Deutsche Wohnen : Approval of the remuneration system for the members of the Management Board (Extract from the invitation to the AGM)

2. Remuneration system for the members of the Management Board of Deutsche Wohnen SE (Agenda Item 7)

Remuneration System for the Management Board of Deutsche Wohnen SE

1. Further Development of the Remuneration System

The Management Board remuneration system that has applied to date at Deutsche Wohnen SE was presented to the Annual General Meeting in June 2022 and approved by a 96.9% majority. In light of the fundamental revision of Deutsche Wohnen SE's management model by the Management Board, and taking current market practice and typical investor expectations into account, the Supervisory Board performed a review of this remuneration system. Based on its analysis, the Supervisory Board passed a resolution on the following adjustments to the Management Board remuneration system.

	Current Design	Adjustment and Background
As part of the fundamental revision of Deutsche Wohnen SE's manage-
ment model, Group FFO is no longer used as part of the management
system. It has been replaced by the DW Adjusted EBT as the central
indicator for evaluating the company's sustained operating earnings
power.
Short-term	As the central indicator for	The performance criterion DW
Incentive	evaluating the company's sus-	Group FFO is being replaced
(STI) Per-	tained operating earnings	by the performance criterion
formance	power, the DW Group FFO is	DW Adjusted EBT.
Criteria	assigned a weighting of 75%	The second performance crite-
	for evaluating target achieve-	rion Adjusted EBITDA is no
	ment. Another 25% is deter-	longer applied due to its simi-
	mined based on	larity to DW Adjusted EBT,
	Adjusted EBITDA. The target	meaning that, going forward,
	achievement level is multiplied	the STI will only be evaluated
	by a personal performance	based on the performance cri-
	factor.	terion DW Adjusted EBT and
		the personal performance fac-
		tor.
Long-term	DW Group FFO per share is as-	The performance criterion DW
Incentive	signed a weighting of one-third	Group FFO per share is being
(LTI) Per-	for evaluating target achieve-	replaced, with the weighting
formance	ment.	remaining the same, by the
Criteria		performance criterion
		DW Adjusted EBT per share.
Contrac-	Management Board contracts	In the future, the contractual
tual Terms	of employment are concluded	terms will generally be three
	for the term of each individ-	years both upon initial ap-
	ual's appointment, usually for	pointment and for each subse-
	three years upon initial ap-	quent appointment.The five-
	pointment and for five years	year contractual terms and ap-
	for each subsequent appoint-	pointment periods typically
	ment.	used in Germany to date are
		relatively long in an interna-
		tional comparison.
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The enhanced Management Board remuneration system applies, subject to its approval by the 2024 Annual General Meeting, as of January 1, 2024, for all Management Board members in office as well as for all newly appointed and reappointed members.

For the purposes of the 2022-2025 and 2023-2026 LTI tranches, the performance criterion DW Group FFO per share provided for in these tranches is being replaced by the performance criterion DW Adjusted EBT per share to ensure consistency with the revised management model. This will be achieved by assessing the increase in the DW Group FFO per share during the performance period defined as a target when the 2022-2025 and 2023-2026 LTI tranches were issued based on the performance criterion DW Adjusted EBT per share.

2. Principles of the Remuneration System

As a residential real estate company, Deutsche Wohnen SE plays a central role in society. This explains why our activities are never focused exclusively on financial aspects, but also take social factors into account. We are aware of the special role that we play and the special responsibility we have: As a service provider and the provider of homes for around a quarter of a million people, our focus is on our customers and their needs. This is why we strive to maintain our building stock and make an active contribution to shaping neighborhoods. We offer our customers modern apartments that meet their needs while at the same time developing services for higher quality of living. Our focus on our customers is also the reason why we are addressing a particularly important social issue: the construction of new apartments. We are committed to the principles of the social market economy and profitability and take responsibility for safe, good and affordable housing.

