48 Share-Based Payments
Accounting Policies
The obligations arising from share-based payments are calculated using standard valuation methods based on option pricing models (Monte Carlo simulation). Calculation of the fair value on the reporting date is based on various parameters for the Monte Carlo simulation (risk-free rate, annualized volatilities, correlations). The annualized volatility and the correlation are calculated based on historical volatility and historical correlation in the period matching the residual term based on daily returns. The risk-free rate is calculated using the interest rate structure curve based on the Svensson method. As the LTI provides for the granting of a dividend equivalent, there is no need to include the dividend yield.
Equity-settled share-based payments are recognized at the grant date at the fair value of the equity instruments vested by that date. The fair value of the obligation is therefore recognized as personnel expenses proportionally over the vesting period and is offset directly against the capital reserves.
The cash-settled share-based payments are shown under other provisions and remeasured at fair value at each reporting date. The expenses are also recognized as personnel expenses over the vesting period (see [E38] Provisions).
Vonovia Management Board
As part of the LTI in place since 2015, the Management Board members are granted a fixed number of phantom stocks (performance share units or “PSU”) annually, which are paid out at the end of a four-year performance period based on the target achievement level for targets defined at the beginning of the performance period and on the development of the share price, including dividends paid out during the performance period. The pre-defined target achievement level is based on the targets Relative Total Shareholder Return (RTSR), the development of EPRA Net Tangible Assets (NTA) per share, the development of the Group FFO per share, and the Sustainability Performance Index (SPI), with each target weighted equally at 25%. A change in the plan was agreed in the 2024 fiscal year for all tranches that had not yet been paid out. This involved the development in Group FFO per share being replaced by the development in Adjusted EBT per share. Under the new Management Board remuneration system effective as of January 1, 2025, operating free cash flow (OFCF) per share replaces the target for Adjusted EBT per share for all new LTI tranches. The SPI is taken into account excluding the Customer Satisfaction Index (CSI) and changes have been made to the target weightings. Target achievement now comprises the RTSR with a weighting of 40% and NTA per share, OFCF per share and the SPI with a weighting of 20% in each case. The LTI shown constitutes a cash-settled plan pursuant to IFRS 2; in turn, the payout claim can be lost entirely if the defined target achievement level has not been reached.
As part of the premature termination of a contract, one Management Board member was allocated 210,528 phantom stocks in Vonovia SE in an additional two-year tranche as of January 1, 2026. Each phantom stock confers a payment entitlement (gross) corresponding to the final share price of an ordinary share in Vonovia SE. The phantom stocks will be settled and paid out as part of the standard variable remuneration settlement cycle at the beginning of 2028.
The value of the total phantom stocks that had been granted but not paid out from the LTI as of December 31, 2025 was calculated by an external expert based on recognized actuarial principles (Monte Carlo simulation). The obligation disclosed as of the reporting date breaks down as follows:
Management Board Vonovia – The Value of the Total Phantom Stocks that had been Granted but not Paid out from the new LTIP Plan as of December 31, 2025
Tranche | End of performance period | Number of shares | Average fair value per share | Earned provision | ||||
2022–2025 | Dec. 31, 2025 | 138,742 | 20.44 | 2,835,690 | ||||
2023–2026 | Dec. 31, 2026 | 262,026 | 28.56 | 5,593,261 | ||||
2024–2027 | Dec. 31, 2027 | 272,544 | 37.53 | 5,114,593 | ||||
2025–2028 | Dec. 31, 2028 | 247,477 | 27.61 | 1,703,618 | ||||
2026–2027 | Dec. 31, 2027 | 210,528 | 24.54 | 5,140,450 | ||||
The LTI program resulted in expenses pursuant to IFRS 2 totaling € 11.6 million in the 2025 reporting year (2024: € 7.0 million).
Vonovia Executives Below Management Board Level
As part of the LTI in place since 2016, executives are granted a fixed number of phantom stocks (performance share units or “PSU”) annually, which are paid out at the end of a four-year performance period based on the target achievement level for targets defined at the beginning of the performance period and on the development of the share price, including dividends paid out during the performance period. The pre-defined target achievement level is based on the targets Relative Total Shareholder Return (RTSR), the development of EPRA Net Tangible Assets (NTA) per share, the development of the Group FFO per share, and the Sustainability Performance Index (SPI), with each target weighted equally at 25%. A change in the plan was agreed in the 2024 fiscal year for all tranches that had not yet been paid out. This involved the development in Group FFO per share being replaced by the development in Adjusted EBT per share. As of January 1, 2025, operating free cash flow (OFCF) per share replaces the target for Adjusted EBT per share for all new LTI tranches. The SPI is taken into account excluding the Customer Satisfaction Index (CSI) and changes have been made to the target weightings. Target achievement now comprises the RTSR with a weighting of 40% and NTA per share, OFCF per share and the SPI with a weighting of 20% in each case. The LTI shown constitutes a cash-settled plan pursuant to IFRS 2; in turn, the payout claim can be lost entirely if the defined target achievement level has not been reached.
The value of the total phantom stocks that had been granted but not paid out from the LTI as of December 31, 2025 was calculated by an external expert based on recognized actuarial principles (Monte Carlo simulation). The obligation disclosed as of the reporting date breaks down as follows:
Executives Below Management Board Level – The Value of the Total Phantom Stocks that had been Granted but not Paid out from the new LTIP Plan as of December 31, 2025
Tranche | End of performance period | Number of shares | Average fair value per share | Earned provision | ||||
2022–2025 | Dec. 31, 2025 | 33,354 | 20.44 | 681,409 | ||||
2023–2026 | Dec. 31, 2026 | 83,223 | 28.56 | 1,857,808 | ||||
2024–2027 | Dec. 31, 2027 | 76,458 | 37.53 | 1,580,904 | ||||
2025–2028 | Dec. 31, 2028 | 65,842 | 27.61 | 509,064 | ||||
The LTI program resulted in expenses pursuant to IFRS 2 totaling € 2.0 million in the 2025 reporting year (2024: € 2.4 million).
Employees
The Group works council agreement “Employee Share Program” was concluded in 2014. The program started in the 2015 calendar year, with the shares (in Vonovia SE) granted subject to a vesting period of six months. The costs associated with the securities deposit account are borne by Vonovia. All employees that had at least one full year of service as of December 31 of the calendar year concerned are eligible to participate. Shares with a value of between € 90 and € 360 at the most are granted to employees, depending on their gross annual salary, without the employees having to make any contribution of their own. This means that the Employee Share Program is an equity-settled plan pursuant to IFRS 2.
The employee share program results in total expenses of € 2.7 million in the 2025 reporting year (2024: € 2.7 million), which have been offset directly against the capital reserves.