Letter from the Chair of the Compensation Committee

Dear Share­holders

Swisscom achieved a stable set of financial results in the year under review, con­tin­ued to hold a strong market position in Switzer­land and had leading challenger status in Italy through Fastweb. In addition to strong price pressure, 2022 presented new major challenges in the form of supply bottlenecks, the Ukraine war, rising inflation and the tense energy supply situation. Nevertheless, revenue was stabilised in the Swiss core business and boosted at Fastweb. The Group’s financial de­vel­op­ment as presented in the financial reporting is characterised by non-recurring items and foreign currency translation. At constant exchange rates and after adjustment for non-recurring items, revenue, EBITDA and net income increased.

Swisscom came out on top in the relevant mobile and broad­band tests during the year under review and impressed the juries of independent tests with the quality of services provided in shops and digitally via the ‘My Swisscom App’. It launched a modern and innovative offering in 2022 with its new blue portfolio. Swisscom is also on track in terms of sustainability: The goal is to save one million tonnes of CO₂ per year by 2025 in cooperation with cus­tomers. To that end, Swisscom offers residential and business cus­tomers ICT solutions that can mas­sively reduce their collective carbon footprint. In addition, Swisscom offers cus­tomers their sub­scrip­tions, devices and our network on a climate-neutral basis.

The Compensation Committee reviewed the re­mu­ner­a­tion system of the Group Executive Board and proposed to the Board of Directors that it keep the variable re­mu­ner­a­tion model that had been revised in the previous year. In addition to financial per­for­mance, which is a key determinant of overall target achieve­ment, this model also takes per­for­mance on issues related to business trans­for­ma­tion into account. The variable per­for­mance-related salary component for members of the Group Executive Board will continue to be paid out in cash and blocked shares. This approach gears re­mu­ner­a­tion of the Group Executive Board towards strategy im­ple­men­ta­tion and makes it possible to reward per­for­mance both ap­pro­pri­ately and sustainably while taking into account Swisscom’s responsibility to help promote society’s positive de­vel­op­ment and to protect the en­vi­ron­ment.

Swisscom performed successfully in the year under review. Not only did it achieve a good financial result, it also performed exceptionally well in terms of customer satis­faction and sustainability. Within the scope of its overall assessment, the Board of Directors weighed these successes against the company’s operational per­for­mance, which was not satisfactory in every respect (keyword: network disruptions). This results in overall target achieve­ment of 120% for the members of the Executive Committee. Overall, the total re­mu­ner­a­tion for the members of the Board of Directors and the Group Executive Board for the 2022 reporting year is within the range approved by the 2021 Annual General Meeting.

Like every year, you, dear shareholders, will have an op­por­tu­nity at the 2023 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, you will vote again on the maximum total re­mu­ner­a­tion paid to the Board of Directors and the Group Executive Board for the 2024 financial year. The proposed amount for the Board of Directors remains unchanged over the prior year. Due to the expansion of the Group Executive Board from six to nine members as of 1 April 2023, a maximum amount of CHF 10.9 million is proposed for the re­mu­ner­a­tion of the Group Executive Board in 2024. In addition, a proposal to increase the already approved amount for the re­mu­ner­a­tion of the Group Executive Board in 2023 from CHF 8.7 million to CHF 10.4 million will be submitted to the Annual General Meeting for approval.

To meet our responsibilities, the Compensation Committee will conduct 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 both ap­pro­pri­ately and sustainably. We look forward to your support and thank you for your trust.

Kind regards

Barbara Frei

Chair of the Compensation Committee