The remuneration paid to the Management Board members helps promote the business strategy and the company's sustainable development by creating incentives to manage the company and its subsidiaries, as a portfolio-holding and growth-oriented residential real estate company, in the interests of generating positive and stable returns for all shareholders in the long term. The remuneration system serves as motivation to pursue a clear and sustainable corporate strategy in line with the Deutsche Wohnen SE management model, which has been revised to reflect changes in the market environment, the aim being to promote the active management of investments and financing. The Supervisory Board is aware of the company's responsibility towards its tenants, customers and employees as well as being aware of the significance of the company's commitment to the greater good. As a result, non-financial ESG (environmental, social and governance) factors are also taken into account in Management Board remuneration as a general rule.

The Management Board receives performance-related renumeration; realistic and ambitious targets are set for variable remuneration components (pay for perfor- mance). The criteria used to assess whether the Management Board remuneration is appropriate include the duties of the individual Management Board member, his or her personal performance, the economic situation, the company's success and future outlook and the extent to which such remuneration is standard practice, taking into account the company's peer group and the remuneration structure within the company. The remuneration system is oriented toward the sustainable growth of the company overall.

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The remuneration system forms the basis for determining the remuneration of Deutsche Wohnen SE Management Board members.

3. Procedures for Establishing, Implementing and Reviewing the Remu- neration System, Initial Application, Conflicts of Interest

In accordance with the requirements of Sections 87 (1) and 87a (1) AktG, the Supervisory Board adopts a remuneration system for Deutsche Wohnen SE Management Board members. The Supervisory Board is supported by the Executive and Nomination Committee ("Executive Committee"), which develops recommendations relating to the Management Board remuneration system. The Supervisory Board discusses and then rules on these recommendations. If need be, the Supervisory Board can seek the advice of external consultants, making sure that they are independent of both the Management Board and the company. The general provisions set out in the German Stock Corporation Act and the GCGC regarding dealing with conflicts of interest are also taken into account when establishing, implementing and reviewing the Management Board remuneration system. If conflicts of interest arise, the Supervisory Board members do not participate in the adoption of resolutions on the agenda items concerned within the Supervisory Board and the relevant committees.

The remuneration conditions for employees are taken into account when setting the amount of remuneration to be paid to Management Board members by way of a vertical comparison (see 4.2). In addition, when defining the performance criteria for the variable remuneration to be paid to the Management Board, care is taken to ensure that these largely match the performance incentives for senior management where the latter is granted variable remuneration.

The Supervisory Board submits the remuneration system to the Annual General Meeting for approval. The target total remuneration for members of the Management Board is defined by the Supervisory Board in line with the remuneration system presented to the Annual General Meeting for approval.

The regular review of the Management Board remuneration system by the Supervisory Board is prepared by the Executive Committee. The latter recommends to the Supervisory Board any changes to the system if necessary. If significant changes are made to the remuneration system, they are submitted to the Annual General Meeting for approval once again. The same occurs at least every four years, even without significant changes.

If the Annual General Meeting does not approve the remuneration system that is put to the vote, a revised remuneration system is presented for approval at the next ordinary Annual General Meeting at the latest.

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4. Definition of Specific Target Total Remuneration by the Supervisory Board, Appropriateness of Management Board Remuneration

In accordance with the requirements of the German Stock Corporation Act and the GCGC, when determining the target total remuneration of Management Board members, the Supervisory Board ensures that it is commensurate with the tasks and performance of the relevant member and the company's financial situation, is aligned with the long-term, sustainable development of Deutsche Wohnen SE and does not exceed the usual remuneration without special justification. For this pur- pose, both external and internal comparisons are made.

When assessing the appropriateness of remuneration, Deutsche Wohnen SE looks at its peer group (horizontal, external comparison) and the remuneration structure that applies in the rest of the company (vertical, internal comparison).

4.1. Horizontal Comparison

In the horizontal - external - comparison, a suitable group of companies is used to assess whether the amount and structure of the target total remuneration is appropriate and customary in view of the market position of Deutsche Wohnen SE (in particular in terms of industry, size and country). These are generally the other companies from the stock exchange segment (index) in which Deutsche Wohnen SE is listed and/or a peer group comprising national and international companies of a similar size within the real estate industry.

