Stock-based compensation plans.
Stock-based compensation plans exist at Deutsche Stock-based compensation plans currently in existence
Telekom AG (including the plans at the former T-Online within the Group are summarized below. Details of the
International AG issued prior to the merger), T-Mobile plans can be found in Note 42 to the consolidated finan-
USA, T-Mobile UK, Magyar Telekom and PTC. cial statements in the 2007 Annual Report.
Stock option plans (SOPs).
Deutsche The following table provides an overview of the devel-
Telekom AG opment of the total stock options issued by Deutsche
plans Telekom AG held under the 2001 plan:
SOP 2001 SAR 2001
Stock options Weighted SARsa Weighted
exercise price exercise price
(thousands) € (thousands) €
Outstanding stock options at Jan. 1, 2008 9,746 24.47 142 29.76
Granted 0 - 0 -
Exercised 22 12.36 0 -
Forfeited 476 26.88 3 22.00
Outstanding at June 30, 2008 9,248 24.38 139 29.93
Exercisable as of June 30, 2008 9,248 24.38 139 29.93
a SARs: Stock appreciation rights represent an entitlement to cash compensation rather than shares.
Interim consolidated financial statements
T-Online The following table provides an overview of the develop- plan. The options are converted into shares of
International AG ment of total stock options issued by the former T-Online Deutsche Telekom AG when exercised.
stock option plans
(prior to merger) International AG (prior to merger) held under the 2001
Stock options Weighted
Outstanding stock options at Jan. 1, 2008 3,085 10.30
Granted 0 -
Exercised 0 -
Forfeited 136 10.31
Outstanding at June 30, 2008 2,949 10.30
Exercisable as of June 30, 2008 2,931 10.30
T-Mobile USA The following table provides an overview of the develop- Powertel, which were combined in 2004. The options are
(VoiceStream/ ment of total stock options issued under the stock option converted into American Depository Shares (ADSs) when
stock option plan plans of T-Mobile USA, including performance options, and exercised.
Stock options Weighted average
Outstanding stock options at Jan. 1, 2008 7,079 22.75
Granted 0 -
Exercised 256 10.14
Forfeited 559 27.87
Expired 0 -
Outstanding at June 30, 2008 6,264 22.81
Exercisable as of June 30, 2008 6,264 22.81
Mid-term incentive plan/long-term incentive plan.
Mid-term incentive plans (MTIPs) exist at Deutsche Additionally, T-Mobile USA and PTC have established per-
Telekom AG (including the plans at the former T-Online formance cash plan programs with long-term incentive
International AG issued prior to the merger), T-Mobile plans (LTIPs).
USA, T-Mobile UK and Magyar Telekom to promote
competitive total compensation for members of the The most important changes to the Group’s MTIPs and LTIPs
Board of Management, senior executives and other since year-end 2007 are detailed below. Details of the plans
beneficiaries at the Deutsche Telekom Group. can be found in Note 42 to the consolidated financial state-
ments in the 2007 Annual Report.
Deutsche An MTIP for Deutsche Telekom AG came into effect for of the plan. The relative performance target will be met if
Telekom AG the last time on a revolving cycle for the year 2008 and the total return of the T-Share outperforms the Dow Jones
will remain in force until the end of 2010. Euro STOXX Total Return Index on a percentage basis dur-
ing the term of the plan. The weighting of the two targets,
The absolute performance target will be met if at the end of which are independent of each other, is 50 percent each
the term of the three-year plan, Deutsche Telekom’s share and the payment upon target achievement is structured in
price has risen by at least 30 percent since the beginning the same way.
T-Mobile USA For 2008, T-Mobile USA set up a new LTIP that, like the growth and the development of the company’s shareholder
LTIP LTIP plans for the years 2006 and 2007, takes customer value into consideration as targets.
T-Mobile UK For T-Mobile UK, an MTIP has also come into effect for the before investments in intangible assets (excluding good-
MTIP last time as part of a revolving cycle. In addition to the two will) and property, plant and equipment). The third per-
performance targets for Deutsche Telekom AG, T-Mobile formance target can only be achieved after the two other
UK has introduced a third target for a defined group of par- performance targets have been met.
ticipants which is based on the cash contribution (EBITDA
Interim consolidated financial statements
Magyar Telekom Magyar Telekom’s MTIP that came into effect for 2008 is measured in terms of the development of Magyar
MTIP and was also issued for the last time on a revolving cycle Telekom’s shares and the Dow Jones EURO STOXX
is generally based on the same terms and conditions as Total Return Index.
Deutsche Telekom AG’s MTIP. However, performance
Polska Telefonia Under the LTIP at PTC newly issued for 2008, the bonus target and, as in the case of previously issued LTIPs,
Cyfrowa (PTC) is determined based on the achievement of the EBITDA is calculated separately for each cycle.
Income of EUR 3 million was recognized in the first half of of the T-Share relative to the defined performance targets.
2008 in connection with the reversal of provisions for the Expenditures for LTIPs at T-Mobile USA and PTC amounted
MTIPs linked to the development of the T-Share due to a to EUR 32 million.
sustained shortfall in the expectations for the performance
Contingencies and other financial obligations.
Contingencies and other financial obligations decreased annual obligation of EUR 0.8 billion and, in an offsetting
by EUR 1.5 billion compared with December 31, 2007 effect, interest added to the present value amounting to
to EUR 33.1 billion, mainly due to the payment of the EUR 0.1 billion. By contrast, obligations arising from the
purchase price for SunCom Wireless Holdings, Inc. In acquisition of property, plant and equipment, as well as
addition, the present value of payments to be made by miscellaneous purchase commitments and similar obliga-
Deutsche Telekom to the special pension fund or its suc- tions rose by EUR 0.9 billion compared with the amount at
cessors pursuant to the provisions of the German Posts the end of the year.
and Telecommunications Reorganization Act (Postneu-
ordnungsgesetz – PTNeuOG) decreased by EUR 0.7 bil- Details of commitments resulting from the acquisition of
lion compared with December 31, 2007. The decrease shares in OTE are disclosed in the notes on “Investments
in the present value is the result of the pre-payment of the accounted for using the equity method.”