GOV-3 – Integration of Sustainability-related Performance in Incentive Schemes

To demonstrate the importance of sustainability for our corporate activities, we have integrated sustainability targets into Vonovia’s management and remuneration system for the Management Board and top management (first level below the Management Board) via the Sustainability Performance Index (SPI). The index comprises six sub-indicators based on the material sustainability topics at Vonovia. They are each included in the SPI, which is measured as a percentage, with different weightings. The sub-indicators include:

The SPI is one of Vonovia’s internal performance indicators and relates explicitly to its core business, property management and development (excluding the Care segment).  Its six subindicators are company-specific metrics that have no direct equivalent in the metrics required under the ESRS. One exception is S1-9, which shows the gender distribution at top management level. The information shown under  S1-9 differs from the company-specific SPI sub-indicator “proportion of women in management positions,” which is defined as a company-specific metric. Further information can be found in S1-5 and S1-9.

The indicators “proportion of (partially) modernized newly rented apartments,” “customer satisfaction” and “carbon intensity of the housing stock” are only measured for Germany, i.e., they do not include Austria or Sweden.

Climate-related considerations are incorporated into Management Board and top management remuneration via two SPI subindicators: “carbon intensity of the housing stock (in Germany)” and “average primary energy demand of new constructions (Group as a whole).” The carbon intensity of the housing stock (see E1-4) is designed to illustrate energy-efficiency alterations to existing properties, while the energy demand of new constructions addresses the average primary energy demand of newly constructed housing. Overall, climate-related considerations are incorporated into long-term variable remuneration at 11.25%. In 2024, climate-related considerations of around 2 % to 4 % were included in the total compensation paid to members of the Management Board (in accordance with Section 162 AktG).

We are aiming to achieve 100% target achievement in the 2025 fiscal year. The Management Board has set specific annual targets for each of the SPI indicators. The weighted targets add up to a target of 100%. Progress during the year is recorded, reported to the Management Board and monitored on a quarterly basis for internal annual controlling purposes. Externally, the individual metrics and the overall target achievement level for the SPI index, expressed as a percentage, are shown in the annual reporting. The SPI target achievement level for the 2024 fiscal year was 104.2% (see also the chapter “Corporate Governance”). The Management Board has also set medium-term targets for 2030 for internal management purposes.

The metrics derived from the SPI with a target horizon of four years are also linked to annual target values, which are, in turn, incorporated into the long-term remuneration system (long-term incentive plan, LTIP) for the Management Board and top management, and are confirmed by the Supervisory Board. The SPI targets are closely tied to the company’s five-year investment planning.

The remuneration paid to members of the Management Board (and top management) is based on a number of components. Among other things, members are granted a remuneration component with a long-term incentive effect and a balanced risk-return profile in the form of notional shares (“performance shares”) in line with the provisions of the relevant applicable Long-Term Incentive Plan (LTIP). Target achievement is calculated on the basis of three financial performance criteria and one non-financial performance criterion, the Sustainability Performance Index (SPI).

• Relative Total Shareholder Return (relative TSR)
• EPRA NTA (Net Tangible Assets) per share
• Adjusted EBT
• Sustainability Performance Index (SPI)

All four performance criteria are included when calculating the payout from the LTIP, each with a weighting of 25%. In the reporting year, 11 to 13% of the remuneration to be paid to members of the Management Board depended on sustainability-related targets. The remuneration system and the SPI are described in detail in the Remuneration Report and in the chapter entitled “Corporate Governance.”

In accordance with the requirements of Sections 87 (1) and 87a (1) AktG, the Supervisory Board adopts a remuneration system for Vonovia SE Management Board members. The Supervisory Board is supported by the HR and Remuneration Committee, which develops recommendations relating to the Management Board remuneration system. The Supervisory Board discusses and then rules on these recommendations. The Supervisory Board submits the remuneration system to the Annual General Meeting for approval. The Supervisory Board also makes a decision every year on the specific SPI targets for the term of the LTIP and on the parameters for target achievement.