4.2. Vertical Comparison

In addition to the horizontal - external - comparison, a vertical - internal - comparison of Management Board remuneration is also drawn up. This involves looking at the ratio of the remuneration of the Management Board to that of senior management (below Board level) and other senior executives and taking into account the total workforce of other DW employees in the real estate industry. In addition to the current remuneration ratios of various levels of management, the Supervisory Board also takes into account how their remuneration has evolved over time. This comparison is also performed as part of the regular review of the appropriateness of Management Board remuneration and, as a result, also when the corresponding salary adjustments are made.

4.3. Differentiation Based on the Relevant Requirement Profile

The remuneration system allows the Supervisory Board to take into account the function and area of responsibility of the individual Management Board member when determining the target total remuneration. At the discretion of the Supervisory Board, function-specific distinctions are therefore permissible, taking into account criteria such as customary market practice, experience of the relevant Management Board member, length of service on the Board and the department for which he or she is responsible.

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4.4. The Remuneration System at a Glance

Basis of assessment/parameter

Fixed remuneration

Basic salary (fi- xed remunera- tion)

Possible benefits

in kind and

other

fringe benefits

• Contractually agreed fixed remuneration paid in twelve monthly instalments
• Private use of a company car or payment of a company car allowance and provision of equip- ment (especially communication equipment)
• 50% of the contributions to private health and long-term care insurance, but no more than the maximum employer's contribution to statu- tory health and long-term care insurance
• D&O insurance

remuneration

Short-term

incentive (STI)

Type: Limit I cap:

Performance cri- teria:

Payout:

• Target STI
• 125% of target STI
• DW Adj. EBT
• Personal performance factor (0.8
  - 1.2)
• Due one month after the adoption of the
  company's annual financial state- ments
• Paid in cash

Variable

Long-term

incentive

(LTI)

Type: Limit I cap

Performance cri- teria:

Payout:

• Target LTI
• 250% of the target value
• DW NAV per share (1/3)
• DW Adj. EBT per share (1/3)
• ESG targets (1/3)
• As part of the next salary pay- ment after the company's annual financial statements are adopted following the end of the four-year performance period
• Paid in cash

Additional remunerationarran- gements

Maximum

total remunera-

tion

Malus/clawback

• The maximum total remuneration amounts to € 5.5 million gross per annum for the Chair of the Management Board and € 3.5 million gross per annum for each of the other Management Board members
• Partial or full reduction in payment/demand for repayment of variable remuneration
• May apply in the event of significant breaches of duty (for the year in which the breach oc- curs) and payments based on incorrect data

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Basis of assessment/parameter

 Clawback period of one year after payout

Benefits on

early

termination of

contract

• If agreed in the Management Board employ- ment contract, compensation amounting to two annual total remuneration payments if the con- tract is terminated early because the appoint- ment is revoked, but limited to a maximum of the remuneration for the remaining term of the contract; no severance pay in the event of ter- mination of the contract by the company for cause
• In the event of death, continued payment of the fixed remuneration to surviving dependents for the month of death and the six following months, as well as the STI and LTI pro rata temporis until the end of the month of death

4.5. Components of the Remuneration System, Proportion of Target Total Remuneration

4.5.1.Components of the Remuneration System

The remuneration system is made up of fixed and variable components, the sum of which constitutes the total remuneration of each Management Board member.

Fixed remuneration components are paid irrespective of the company's performance and consist of fixed remuneration, benefits in kind and other fringe bene- fits. Deutsche Wohnen SE does not grant pension benefits.

The variable remuneration components are linked to the achievement of predefined performance targets and consist of a short-term variable component in the form of a short-term incentive (STI) and a long-term variable component, the so- called long-term incentive (LTI).

If the Management Board member achieves a 100% target achievement level for both the STI and the LTI, the total amount of these variable payments and the fixed remuneration as well as the fringe benefits make up the target total remuneration to be paid to the Management Board member in question.

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4.5.2. Relative Ratio of Remuneration Components to Target Total Remuner- ation

The individual remuneration components are assigned different weightings in the target total remuneration. In the event of 100% target achievement, the STI comprises between 45% and 55% of the fixed remuneration, while the LTI makes up between 95% and 115% of the fixed remuneration. As an additional non-performance-related component of the remuneration system, fringe benefits making up 1% to 3% of fixed remuneration on average are granted.

Fixed remuneration

Fixed remuneration (40-45 %)

STI (20-25 %)

LTI (35-40 %)

Fringe benefits (1-2 %)

The relative shares referred to above can shift slightly by a few percentage points due to fluctuations in the valuation/use of fringe benefits (which have been included as a lump sum, based on experience, for the purposes of the percentages of the target total remuneration stated here).

The target remuneration structure described above ensures alignment with Deutsche Wohnen SE's long-term sustainable development. The high weighting assigned to the LTI ensures that the variable remuneration based on the achievement of long-term targets exceeds the proportion of short-term targets. At the same time, the STI provides incentives to achieve the annual operational targets.

4.6. Maximum Remuneration

All variable remuneration components are capped at a maximum amount. The STI payment is capped at 125% of target STI. The LTI payment cannot exceed 250% of the target value.

In addition, in accordance with the first point of the second sentence of Section 87a (1) AktG, the Supervisory Board has set an upper limit for the total amount of all remuneration elements for Management Board activities for one year, i.e., currently consisting of the fixed remuneration, fringe benefits, short-term variable and long-term variable remuneration components (maximum remuneration). The maximum remuneration further limits the maximum achievable total remuneration (sum of the individual components with maximum target achievement). It amounts to € 5.5 million gross per annum for the Chair of the Management Board and € 3.5 million gross per annum for each of the other Management Board mem- bers.

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This cap relates to the total benefits granted to a Management Board member for Board-related activities for the relevant fiscal year. Payments of the long-term variable remuneration component under the applicable LTI are attributed to the year the underlying LTI tranche is awarded. Fringe benefits are stated at the value of the non-cash benefit for tax purposes. If the total benefits for a fiscal year exceed the defined maximum remuneration, the payment to be made last in each case, i.e., generally the payment determined from the LTI awarded for the fiscal year, is reduced by the excess amount.

Any severance payments to be made upon early termination of the Management Board activity and other ad hoc special payments not granted as consideration for a Management Board member's work (e.g., relocation expenses, compensation payments for bonuses lost at the member's previous employer) are not included in, or limited by, the maximum remuneration.

5. Components of the Remuneration System in Detail

1. Fixed remuneration

1. Fixed remuneration

Each Management Board member receives an annual base salary ("fixed remu- neration") from the company for his or her work on the Board, which is paid in twelve equal monthly installments. The fixed remuneration also covers work at the level of subsidiaries. The amount of the fixed remuneration granted by Deutsche Wohnen SE reflects the individual's role within the Management Board (also taking into account the time that has to be spent on the Management Board work if the member receives separate remuneration for his or her activities within the Group), the member's experience, area of responsibility and market condi- tions.

5.1.2.Fringe Benefits

Each Management Board member can also receive non-cash and fringe benefits. These include the private use of a company car or - at the discretion of the Management Board member - a company car allowance as well as the provision of necessary equipment (e.g., communication means) for the performance of duties. Any private use of a company car is taxed as a non-cash benefit, and the Management Board member bears the tax. The costs associated with running a company car are borne by Deutsche Wohnen SE.

Deutsche Wohnen SE can also pay 50% of the Management Board member's contributions to private health and long-term care insurance, but no more than the maximum employer's contribution to statutory health and long-term care insur- ance.

All Management Board members are generally entitled to the same fringe benefits, although these benefits can vary on a case-by-case basis, particularly in terms of their amount, depending on the member's personal situation and the extent to which they are used. The Supervisory Board can grant other or additional fringe benefits that are standard market practice.

