculated in a reference period at the end of the plan and paid out in cash together with the dividend for the last year of the plan, which is not converted into virtual shares. The individual long-term incentive plans are each recognized for the first time at fair value on the grant date. The fair value of a plan is calculated by multiplying the number of virtual shares by Deutsche Telekom AG’s share price discounted to the reporting date. In the 2019 financial year, a total of 3.88 million (2018: 3.46 million) virtual shares were granted at a weighted average fair value of EUR 15.07 (2018: EUR 15.03). A plan must be remeasured at every reporting date until the end of the service period and expensed pro rata temporis. As of December 31, 2019, the cost of the long-term incentive plans amounted to EUR 50 million in total for all tranches (December 31, 2018: EUR 62 million). In 2019, the provision was utilized in the amount of EUR 76 million. The provision totaled EUR 125 million as of December 31, 2019 (December 31, 2018: EUR 151 million). Share-based payment at T‑Mobile US Under T‑Mobile US’ Omnibus Incentive Plan, the company may grant stock options, stock appreciation rights, restricted stock, restricted stock units (RSUs), and performance awards to employees, consultants, advisors and non-employee directors. As of December 31, 2019, there were 19 million T‑Mobile US shares of common stock (December 31, 2018: 12 million shares) available for future grants under the incentive plan. T‑Mobile US grants RSUs to eligible employees and certain non-employee directors, and performance-based restricted stock units (PRSUs) to eligible key executives of the company. RSUs entitle the grantee to receive shares of T‑Mobile US’ common stock at the end of a vesting period of up to three years. PRSUs entitle the holder to receive shares of T‑Mobile’ US common stock at the end of a vesting period of up to three years if a specific performance goal is achieved. The number of shares ultimately received is dependent on the actual performance of T‑Mobile US measured against a defined performance target. The RSU and PRSU plans resulted in the following share-related development: (XLS:) Download Time-based restricted stock units and restricted stock awards (RSUs) Number of shares Weighted average fair value at grant dateUSD Non-vested as of January 1, 2019 11,010,635 57.66 Granted 6,099,719 73.13 Vested (5,862,128) 55.52 Forfeited (745,015) 65.87 Non-vested as of December 31, 2019 10,503,211 67.31 (XLS:) Download Performance-based restricted stock units (PRSUs) Number of shares Weighted average fair value at grant dateUSD Non-vested as of January 1, 2019 3,851,554 64.03 Granted 1,046,792 73.98 Vested (1,006,404) 52.47 Forfeited (88,403) 62.02 Non-vested as of December 31, 2019 3,803,539 69.78 The program is measured at fair value on the grant date and recognized as expense, net of expected forfeitures, following a graded vesting schedule over the related service period. The fair value of stock awards for the RSUs is based on the closing price of T‑Mobile US’ common stock on the date of grant. The fair value of stock awards for the PRSUs was determined using the Monte Carlo model. Stock-based compensation expense was EUR 495 million as of December 31, 2019 (December 31, 2018: EUR 440 million). Prior to the business combination, MetroPCS had established various stock option plans (predecessor plans). The MetroPCS stock options were adjusted in connection with the business combination. Following stockholder approval of T‑Mobile US’ 2013 Omnibus Incentive Plan, no new awards may be granted under the predecessor plan. The plan resulted in the following development of the T‑Mobile US stock options: (XLS:) Download Number of shares Weighted average exercise priceUSD Weighted average remaining contractual life(years) Stock options outstanding at January 1, 2019 284,811 14.58 3.8 Exercised (85,083) 15.94 Forfeited/canceled (4,786) 22.75 Stock options outstanding at December 31, 2019 194,942 13.80 2.9 Stock options exercisable at December 31, 2019 180,966 13.48 2.6 The exercise of stock options generated cash inflows of EUR 1 million (USD 1 million) in the 2019 financial year (2018: EUR 3 million (USD 3 million)).