Review of appropriateness and customariness of Board of Management remuneration and compliance with maximum remuneration

The Supervisory Board determines the structure of the Board of Management remuneration system and reviews the appropriateness and customariness of remuneration on a regular basis. It is to be ensured that Board of Management remuneration is oriented toward sustainable development and that there is a multi-year measurement base for the variable components for a target achievement level of 100 %.

The General Committee of the Supervisory Board reviewed the appropriateness and customariness of Board of Management remuneration at Deutsche Telekom AG in 2024. The review was carried out based on a study done by an independent external service provider on the remuneration components and remuneration levels at DAX 40 companies. Based on the statistical classification (revenue, employees, and market capitalization), Deutsche Telekom AG is currently in the top quarter of this group of peer companies. To take account of the differences within the DAX 40, particular attention was paid in the review to the twelve largest companies in the index.

In addition, the European and international telecommunications companies were analyzed in more detail in 2024 with the assistance of an external service provider. The analysis showed that these companies do not serve as a suitable benchmark for the remuneration of the Board of Management of Deutsche Telekom AG due to their different sizes and geographical location. 

It was ascertained that the remuneration components applied in the Board of Management remuneration system are in line with market standards, and that the members of the Board of Management are compensated according to stock corporation law at a level appropriate to their tasks and performance and to the situation of the Company. Nevertheless, the General Committee of the Supervisory Board has identified a need for action with regard to the remuneration levels of the Board of Management members so that the Company remains competitive going forward. 

In addition, in accordance with § 162 (1) AktG, the Supervisory Board shall ensure compliance with maximum remuneration, and shall outline this in the remuneration report. The Supervisory Board set the current maximum remuneration for the Chair of the Board of Management at EUR 9,100,000 and for the ordinary members of the Board of Management at EUR 5,300,000. The Shareholders’ Meeting on April 7, 2022 approved this maximum remuneration.

In accordance with the current Board of Management remuneration system, the following components are taken into account for the review of maximum remuneration:

Compliance with maximum remuneration can only be evaluated retrospectively when the last remuneration component from the financial year in question has been paid out. The current and the previous Board of Management remuneration system each includes two multi-year variable remuneration components. The Long-Term Incentive (LTI; Variable II in the former system) and the Share Matching Plan (SMP) each has a term of four years. To participate in the SMP, the Board of Management member must use the gross Short-Term Incentive (STI) paid out in the prior year to make a personal investment in Deutsche Telekom AG shares, which are then locked up for four years from the date of purchase. At the end of the lock-up period, the number of shares matching the personal investment is transferred to the member of the Board of Management.

This means that it is only possible to provide a final report on compliance with maximum remuneration for the 2024 financial year in the 2029 remuneration report. If it is clear at an earlier point in time that the maximum remuneration will be exceeded, the payment of the remuneration component causing the maximum remuneration to be exceeded is capped straight away.

Since the 2022 financial year, along with the allocation cap (“Zuteilungs-Cap”) under stock corporation law, the remuneration received by Timotheus Höttges in a given financial year has also been capped. Remuneration was capped for the first time in the 2024 financial year. For more information, please refer to the section on remuneration granted and owed for current Board of Management members in accordance with § 162 AktG.