Benefits in case of early or regular termination

Processing of the remuneration components upon termination

In the event of termination, the primary reason for the termination is the decisive factor in defining the settlement of the existing remuneration components. Essentially, the member of the Board of Management will receive the monthly basic remuneration and the ongoing remuneration in kind until the point of termination. This also applies to the entitlement to participate in the variable remuneration that results from the achievement of short-term performance targets (STI). The STI is paid out in the same way and at the same time as for the still-active members of the Board of Management in accordance with the respective rules of the Company. The concrete reason for the termination is decisive with regard to the further participation in the variable remuneration that results from the achievement of long-term performance targets (LTI) and the Share Matching Plan. Depending on the reason for the termination, the plans may be completely forfeited or the members may be able to continue participating on a full or pro rata basis. It is ensured that, when outstanding variable remuneration components are paid out, the agreed targets and benchmarks as well as the due dates and lock-up periods as defined in the contract continue to apply.

Upon his reappointment as member of the Board of Management in February 2021, Thorsten Langheim was granted the right to resign from his position as Board member prematurely without suffering any disadvantages regarding participation in the LTI and SMP; in this case, a pro-rata rule would be applied proportional to the reduced time period.

Upon his early reappointment as Chair of the Board of Management in 2022, Timotheus Höttges was granted the right to resign from his position as Chair of the Board of Management prematurely with a six-month notice period. This right can be exercised no earlier than the end of 2024. Timotheus Höttges has not yet exercised this right.

With his resignation from his position on the Board of Management at his own request effective midnight on December 31, 2023, Adel Al-Saleh lost any claim resulting from the SMP, without entitlement to substitution or compensation. Moreover, any claims resulting from the LTI tranche for 2021 and the following years were also forfeited.

Incapacity for work

Temporary incapacity for work as a result of an uninterrupted period of illness-related absence up to a period of one month has no impact on the continued payment of the contractually agreed remuneration components. In the event of longer absences due to illness, the basic remuneration will be paid for a maximum of six months and, with regard to variable remuneration components, participation will be solely on the basis of a pro-rata calculation. Service contracts for the Board of Management end automatically at the end of the month in which permanent incapacity for work is determined for the member of the Board of Management in question. In such a case, there is no entitlement to a severance payment.

Post-contractual prohibition of competition

Board of Management member service contracts generally stipulate a post-contractual prohibition of competition. Pursuant to these provisions, members of the Board of Management are prohibited from rendering services to or on behalf of a competitor for the duration of one year following their departure. To this end, the members of the Board of Management are paid compensation for the period of prohibition of competition. The sum is 50 % of the most recent basic remuneration and 50 % from the most recent STI assuming target achievement of 100 %. Compensation to be paid for the period of prohibition of competition is set off against the total of a potential severance payment. In the event of an upcoming contract termination, Deutsche Telekom AG has the right to cancel the post-contractual prohibition of competition provided that appropriate notice is observed. If the agreed deadline is observed, the member of the Board of Management will not receive a compensation payment.

Adel Al-Saleh’s post-contractual prohibition of competition continued to apply even after his departure effective midnight on December 31, 2023. On Adel Al-Saleh’s request, Deutsche Telekom AG consented to his activity for SES S.A. during the term of his post-contractual prohibition of competition. For the length of said activity, Adel Al-Saleh was not entitled to claim compensation from the Company for the period of prohibition of competition. Adel Al-Saleh’s post-contractual prohibition of competition ended effective midnight on December 31, 2024.

Change of control clause

The service contracts for the Board of Management contain no commitments in relation to the early termination of the employment contract of the member of the Board of Management due to a change of control.

Severance payments

The existing service contracts for the Board of Management stipulate a severance entitlement in certain cases of early termination at the instigation of the Company. In such cases, the severance payment will not exceed the value of two years of annual remuneration (severance cap) and will compensate no more than the remaining term of the contract. If compensation is paid for the period of prohibition of competition due to an existing post-contractual prohibition of competition, it is ensured that this compensation is offset against the severance entitlement. A severance payment is not considered to be an element of the maximum remuneration set for members of the Board of Management.

Board of Management pension plan

Since the introduction of the new Board of Management remuneration system in 2021, new members of the Board of Management are no longer entitled to a Board of Management pension plan. Pension commitments based on defined contribution plans from the previous Board of Management remuneration system will be maintained on the basis of the account balance earned as of December 31, 2020, as vested entitlements. This means that in the 2024 financial year, with the exception of the pension commitment for Timotheus Höttges, no further service costs arose for pension commitments from the previous Board of Management remuneration system.

Since 2009, newly appointed Board of Management members had received pension commitments under defined contribution plans. This commitment provided the member of the Board of Management with a contractually agreed specific amount for each year of service, which, endowed with a market-standard interest rate, was added to the personal pension plan account for the respective member of the Board of Management. Market-standard interest rate in this regard corresponds to the interest rate of the capital accounts plan for employees of the Group. Upon retirement, the member of the Board of Management receives the accrued balance as a one-time payment.

As of December 31, 2024, the defined benefit obligations (DBO) for members of the Board of Management with pension commitments based on defined contribution plans were as shown below in accordance with IFRS reporting:

Dominique Leroy received a commitment to “pension substitutes” under the previous Board of Management remuneration system. For each complete year of service, she received an annual one-time payment instead of a pension commitment. Following the changeover to the current remuneration system, there are no further consequences from this commitment and no payments were made in 2024 in this regard.

In item 12.2 of the remuneration system, the Shareholders’ Meeting of Deutsche Telekom AG approved on April 1, 2021 that the existing pension commitment for Timotheus Höttges is to remain in place in the new system. Timotheus Höttges is the only current member of the Board of Management who has a legacy pension commitment (granted prior to 2009). This model of pension commitment is directly related to the personal basic remuneration and is paid out as a monthly retirement pension when he reaches retirement. Upon his reappointment as Chair of the Board of Management in 2019, Timotheus Höttges’ pension commitment was adjusted such that his pension entitlements accrued up to December 31, 2018 were increased by 2.4 % per further complete year of service using his basic remuneration valid up to December 31, 2018 as the measurement base. Future increases in his basic remuneration as of that date will thus not lead to higher pension payments. Additionally, as part of the pension commitment, pension payments to be made upon retirement increase dynamically at a rate of 1 % per year. The pension agreement also includes arrangements for pensions for surviving dependents in the form of entitlements for widowed spouses and orphans. The pension for surviving dependents for widowed spouses amounts to 60 % of the retirement pension to which Timotheus Höttges would have been entitled to at that point in time. The orphan’s pension is 12 % for half-orphans and 20 % for full orphans, not exceeding a total of 60 % of the retirement pension to which Timotheus Höttges would be entitled to at the time of provision. In the event of a permanent incapacity for work (invalidity), Timotheus Höttges is also entitled to the pension payments.

One of the changes to the remuneration system for members of the Board of Management approved by the Shareholders’ Meeting on April 7, 2022 concerned an amendment to the payment option for the pension commitment for Timotheus Höttges in item 12.2 of the remuneration system. The amendment to the pension commitment provides the option of converting up to 50 % of the calculated pension into partial retirement assets and paying these out as one-time retirement assets. This change brings the pension commitment more closely into line with those of other members of the Board of Management, as commitments made between 2009 and 2020 primarily entail a one-time payment.

As of December 31, 2024, Timotheus Höttges was entitled to the defined benefit obligation (DBO) stated below, based on IAS 19. In the 2024 financial year, the following service costs arose: