Deutsche Bank : Compensation system for the members of the Management Board as of January 2021

Deutsche Bank

Compensation system for the members of

the Management Board as of January 2021

Deutsche Bank

Compensation System for the Management Board 2021

Table of Contents
1.	Compensation system for the Management Board as of 2021.....................................................................	2
1.1	Compensation principles.................................................................................................................................	2

1.2 Procedure to determine the amount of Management Board compensation and the review of

	appropriateness ........................................................................................................................................................	4
	1.2.1	Review of appropriateness......................................................................................................................	5
	1.2.2	Workforce compensation and employment conditions taken into account...........................................	5
	1.2.3	Measures to avoid and handle conflicts of interest ................................................................................	5
2.	Further development of the compensation system with effect from 2021 ..................................................	6

2.1 Increased portion of share-based variable compensation by up 100% until the shareholding requirement is

met (Shareholding Guidelines) ..................................................................................................................................	6
2.2 Increased transparency and consistency of variable compensation components..........................................	6

2.3 Sustainability strategy linked to variable compensation through enhanced implementation of ESG

objectives	...................................................................................................................................................................	7
2.4	Overview of the changes ................................................................................................................................	7
3.	Total compensation and compensation components ..................................................................................	8
3.1	Structure and compensation components of the compensation system........................................................	8
3.2	Target total compensation .............................................................................................................................	9
3.3	Compensation caps.......................................................................................................................................	10
3.3.1	Cap on total compensation (maximum compensation) ........................................................................	10
3.3.2	Cap on variable compensation ..............................................................................................................	10
3.3.3	Reduction of compensation ..................................................................................................................	10
3.4	Non-performance-related components (fixed compensation) .....................................................................	10
3.4.1	Base salary.............................................................................................................................................	11
3.4.2	Company pension plan ..........................................................................................................................	11
3.4.3	Fringe benefits.......................................................................................................................................	11
3.5	Performance-related components (variable compensation) ........................................................................	11
3.5.1	Short-Term Award (STA)........................................................................................................................	12
3.5.2	Long-Term Award (LTA).........................................................................................................................	15
3.5.3	Granting of variable compensation and ensuring sustainability ...........................................................	19
3.5.4	No discretionary special payments .......................................................................................................	20
4.	Compensation-related transactions...........................................................................................................	20
5.	Temporary deviation from the compensation system ...............................................................................	22

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Deutsche Bank

Compensation System for the Management Board 2021

1. Compensation system for the Management Board as of 2021

The system for the compensation of the Management Board members of Deutsche Bank Aktiengesellschaft (hereinafter also referred to as "Deutsche Bank" or the "Bank"), which has applied since the General Meeting 2017 and was recently adjusted in January 2021, is to be submitted to the General Meeting for approval in accordance with § 120a (1) Stock Corporation Act (AktG). The compensation system takes into account the regulatory requirements of the Stock Corporation Act (AktG) as well as the Remuneration Ordinance for Institutions (InstitutsVergV) of December 16, 2013 (Bundesgesetzblatt (BGBl.) I, p. 4270), last amended by Article 1 of the Ordinance of April 15, 2019 (Bundesgesetzblatt (BGBl.) I, p. 486) on the Amendment to the InstitutsVergV of July 25, 2017 (Bundesgesetzblatt (BGBl.) I, p. 3042), as well as the principles and recommendations of the German Corporate Governance Code (GCGC) in the version of December 16, 2019. As announced by the Chairman of the Supervisory Board in the Annual Report 2020, the compensation system was comprehensively reviewed and further developed during the past financial year. The Compensation Control Committee developed a recommendation for the adjustment of the compensation system, which was submitted to the Supervisory Board and approved by it on February 3, 2021. The adjusted compensation system applies to all incumbent Management Board members with effect from January 1, 2021, as well as in the case of new appointments or reappointments to the Management Board.

The Supervisory Board proposes that the system of compensation for the Management Board members described in the invitation to this General Meeting be approved.

