Invitation to the Ordinary Shareholders’ Meeting Wednesday, 8 April 2015 at 1.30 p.m. in the Hallenstadion Zurich Oerlikon Wallisellenstrasse 45 Doors open at 12.30 p.m.
Dear Shareholder We are pleased to invite you to the 17th Ordinary Shareholders’ Meeting of Swisscom Ltd. Alongside the approval of the Annual Report, financial statements and consolidated financial statements, the appropriation of retained earnings and the discharging of the members of the Board of Directors and Group Executive Board, the agenda includes the annual elections. Under application of the Ordinance Against Excessive Compensation in Listed Stock Companies and on the basis of the Articles of Incorporation passed by the Shareholders’ Meeting in 2014, the Board of Directors shall for the first time also submit to you for approval the maximum total amounts for the remuneration of the Board of Directors and the Group Executive Board in 2016. To register for the Shareholders’ Meeting or to allocate a proxy, please use the enclosed form or enter your details on the shareholder platform Sherpany. Once you have registered on the platform, you will receive future invitations via e-mail. Worblaufen, 23 February 2015 Yours sincerely Swisscom Ltd Board of Directors
Hansueli Loosli, Chairman
This invitation is a translation of the German original. In the event of any inconsistencies, the German version of the invitation shall prevail over the French, Italian and English translations. 3
Agenda
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Page
1.1 1.2
Annual Report, financial statements of Swisscom Ltd and consolidated financial statements for the 2014 financial year 6 Approval of the Annual Report, financial statements of Swisscom Ltd and consolidated financial statements for the 2014 financial year 6 Consultative vote on the 2014 Remuneration Report 7
2
Appropriation of the 2014 retained earnings and declaration of dividend
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3
Discharge of the members of the Board of Directors and the Group Executive Board
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4 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9
Re-elections to the Board of Directors Re-election of Frank Esser Re-election of Barbara Frei Re-election of Hugo Gerber Re-election of Michel Gobet Re-election of Torsten G. Kreindl Re-election of Catherine M端hlemann Re-election of Theophil Schlatter Re-election of Hansueli Loosli Re-election of Hansueli Loosli as Chairman
8 9 9 9 10 10 10 11 11 12
5 5.1 5.2 5.3 5.4 5.5
Re-elections to the Remuneration Committee Re-election of Barbara Frei Re-election of Torsten G. Kreindl Re-election of Hansueli Loosli Re-election of Theophil Schlatter Re-election of Hans Werder
12 12 12 12 13 13
6 6.1 6.2
Remuneration of the members of the Board of Directors and the Group Executive Board Approval of the total remuneration of the members of the Board of Directors for 2016 Approval of the total remuneration of the members of the Group Executive Board for 2016
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Re-election of the independent proxy
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Re-election of the statutory auditors
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Organisational information
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Information on the arrival
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13 13 14
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Proposals and explanatory notes 1
Annual Report, financial statements of Swisscom Ltd and consolidated financial statements for the 2014 financial year
1.1
Approval of the Annual Report, financial statements of Swisscom Ltd and consolidated financial statements for the 2014 financial year
Proposal The Board of Directors proposes that the Annual Report, financial statements of Swisscom Ltd and consolidated financial statements for the 2014 financial year be approved.
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Explanatory notes In 2014, Swisscom’s consolidated net revenue increased by CHF 269 million to CHF 11,703 million, which corresponds to an increase of 2.4% compared with the prior-year period. Adjusted for company acquisitions, at constant exchange rates and excluding Fastweb’s hubbing (wholesale revenue from interconnection services), revenue increased by CHF 218 million or 1.9%, of which CHF 128 million was attributable to the Swiss business. Price erosion of CHF 360 million in the Swiss core business (CHF 170 million of which was attributable to lower roaming charges) was more than offset by customer and volume growth of CHF 488 million.
EBITDA rose 2.6% or CHF 111 million to CHF 4,413 million. Adjusted, the increase amounted to 0.9% or CHF 39 million. The increase in EBITDA was partly offset by higher depreciation and amortisation and higher income tax expense. Consolidated net income rose by CHF 11 million or 0.6% to CHF 1,706 million.
Overall Group headcount increased by 1,017 FTEs to 21,125, an increase of 5.1%. The increase in headcount was attributable to company acquisitions, the hiring of external staff and the strengthening of customer service operations. In Switzerland, the number of employees increased by 910 FTEs or 5.2% to 18,272. Adjusted for company acquisitions, headcount in Switzerland increased by 375 FTEs or 2.2%.
Group-wide capital expenditure increased by CHF 40 million or 1.7% to CHF 2,436 million, and by CHF 65 million or 3.9% to CHF 1,751 million in Switzerland. The higher figures are primarily due to the expansion and upgrading of mobile and fixed network infrastructure with the latest technologies. By the end of 2014, Swisscom had connected more than 1.4 million homes and businesses with ultra-fast broadband – from fibre-to-the-home (FTTH) to the latest fibre-optic technology such as fibre-tothe-street (FTTS), fibre-to-the-building (FTTB) and vectoring technology.