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In addition, Management Board members are covered by a standard D&O insurance policy. In accordance with the third sentence of Section 93 (2) AktG, the Management Board members' deductible under the D&O liability insurance is 10% of the damage or one and a half times the fixed annual remuneration. Business- related and travel expenses are reimbursed based on the valid reimbursement policies.

5.2. Variable Remuneration

The variable remuneration components for Management Board activity are aligned with both the achievement of annual operational targets and the long-term, sustainable development of Deutsche Wohnen SE. The short-term variable remuneration component (STI) and the long-term variable remuneration component (LTI) incentivize Management Board members' performance from different perspectives and over different periods (performance periods). In particular, they differ in the financial and non-financial performance criteria used to measure the payout. When selecting the performance criteria, the focus is on implementing the strategy, i.e., the performance criteria support the growth strategy of Deutsche Wohnen SE in particular while at the same time incentivizing an increase in profitability and com- petitiveness. By considering various transparent performance criteria, it is therefore possible to depict the success of Deutsche Wohnen SE in an integrated and multifaceted manner.

5.2.1.STI

a. STI - Basic Principles and Performance Criteria

The Management Board members are entitled to short-term variable remuneration in the form of an STI for each of the company's fiscal years. The amount of the STI depends on the extent to which a corporate target defined by mutual agreement between the Supervisory Board and the Management Board member is achieved. In addition, the Supervisory Board may define performance targets with individual or all Management Board members, which are included in the target achievement level in the form of a personal performance factor (PLF) as a multiplier with a value of 0.8 to 1.2. Individual performance targets can also be set for a group of several Management Board members.

The target achievement level for the payout of the STI is determined on the basis of the following performance criteria:

• DW Adjusted Earnings before Taxes (DW Adjusted EBT)
• Any individual performance targets

The financial performance criterion (DW Adjusted EBT) is a key operational corporate target that reflects the company's financial success and is a straightforward management indicator that is commonly used on the capital market, particularly for generalists, in addition to being easy to compare and communicate. It also meets investor demands for an earnings indicator that can be used for company valuation purposes. The DW Adjusted EBT considers the earnings contributions of the four segments (Rental, Value-add, Recurring Sales and Development to sell)

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and is one of the most important key figures at Group level. It is calculated based on the DW Adjusted EBITDA. This consists of EBITDA after adjustments to reflect effects that do not relate to the period, recur irregularly or are atypical for business operation. A distinction is made here between the Adjusted EBITDA of the four segments and the Adjusted EBITDA Total, which results from the total of the Adjusted EBITDA for the four segments. Either the Adjusted EBITDA Total or the Adjusted EBITDA for the segments managed in each case by the Management Board members is used to calculate the overall target achievement level of the STI. By reducing the Adjusted EBITDA Total by the adjusted net financial result, depreciation and amortization, and consolidation effects, we arrive at the DW Adjusted EBT, which describes the sustained operating earnings power of Deutsche Wohnen SE.

Individual performance targets and/or expectations of the Management Board members are derived, in particular, from his or her responsibilities for particular executive divisions, support the corporate strategy and are also designed to take account of the interests of relevant stakeholders. Together with the performance targets, performance criteria are set that are then used by the Supervisory Board, after the end of the fiscal year, to define a personal performance factor of between 0.8 and 1.2 for each Management Board member.

When defining all targets, possible extraordinary developments within the meaning of Section 87 (1) sentence 3 AktG are given appropriate consideration. In the event of extraordinary circumstances (e.g., a severe economic or financial crisis, war, terrorist attacks or expropriation), the Supervisory Board can opt to adjust the calculated STI entitlement at its own due discretion (but adhering to the limits imposed by the STI cap). If the employment contract does not cover the entire fiscal year, the STI is generally paid and pro-rated for the term of the employment contract in the relevant fiscal year. Provided and insofar as an STI entitlement arises, it is due one month after the adoption of the company's annual financial statements.

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