1.1 Compensation principles

The compensation system and thus the assessment of individual compensation are based on the compensation principles outlined below. The Supervisory Board takes them into consideration when adopting its resolutions on the compensation system and assessing individual compensation.

Corporate strategy		Deutsche Bank aims to make a positive contribution to its clients, employees, investors and society
		in general by fostering economic growth and social progress. Deutsche Bank would like to offer
		clients solutions and provide an active contribution to foster their creation of value. This approach
		is also intended to ensure that the Bank is competitive and profitable and can operate on the basis
		of a strong capital and liquidity position. Deutsche Bank is committed to a corporate culture that
		appropriately aligns risks and revenues.
		Through the structure of the compensation system, the members of the Management Board are
		to be motivated to achieve the targets and objectives linked to the Bank's strategy, to work
		continually towards the long-term positive development of the company and thereby to avoid
		disproportionately high risks.
		The compensation system for the Management Board members makes an important contribution
		to promoting and implementing the corporate strategy, in particular in that pay is linked to relevant
		and demanding performance criteria for short-term and long-term variable compensation. Success
		and performance-based compensation therefore comprises the predominant portion of total
		compensation.
		The Supervisory Board thus ensures there is always a strong link between compensation and
		performance ("pay for performance").
Shareholder's interests		When designing the specific structure of the compensation system, determining individual
		compensation amounts and structuring the means of compensation allocation and delivery, the
		focus is on a close alignment of the interests of the Management Board members and
		shareholders.
		This link is established within the framework of the assessment of the Long-Term Award, as
		Deutsche Bank's shareholder return is assessed in comparison to those of a selected group of
		peers.
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Deutsche Bank

Compensation System for the Management Board 2021

		Furthermore, all Management Board members have an obligation to hold a significant amount of
		Deutsche Bank shares (Shareholding Guidelines).
		In addition, the Long-Term Award (60% of the reference variable compensation) is granted
		exclusively in the form of share-based compensation components. The Supervisory Board has the
		possibility to grant the Short-Term Awards (40% of reference variable compensation) to individual
		Management Board members entirely as share-based equity awards until they fulfill their
		shareholding obligation requirements.
Individual and collective		The compensation structures foster not only the sustainable and long-term development of each
objectives		of the business divisions, infrastructure areas or regions the Management Board members are
		responsible for, but also the performance of the Management Board as a collective management
		body.
		Variable, performance-based compensation is determined on the basis of pre-defined objectives,
		while ensuring an appropriate balance between financial and non-financial targets. Exceptional
		performances are appropriately rewarded, and missed targets lead to a tangible reduction of
		variable compensation, including up to a full forfeiture.
		Individual and divisional performance is assessed on the basis of one-year objectives (Short-
		Term-Award).
		The collective performance of the entire Management Board is evaluated over a three-year
		assessment period by the Supervisory Board on the basis of long-term objectives that are the
		same for all Management Board members (Long-Term Award).
Long term		Variable compensation is only granted on a deferred basis.
		The Long-Term Award, which accounts for a uniform 60% of the reference variable compensation
		and has a three-year assessment period, is granted only in the form of share-based compensation
		components that vest with a deferral period of up to five years. After vesting, the individual
		tranches are still subject to an additional holding period of one year each. The Long-Term Award
		only becomes fully available for delivery over a period of three to six years following its
		assessment.
		The Short-Term Award, which accounts for a uniform 40% of the reference variable compensation,
		is granted primarily in cash and 25% of it becomes due for payment every two years (in each case
		proportionally in year 1, 3, 5 and 7 after being assessed). Thus, the Short-Term Award is not fully
		paid out until seven years after being assessed.
		During deferral and holding periods, deferred compensation is subject to certain performance and
		forfeiture conditions that can lead to - upon the occurrence of certain events - a partial or full
		forfeiture of the awarded variable compensation.
		The total variable compensation may be reclaimed even after disbursal in response to specific
		individual negative contributions to results made by the Management Board member for up to two
		years after the expiry of the last deferral period (clawback).
Sustainability		Economic, social and ecological issues are closely connected. Deutsche Bank wants to be a role
		model for sustainability in the financial sector and thus contribute to fostering a more
		environmentally, socially and financially well-governed economy. By acting responsibly also in the
		context of sustainability, the Bank is also making an important contribution to the company's
		performance.
		The compensation system is therefore closely linked to Deutsche Bank's Environmental, Social
		and Governance (ESG) sustainability strategy. The corresponding ESG Factor, which accounts
		for 20% of the reference variable compensation, comprises not only governance objectives but
		also environmental and social aspects.
		In addition, ESG objectives are implemented in the individual Balanced Scorecards, which account
		for 10% of the reference variable compensation.
Compensation caps		Pursuant to the regulations of the Capital Requirements Directive (CRD) 4, which banks are
		subject to, the ratio of fixed to variable compensation is generally limited to 1:1 (cap regulation).
		In other words, the amount of variable compensation must not exceed that of fixed compensation.
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Deutsche Bank