Swisscom Ltd’s financial statements show a net income of CHF 2,472 million in accordance with accounting provisions under Swiss corporation law. The retained earnings, comprising the earnings carried forward from 2013 of CHF 3,030 million and the 2014 net income of CHF 2,472 million, amount to CHF 5,502 million. The statutory auditors, KPMG Ltd, recommend in their reports to the Shareholders’ Meeting that the financial statements of Swisscom Ltd and the consolidated financial statements for the year ended 31 December 2014 be approved.
The comprehensive report on the 2014 financial year is contained in the 2014 Annual Report. It also includes the reports of the statutory auditors, information on Corporate Governance and the Remuneration Report. Information on Corporate Responsibility is now provided in the separate Sustainability Report published on the website.
1.2
Consultative vote on the 2014 Remuneration Report
Proposal The Board of Directors proposes that affirmative notice of the 2014 Remuneration Report be taken by means of a consultative vote.
Explanatory notes The Remuneration Report (pages 115 to 126 of the 2014 Annual Report) states the decision-making competencies and presents principles and elements of the remuneration of the Board of Directors and Group Executive Board. It lists the remuneration paid in the reporting year to the members of the Board of Directors and Group Executive Board and indicates their participations in Swisscom Ltd. A non-binding consultative vote will be held in relation to the report.
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Appropriation of the 2014 retained earnings and declaration of dividend >> Balance carried forward from prior year CHF 3,030 million >> Net income 2014 CHF 2,472 million >> Total retained earnings 2014 CHF 5,502 million
Proposal The Board of Directors proposes that the retained earnings be appropriated as follows: >> dividend of CHF 22 per share for 51,801,794 shares CHF 1,140 million >> balance to be carried forward CHF 4,362 million
No dividends will be granted on shares held by Swisscom Ltd.
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Explanatory notes The Board of Directors proposes to the Shareholders’ Meeting a dividend of CHF 22 gross per share (previous year CHF 22). The total dividend of approx. CHF 1,140 million is based on a portfolio of 51,801,794 shares with a dividend entitlement (as at 31 December 2014). Subject to approval of the proposal by the Shareholders’ Meeting, after deduction of federal withholding tax of 35%, a net dividend of CHF 14.30 per share will be paid out on 15 April 2015. The last trading day with entitlement to receive a dividend is 9 April 2015. As from 10 April 2015, the shares will be traded ex dividend.
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Discharge of the members of the Board of Directors and the Group Executive Board
Proposal The Board of Directors proposes that discharge be granted to the members of the Board of Directors and the Group Executive Board for the 2014 financial year.
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4
Re-elections to the Board of Directors
The representative of the Swiss Confederation, Hans Werder, is not elected by the Shareholders’ Meeting and is instead delegated by the Federal Council. His term of office shall also expire at the 2015 Shareholders’ Meeting. The Federal Council has delegated him for a further term of office for the duration until the conclusion of the 2016 Shareholders’ Meeting.
Further details about the candidates are provided in the 2014 Annual Report in the chapter on Corporate Governance, section 3.
The one-year term of office of all members of the Board of Directors expires at the 2015 Shareholders’ Meeting. All members of the Board of Directors are standing for re-election. Even though Michel Gobet and Torsten G. Kreindl will mark a term of office of 12 years in total at the 2015 Shareholders’ Meeting, the Board of Directors proposes them for a final additional term of office in the interest of optimum succession planning. The Board of Directors thus proposes that all members are re-elected for one year for the duration until the conclusion of the next Ordinary Shareholders’ Meeting. The respective elections will be held individually.
4.1
Re-election of Frank Esser
Proposal The Board of Directors proposes that Frank Esser be re-elected as member of the Board of Directors for the duration until the conclusion of the next Ordinary Shareholders’ Meeting. Explanatory notes Frank Esser (1958), graduate in business administration and Dr. rer. pol., has been a member of the Board of Directors and of the Finance Committee since 2014. He was a member of the Vivendi Group Board of Directors from 2005 until 2012. Today, he has three other mandates in listed companies. 4.2
Re-election of Barbara Frei
Proposal The Board of Directors proposes that Barbara Frei be re-elected as member of the Board of Directors for the duration until the conclusion of the next Ordinary Shareholders’ Meeting.
4.3
Explanatory notes Barbara Frei (1970), Dr. sc. techn., MBA IMD, has been a member of the Board of Directors since 2012 and was a member of the Finance Committee until the end of 2013. She has been a member of the Remuneration Committee since 2014 and has been Chairwoman since April 2014. Barbara Frei has worked in various managerial positions of the ABB Group since 1998; currently as Managing Director of the Drives and Control Unit. As part of her function at ABB she currently holds a Board of Directors mandate. Barbara Frei will be proposed for re-election to the Remuneration Committee under agenda item 5.1. Re-election of Hugo Gerber
Proposal The Board of Directors proposes that Hugo Gerber be re-elected as member of the Board of Directors for the duration until the conclusion of the next Ordinary Shareholders’ Meeting.
