Commitments in connection with the termination of a position on the Board of Management

Severance payments

The existing rules concerning the payout of a severance payment if the membership on the Board of Management is terminated early at the instigation of the Company do not exceed the value of two years of annual remuneration (severance cap) and do not total more than the remaining term of the service 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 these compensation payments are set off against the volume of the severance entitlement.

Settlement of remuneration components in the event of 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 continue to receive the monthly basic remuneration and the ongoing fringe benefits 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.

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.

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 is paid for a maximum of six months and, with regard to variable remuneration components, participation is only permitted on the basis of a pro rata calculation. Service contracts for the Board of Management automatically end at the end of the month in which a 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.

Change of control

The service contracts for the Board of Management at Deutsche Telekom AG 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.