Compensation System for the Management Board 2021

Transparency

Appropriateness

Governance

However, lawmakers have also stipulated that shareholders may resolve to set the ratio of fixed to variable compensation to 1:2. In May 2014, the General Meeting voted to approve setting a 1:2 ratio by a majority of 91%.

The compensation system resolved by the Supervisory Board also provides a uniform fixed cap of 150% of the target figures for the two variable compensation components.

The Supervisory Board also set a maximum compensation in accordance with the requirements of § 87a (1) No. 1 Stock Corporation Act (AktG). This comprises all compensation components (base salary, Short-Term Award, Long-Term Award, company pension plan and fringe benefits) and amounts to €12 million uniformly for all Management Board members. The level of maximum compensation makes it possible to recruit the best national and international personnel for management and to pay them adequately, while also taking into account the Bank's broad and international business model.

Through the uniform structure, the Supervisory Board has significantly increased the transparency and understandability of the compensation system in accordance with the expectations of investors and the public as well as the regulatory requirements.

The specific application of the compensation system is clearly and understandably described each year in the Compensation Report. Shareholders and other stakeholders can see based on the underlying performance criteria how the compensation system for the Management Board members contributes to fostering the implementation of the strategy and the long-term sustainable development of the company as well as what the actual compensation is for the financial year.

The amounts of the base salary and variable compensation are appropriate in light of both a vertical and a horizontal comparison. The horizontal comparison is performed on the basis of the relevant peer groups; their composition is disclosed. The vertical comparison entails an examination of the relationship between Management Board compensation and the compensation of the workforce in general and over time in particular.

Furthermore, within the framework of a review pursuant to § 7 Remuneration Ordinance for Institutions (InstitutsVergV), the affordability of the total amount of annual variable compensation is determined based on key profitability, solvency and liquidity figures.

The structuring of the compensation system and the resulting assessment to determine the individual compensation takes place within the framework of the statutory and regulatory requirements.

In particular, the Supervisory Board's objective is to offer, within the boundaries of applicable regulatory requirements, the Management Board members a compensation package that is commensurate with the scope of the Management Board member's responsibilities and is competitive and in line with customary market practices. This is to ensure that the best managers can be gained and retained.

These compensation principles were decisive for the Supervisory Board in reviewing the previous compensation system, identifying the need for adjustments and carrying out the adjustments. The Supervisory Board also took into account how the individual elements of compensation have proven themselves in practice.

Implementation of the compensation system takes place within the framework of the Management Board service contracts.

1.2 Procedure to determine the amount of Management Board compensation and the review of appropriateness

The Supervisory Board as a whole is responsible for decisions regarding the design of the compensation system and the structure and amount of compensation. The Compensation Control Committee supports the Supervisory Board in its tasks of designing and monitoring the implementation of the system and prepares the resolutions for the Supervisory Board. As necessary, the Compensation Control Committee recommends adjustments for the Supervisory Board to make to the system.

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