Other components of the remuneration system

Contractual terms, durations of appointment, and age limits

The Supervisory Board complies with the provisions of § 84 AktG and the German Corporate Governance Code as amended on April 28, 2022 when appointing new members to the Board of Management and defining the term of their service contracts.

The initial appointment of Board of Management members is for a maximum of three years. The maximum term for reappointments or extensions to the term of office is five years.

The Supervisory Board has generally defined a standard age limit of 67 years for members of the Board of Management.

Board-related payments

Group-internal boards

It is expected that members of the Board of Management assume certain Group-internal supervisory board or advisory council seats within the context of the responsibilities as regulated in the schedule of responsibilities. Wherever legally permissible, the members of the Board of Management will forgo the remuneration payable for such seats. If this is not possible or if the acceptance of the remuneration results in a financial advantage for Deutsche Telekom AG, the remuneration payable can be accepted but, in such a case, it is offset against the payable basic remuneration so that, ultimately, the member of the Board of Management has no financial advantage.

Group-external boards

External secondary occupations always require an explicit pre-approval from the Supervisory Board. In every case, the Supervisory Board very closely examines the expected time associated with such a seat on a board and the advantages that such a seat will bring for Deutsche Telekom AG and will also bring for the personal development of the member of the Board of Management. Furthermore, the Supervisory Board also ensures that no member of the Board of Management assumes more than two seats on the supervisory board of non-group listed companies or similar roles and that no role is taken as chair of the supervisory board of a non-group listed company. If a seat on the supervisory board of a non-group company is assumed, the Supervisory Board will always decide whether or to what extent the remuneration for this seat will be offset against the Board of Management remuneration.

Clawback rules for variable remuneration components

In accordance with § 87 (2) AktG, the Supervisory Board is authorized to reduce remuneration for the future to an appropriate level or to amend the structure of the total remuneration as well as the features of the remuneration components. In doing so, the position of the Company and that of the affiliated companies must be taken into consideration.

In addition to the relevant statutory provisions which stipulate that the Supervisory Board – in the event of a breach of duty by members of the Board of Management – is obligated to minimize the financial damage to the Company and, where necessary, to make claims for damages against the members of the Board of Management, a clawback rule has been contractually agreed with the members of the Board of Management of Deutsche Telekom AG. This sets out that the Supervisory Board has the right to reclaim payments made to the members of the Board of Management from the STI and LTI if it is found that the payment was carried out wrongfully, entirely or in part, because the Supervisory Board had received information regarding the decision determining the level of target achievement which was evidently incomplete or incorrect. The reimbursement claims expire three years after the erroneous determination of the target achievement was made.

Share Ownership Guidelines – SOG

The Share Ownership Guidelines (SOG) take account of the requirements from the German Corporate Governance Code as amended on April 28, 2022 and all stipulations from the Stock Corporation Act concerning the alignment of remuneration towards sustainable development of the Company. This brings the interests of the Board of Management and shareholders of Deutsche Telekom AG into line, with Board of Management members participating in the Company’s long-term development, both positive and negative.

Ordinary members of the Board of Management are therefore required to provide evidence of the equivalent value of one year’s annual basic remuneration in shares of Deutsche Telekom AG no later than the payout date of the third STI from the date of initial appointment. The Chair of the Board of Management is obligated to build up the equivalent of two years’ annual basic remuneration in shares of Deutsche Telekom AG. This must be demonstrated no later than the payout date of the fourth STI from the date of initial appointment. The required share portfolio can be built up both through investments under the Share Matching Plan and through voluntary share purchases.