Letter from the Chair of the Compensation Committee

Dear Share­holders

Swisscom is on track and achieved solid financial results in the 2024 reporting year. And it has achieved this in a time that continues to be shaped by uncertainty, geo­political tensions, global economic challenges and techno­logical and en­vi­ron­mental change. With a relatively slight increase in revenue and slightly lower operating income, net income decreased. Fastweb, which is performing very well, represents an im­por­tant contribution to our success. We are now further strengthening our position in Italy. The acquisition of Vodafone Italia is an im­por­tant step for us and sets the course for future success.

Innovation and trust are the keywords for Swisscom’s success. For example, during the year under review we launched an AI platform for business cus­tomers with Swiss AI Platform. Our cus­tomers can use it to develop their own KI solutions with guaranteed data storage in Switzer­land. Another focus of innovation is the topic of digital trust. This includes Swisscom Sign, the only qualified electronic signature considered equivalent to a handwritten signature. In spring 2024, Swisscom expanded this range of services to com­pa­nies so that they can electronically sign contracts and documents simply and with legal effect. Its out­stand­ing in­fra­struc­ture is and remains the foundation of Swisscom’s success. We do everything we can to continue to offer our cus­tomers the best network. We succeeded in doing this in the year under review: Swisscom has once again won all the network and service tests.

In the year under review, the Compensation Committee took note of the results of the advisory vote on the 2023 Re­mu­ner­a­tion Report and thoroughly addressed the concerns raised by shareholders on disclosure of the achieve­ment of targets and the lack of long-term incentive components in the re­mu­ner­a­tion system. We have increased transparency on the assessment of the achieve­ment of targets in this Re­mu­ner­a­tion Report. This will provide you as shareholders with more detailed in­for­ma­tion to assess the ap­pro­pri­ateness of the re­mu­ner­a­tion in relation to performance.

The Compensation Committee reviewed the Group Executive Board’s re­mu­ner­a­tion system and evaluated ways in which it can configured in line with market standards and geared more strongly towards long-term performance and value generation for shareholders through a long-term incentive. Although the market relevance of a long-term incentive component has been clearly confirmed, the current re­mu­ner­a­tion system framework does not offer the flexibility to introduce such a component. However, the long-term component in the re­mu­ner­a­tion is supported by the stipulated minimum share­hold­ing requirement. As such, the Compensation Committee proposed to the Board of Directors that the existing re­mu­ner­a­tion model be retained for 2025. 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 achieved out­stand­ing performance in business transformation, which the Board of Directors evaluated in its overall assessment. This results in overall target achieve­ment of 117% 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 2024 reporting year is within the range approved by the 2023 Annual General Meeting.

Like every year, you, dear shareholders, will have an op­por­tu­nity at the 2025 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 2026 financial year. In the course of the successful acquisition of Vodafone Italia, the Swisscom Board of Directors will tem­porar­ily expand to 10 members from the 2025 Annual General Meeting onward. Laura Cioli, an es­tab­lished expert in the Italian telecom­mu­ni­ca­tions and services market, is nominated for election. A motion will therefore be proposed to the Annual General Meeting that the maximum re­mu­ner­a­tion already approved for the Board of Directors be increased by CHF 0.2 million to CHF 2.7 million for 2025. The maximum amount of CHF 2.8 million is proposed for 2026.

For the re­mu­ner­a­tion of the Group Executive Board, a reduction in the maximum amount already approved for the year 2025 of CHF 3.7 million to CHF 7.2 million, due to the reduction to four members as of 1 April 2025, will be submitted for approval. A maximum amount of CHF 5.9 million is proposed for the year 2026. To meet our responsibilities, the Compensation Committee will conduct reviews of the re­mu­ner­a­tion strategy and system again in the coming year to ensure that Swisscom’s 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