Introduction

The Swiss core principles of corporate governance regarding NEDs are set out in the CO, the
binding DICG and the quasi-obliging SCBP. While the CO was amended in 1992, the latter two
came ‘‘into force’’ a decade thereafter, more as a result of reacting to market exigencies rather
than planned foresight. However, the Law, the Directive and the Code form the uniquely Swiss
triune of corporate governance which has in most matters kept up to date with international
standards. Swiss Centre for Corporate Governance is to orchestrate dialogue, knowledge-sharing,
and thought leadership on governance issues to help advance collaboration among corporations,
board members, the accounting profession, academia and government. It provides global and
local thought leadership on governance issues and Deloitte experience relevant to the Swiss
market place. This paper is going to look into the Swisscom AG approach on corporate
governance i.e.to what degree and how exactly does the company make use of the principle.

Corporate Governance at Swisscom

Corporate governance is a fundamental component of Swisscom’s corporate policy. Swisscom is
committed to practicing effective and transparent corporate governance as part of its effort to
deliver long-term value. Swisscom wants to remain successful in the long run and continue to
grow profitably. Our guiding principles are a key factor. Risks must be taken in order to achieve
success, but certain rules need to be followed.
The Board of Directors and the CEO formulated in this code of conduct their minimum
expectations of vis-à-vis the managers and employees of Swisscom AG and its subsidiaries
(hereinafter called “employees”). The code of conduct is communicated by line-management and
in day-to-day cooperation within the company; it is completed with additional rules.

How the Swisscom Company uses the principles of Corporate Governance

Principles

In performing their activities, the Board of Directors and Group Executive Board of Swisscom
are guided by the objective of long-term and sustainable business management. They incorporate
the legitimate interests of Swisscom shareholders, customers, employees and other interest
groups into their decisions. To this end, the Board of Directors practices effective and transparent
corporate governance, which is characterized by clearly assigned responsibilities and based on
recognised standards. In this regard, Swisscom complies with the recommendations of the Swiss
Code of Best Practice for Corporate Governance 2014 issued by economiesuisse, the umbrella
organisation representing Swiss business, and the requirements of the Ordinance against
Excessive Compensation in Listed Stock Companies (OaEC).The interaction of investors, proxy
advisors and other stakeholder groups with the respective specialist divisions allows the Board of
Directors to identify new standards at an early stage and to adjust its corporate governance
activities to new requirements as and when necessary.

Swisscom’s principles and rules on corporate governance are set out primarily in the company’s
Articles of Incorporation, Organisational Rules and the Rules of Procedure of the Board of
Directors’ committees. Of particular importance is the Code of Conduct approved by the Board
of Directors. It contains an explicit declaration by Swisscom of its commitment to absolute
integrity as well as compliance with the law and all other external and internal rules and
regulations. Swisscom expects its employees to take responsibility for their actions, show
responsibility for people, society and the environment, comply with applicable rules,
demonstrate integrity and report any violations of the Code of Conduct

Bear responsibility

Employees bear responsibility for their actions and show consideration for other people, society
and the environment. The employees treat all reference groups and their representatives
respectfully, fairly and without discrimination. These stakeholders include customers,
shareholders, employees, public and governmental authorities, suppliers, the media and all other
partners as well as public and private organisations.

Follow the rules

Employees comply with all laws and any other external or internal regulations. They are
committed, above all, to upholding all laws governing competition, the industry and the stock
exchange. Employees respect established rules regarding social morals, and endeavor to maintain
conscientious behaviour within the company.

Show integrity Employees act with integrity

They pursue the goals and interests of Swisscom. They recognised and avoid conflicts of interest,
disclose these and find a solution. They do not buy or sell securities, if they have access to
insider information. They do not accept bribes and do not offer unfair advantages to any third
parties. Employees avoid damaging the company, its tangible or intangible assets. They protect
the data of customers, business partners and employees.

Report breaches

The employees report breaches to this code of conduct or relevant suspicion to their managers or
Group Compliance of Swisscom AG. Alternatively, the reaction plan for processing
whistleblowing notifications, which has been provided by Internal Audi

Why Swiss AG uses corporate governance as a key ingredient for success

Professionally managed and ambitious companies form the backbone of a successful and
innovative economy. Good management geared towards the interests of shareholders is crucial.
The term corporate governance refers to guidelines and measures that are conducive to the
successful management of a company. The relevance of adequate governance is further
underlined by the fact that many companies are now publicly accountable for their management
structures, diversity practice and appropriate remuneration systems.

Corporate governance and the Swiss market place

Compared with other jurisdictions, Switzerland has very few statutory corporate governance
requirements. Those worth mentioning include the Code of Obligations, the Swiss Ordinance
against Excessive Remuneration in Listed Companies, which was brought into force by the
Federal Council following the adoption of the initiative against fat-cat payouts (Minder
initiative), and the Swiss Code of Best Practice for Corporate Governance. The latter regulatory
instrument has established itself as a set of recommendations. The Swiss Code of Best Practice
for Corporate Governance was first published by Economiesuisse in 2002 and offers
comprehensive recommendations on corporate governance, particularly for larger and listed
companies. There is also a set of guidelines regarding information on corporate governance, first
published by the Swiss Stock Exchange over ten years ago. It contains requirements for the
regular publication of information on corporate governance, last updated in 2014.

Conclusion

Although Switzerland is not a member of the EU, Swiss companies are nevertheless affected by
international regulatory efforts. These will inevitably have an impact on Swiss companies in the
long run, which is why it is recommended to already now base corporate governance on
international standards. As it has been illustrated in the paper, Swiss AG has shown that
corporate governance is a key factor as far as success in the international market is concerned.