Main changes to the 2025 remuneration system
The remuneration system adopted at the 2025 Shareholders’ Meeting places greater emphasis on the opportunity/risk profile than the remuneration system in effect until now. The possibility of losing all remuneration components depending on the development of total shareholder return (TSR) has been introduced for both the LTI and the SMP. If the TSR falls by 20 % or more during the period of the plan, the LTI will be canceled and no matching shares will be transferred. At the same time, Board of Management members can benefit from positive TSR developments in the SMP through higher matching ratios. This aims to closer align the interests of shareholders and Board of Management members.
In addition, the Supervisory Board made the decision to introduce multipliers for the STI and LTI with a potential bonus or penalty effect. By using multipliers to link the financial targets with the ESG and strategy targets in the STI and LTI, the Supervisory Board is seeking to reinforce its conviction that Board of Management members should first and foremost work towards achieving the financial objectives of the Group and the segments for which they are responsible. However, an attractive Board of Management remuneration should not only be tied to Deutsche Telekom’s financial success and a sustainable increase in shareholder return, but it should also reflect the successful implementation of ESG and strategy targets. Thus, Board of Management members will have an incentive not only to strive for good financial performance, but also to act strategically and in a sustainable manner in line with the long-term corporate targets. The performance factor, which was perceived by some as lacking transparency, is no longer part of the remuneration system.
The long-term environmental target parameters derived from the sustainability strategy are being moved from the STI to the LTI. The measurable target parameters of “customer retention/satisfaction” and “employee satisfaction” that are critical to Deutsche Telekom’s success will thus now be part of the STI, allowing changes in customer and employee satisfaction to be reflected more promptly in Board of Management remuneration. By structuring the STI, SMP, and LTI in this way, the Supervisory Board seeks to ensure that the Company’s performance (pay for performance), responsibility, and a forward-looking approach are rewarded.
The Share Ownership Guidelines for the Chair of the Board of Management are being expanded. In the future, the Chair of the Board of Management will be required to demonstrate ownership of shares in the equivalent value of two years’ annual basic remuneration instead of one. This will now have to be evidenced no later than the payout date of the fourth STI from the date of initial appointment, instead of after payment of the third STI, as before.
Moreover, the maximum remuneration for the Chair of the Board of Management and the ordinary members of the Board of Management has been increased. In addition, a further temporary increase in the maximum remuneration was made for the current Chair of the Board of Management, Timotheus Höttges. This measure is intended to take account of the fact that the current Chair of the Board of Management was willing to extend his term again prematurely so that Deutsche Telekom can continue its successful trajectory. The maximum remuneration for the Chair of the Board of Management is being increased only temporarily for the current Chair.