Letter from the Chair of the Compensation Committee

Dear Share­holders

Swisscom posted solid 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. This was achieved in a challenging year: 2023 was marred by uncertainties, such as the volatile economic en­vi­ron­ment with rising interest rates and inflation, as well as ongoing geopolitical risks. Revenue was down slightly in the Swiss core business and increased at Fastweb. The Group’s financial develop­ment as presented in the financial reporting was charac­ter­ised by non-recurring items and foreign currency translation. At constant exchange rates and after adjust­ment for non-recurring items, revenue and EBITDA increased. Net income also rose.

Swisscom once again 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, by the mobile hotline and digitally via the My Swisscom App. Despite inflation and, unlike its peers, Swisscom will not implement any general price increases and will maintain stable prices for mobile, internet, TV and fixed network sub­scrip­tions until the end of 2024 at the earliest. Independent market researchers also name Swisscom as a leading cyber­security provider. With its new IT security services, Swisscom is also offering small and medium-sized enter­prises even greater security and reliable protection against cyber risks. When it comes to sustainability, Swisscom has set itself ambitious goals for the environ­ment and society. We are promoting media skills in schools and for the general public, and are making a key contribution as a pioneer in climate protection. Our focus is on reducing our CO₂ emissions. World Finance magazine once again rated Swisscom the world’s most sustainable telecom­mu­ni­ca­tions company in 2023. In the year under review, 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. This results in overall target achieve­ment of between 105% and 110% for the members of the Group Executive Board, depending on their function. Overall, the total re­mu­ner­a­tion for the members of the Board of Directors and the Group Executive Board for the 2023 reporting year is within the range approved by the 2022 and 2023 Annual General Meetings (due to the increase in the number of members of the Group Executive Board in the reporting year).

Like every year, you, dear shareholders, will have an op­por­tu­nity at the 2024 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 on the maximum total re­mu­ner­a­tion paid to the Board of Directors and the Group Executive Board for the 2025 financial year. The proposed amount for the Board of Directors remains unchanged over the prior year. Regarding the re­mu­ner­a­tion of the Group Executive Board in 2025, a proposal to keep the maximum amount unchanged at CHF 10.9 million will be submitted 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

Monique Bourquin, Chair of the Compensation Committee