Expert Corporate Governance Service (ECGS)
EUR 492.40 For Business Accounts Only

Etude de l'AG du 9/05/2017

General: The Company has chosen the legal option to opt-out from individual disclosure of Management Board members' remuneration. The AGM 2012 (before the Company's IPO) approved this resolution with an undisclosed majority of votes FOR. The approval is valid for a period of five years and then needs to be renewed. As the Company has not put forth a respective proposal again at this year's AGM, from financial year 2017 onwards Management Board members' remuneration will therefore have to be disclosed individually.

Item 2: We recommend opposing the dividend proposal. ECGS believes that dividends should be covered by consolidated earnings and/or free cash flow and supported by a strong balance sheet in terms of solvency and leverage. We recommend opposition as the Company does not provide any justification why dividend payment exceeds consolidated earnings for a fifth consecutive year.

Item 4: The Supervisory Board, since the Company's IPO in 2012, did not submit the Management Board's remuneration system to shareholders' vote. We urge the Company to submit the remuneration system to shareholder approval at the next AGM. Although the absolute amount of remuneration granted for financial year 2016 is not considered as excessive, we raise our concerns over the level of disclosure with regard to the remuneration system and the fact that is has not yet been up for shareholder approval. In line with our guidelines we would in principle recommend opposing the discharge of the Chairwoman of the Remuneration Committe, Ms. Sally Anne Ashford. As the discharge is proposed in a bundled resolution, we recommend shareholders to oppose the discharge of the Supervisory Board as a whole.

Items 6a, 6b, 6c, 6d, 6e, 6g and 6h: We recommend to oppose the re-election of seven Supervisory Board members until the AGM 2022 due to concerns over the insufficient independent representation on the Board.

Telefonica Deutschland Holdings

Telefonica Deutschland Holding is a telecommunication company. Co. offers its consumer retail and business customers postpaid and prepaid wireless communications products, along with wireless data services using Global Packet Radio Service, Universal Mobile Telecommunications System and Long Term Evolution technology as well as Digital Subscriber Line wireline telephony and high-speed internet services. Co. markets its products and its wireless and wireline communications products as well as services via the core brand O2. Co.'s secondary brands include the brands Fonic and netzclub. Co. also markets high-speed DSL internet access and wireline telephony.


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