Shareholders' Letter

Remuneration paid to the Board of Directors
Principles
The remuneration reflects the level of responsibility and scope of activities performed by each
member of the Board of Directors. The remuneration, which has remained unchanged since 2002,
is reviewed every December for the following year to ensure it is still appropriate. The review was
carried out on the basis of a comparative analysis conducted in November 2010 on Swisscom’s
behalf by Towers Watson, a worldwide consultancy specialising in top executive remuneration.
Listed companies in the Swiss Market Index (with the exception of financial service companies)
were used as benchmarks. The review showed that both the basic salary and total remuneration
were below market rates. Hence, in December 2010 the Board of Directors decided to increase its
remuneration, unchanged since 2002, with effect from fiscal 2011.
Remuneration
The remuneration plan provides for a basic emolument plus individual allowances and meeting
attendance fees. No variable performance-related components are paid out. The Chairman is paid
a basic emolument of CHF 385,000 net and the other members of the Board of Directors CHF
110,000 net each. Each member of the Finance, Personnel and Organisation Committees as well
as the Audit Committee is therefore entitled to remuneration of CHF 10,000 net. The Deputy Chairman
of the Board of Directors and the chairmen of the three aforementioned committees are entitled
to an additional CHF 20,000 net and the representative of the Swiss Confederation to an additional
CHF 40,000 net for the special duties related to his function. Meeting attendance fees are
also paid of CHF 750 net for a whole day and of CHF 500 net for a half-day. Expenses are reimbursed
as incurred. No significant fringe benefits are paid.
The members of the Board of Directors are obliged to draw 25% of their basic salary plus individual
allowances in the form of shares. Swisscom then increases the amount to be invested in shares
by 50%. Two thirds of the remuneration (excluding meeting attendance fees) thus take the form
of cash and one third shares. The shares allocated are calculated on the basis of the tax value,
rounded up to whole numbers of shares, and are subject to a three-year blocking period. The shares
allocated in April of the reporting year for the reporting year are disclosed at their market value
on the purchase date (usually three weeks before allocation) or at the market value on the cut-off
date of allocation if treasury shares are issued. In April 2010, 1,712 shares were allocated to the
members of the Board of Directors (previous year 2,119 shares) with a tax value of CHF 328 per
share (previous year CHF 265). The market value was CHF 392 per share (previous year CHF 316).
The individual remuneration paid to the members of the Board of Directors for the financial years
2010 and 2009 is presented in the tables below, broken down into individual components. The
disclosure of fringe benefits and expenses complies with fiscal law, such that neither fringe benefits
nor expenses are included in reported remuneration. The increase in remuneration is attributable
to the higher number of days spent attending meetings compared with the previous year.
Corporate Governance and Remuneration Report 128 | 129
Remuneration Report