Letter from the Chair of the Compensation Committee
On behalf of the Board of Directors and the Compensation Committee, I am pleased to present our Remuneration Report for the 2021 reporting year.
The year under review was shaped by the measures taken to contain the Covid-19 pandemic and a slowly recovering economy. Over the past year, Swisscom was able to successfully assert itself in the saturated IT and telecoms markets, both of which are characterised by strong price and promotional pressure. It did so thanks to top-rated broadband and mobile networks, innovative products and services that have already received multiple awards. On top of that, simplification and a systematic digital transformation were able to reduce the cost base and hone the company’s competitive edge. In order to ensure high network quality, Swisscom invested CHF 1.6 billion in Switzerland again last year in the maintenance and expansion of its networks. In Switzerland, Swisscom saw growth in particular in the business customer market for IT services and in the residential customers market for home networking. Once again, Fastweb’s performance in the Italian market was impressive, with growth reported in terms of revenue, EBITDA and customers. Swisscom consolidated its role as a pioneer in the area of climate protection with the goal of becoming climate-neutral across the entire value chain in Switzerland by 2025.
With regard to the compensation of the Group Executive Board, the Compensation Committee reviewed the variable remuneration system and proposed adjustments to the Board of Directors. The changes approved by the Board of Directors now tie remuneration even more closely to strategy implementation. They also weight long-term sustainable remuneration criteria more heavily. The variable performance-related salary component for members of the Group Executive Board will continue to be paid out in cash and blocked shares. As in the past, the Group’s financial performance indicators play a key role in determining overall target achievement. A new minimum EBITDA requirement was added to supplement the remuneration criteria. The Board of Directors also fleshed out the business transformation topics and added sustainability-related topics. With these changes, the remuneration system not only incorporates financial performance but also indicators relating to operating performance, customers, growth and sustainability. It now reflects our responsibility to make a significant contribution to society’s positive development and to protect the environment. Further details on our commitment can be found in the Sustainability Report.See www.swisscom.ch/cr-report2021
In addition to the excellent financial results, the year under review also saw exceptional performance in the areas of customer satisfaction and sustainability. In its overall evaluation, the Board of Directors weighed this against operating performance (network faults) that was not entirely satisfactory. This results in an overall target achievement of 118% to 120% for the members of the Executive Committee, depending on their respective functions. As explained in this Remuneration Report, the total remuneration for the members of the Board of Directors for the 2021 reporting year is within the range approved by the 2020 Annual General Meeting. Likewise, the total remuneration paid to members of the Group Executive Board is within the range approved at the 2020 Annual General Meeting.
Like every year, you, dear shareholders, will have an opportunity at the 2022 Annual General Meeting to cast your vote on Swisscom’s remuneration principles and the remuneration system as part of the consultative vote on the Remuneration Report. In addition, the maximum total remuneration paid to the Board of Directors and the Group Executive Board for the 2023 financial year will be put to a vote. The proposed amounts for the Board of Directors and the Group Executive Board remain unchanged over the prior year.
To meet up to our responsibilities, the Compensation Committee will conduct regular reviews of the remuneration strategy and system again in the coming year to ensure that our principles are aligned with the interests of shareholders and other stakeholders and that performance is rewarded appropriately and sustainably. We look forward to your continued support and thank you for your trust.
Chair of the Compensation Committee