Explanatory notes Hugo Gerber (1955), certified postal administrative assistant, has been on the Board of Directors as a staff representative and served as a member of the Audit Commit9
tee since 2006. He had held several managerial functions in trade unions for several years, most recently as Chairman of the Transfair trade union. Hugo Gerber has been an independent consultant since 2009 and has two other mandates outside of the Swisscom Group. 4.4
Re-election of Michel Gobet
Proposal The Board of Directors proposes that Michel Gobet be re-elected as member of the Board of Directors for the duration until the conclusion of the next Ordinary Shareholders’ Meeting.
Explanatory notes Michel Gobet (1954), graduate in history, has been a staff representative on the Board of Directors since 2003 and a member of the Finance Committee since 2011. He has worked in managerial functions in trade unions for several years, since 1999 as the central secretary of the syndicom trade union. He has three other mandates.
4.5
Re-election of Torsten G. Kreindl
Proposal The Board of Directors proposes that Torsten G. Kreindl be re-elected as member of the Board of Directors for the duration until the conclusion of the next Ordinary Shareholders’ Meeting.
4.6
Explanatory notes Torsten G. Kreindl (1963), graduate in industrial engineering, Dr. techn., was elected to the Board of Directors in 2003. He chairs the Finance Committee and is a member of the Remuneration Committee. Torsten G. Kreindl has been a partner of the venture capital company Grazia Equity GmbH, Stuttgart, since 2005 and has three other mandates (one of them in a listed company). Torsten G. Kreindl will be proposed for re-election to the Remuneration Committee under agenda item 5.2. Re-election of Catherine Mühlemann
Proposal The Board of Directors proposes that Catherine Mühlemann be re-elected as member of the Board of Directors for the duration until the conclusion of the next Ordinary Shareholders’ Meeting. 10
Explanatory notes Catherine Mühlemann (1966), lic. phil. I and Swiss certified PR consultant, has been a member of the Board of Directors and of the Finance Committee since 2006. She has worked in managerial positions in various companies in the media sector since 1994 and has been a partner in Andmann Media Holding GmbH, Baar, since 2008, where she was a proprietor until the end of 2012. Catherine Mühlemann has two other mandates, one of them in a listed company.
4.7
Re-election of Theophil Schlatter
Proposal The Board of Directors proposes that Theophil Schlatter be re-elected as member of the Board of Directors for the duration until the conclusion of the next Ordinary Shareholders’ Meeting.
4.8
Explanatory notes Theophil Schlatter (1951), lic. oec. HSG, licensed Audit Expert, was elected to the Board of Directors in 2011. He chairs the Audit Committee, is a member of the Remuneration Committee and has been Vice Chairman of the Board of Directors since April 2014. Theophil Schlatter worked in the financial sector of various companies, most recently until 2011 as Chief Financial Officer and member of the Board of Directors of Holcim Ltd. He has two other Board of Directors mandates. Theophil Schlatter will be proposed for re-election to the Remuneration Committee under agenda item 5.4. Re-election of Hansueli Loosli
Proposal The Board of Directors proposes that Hansueli Loosli be re-elected as member of the Board of Directors for the duration until the conclusion of the next Ordinary Shareholders’ Meeting.
Explanatory notes Hansueli Loosli (1955), Swiss certified expert for accounting and controlling, has been a member of the Board of Directors since 2009 and was elected as Chairman by the Shareholders’ Meeting as of 1 September 2011. He chairs the ad hoc formed Nomination Committee and is a member of the Audit, Finance and Remuneration Committees. In the Remuneration Committee he has an advisory function without voting rights. Until the end of August 2011, Hansueli Loosli was Chairman of the Executive Board of the Coop Association, Basel. At that time, he assumed the chair of the Board 11
4.9
of Directors of the current Coop Group Association and of other companies of the Coop Group (of which one is a listed company). Alongside his Coop Group mandates, he has three others, including a mandate by order of Swisscom. Hansueli Loosli will be proposed under agenda item 4.9 for re-election as Chairman and under 5.3 as member of the Remuneration Committee without voting rights. Re-election of Hansueli Loosli as Chairman
Proposal The Board of Directors proposes that Hansueli Loosli be re-elected as Chairman of the Board of Directors for the duration until the conclusion of the next Ordinary Shareholders’ Meeting. 5
Re-elections to the Remuneration Committee
The one-year term of office of all members of the Remuneration Committee expires at the 2015 Shareholders’ Meeting. All members are standing for re-election. The Board of Directors intends to re-appoint Barbara Frei as Chairwoman of the Remuneration Committee if she is re-elected by the shareholders.
5.1
Re-election of Barbara Frei
Proposal The Board of Directors proposes that Barbara Frei be re-elected to the Remuneration Committee for the duration until the conclusion of the next Ordinary Shareholders’ Meeting. 5.2
Re-election of Torsten G. Kreindl
Proposal The Board of Directors proposes that Torsten G. Kreindl be re-elected to the Remuneration Committee for the duration until the conclusion of the next Ordinary Shareholders’ Meeting. 5.3
Re-election of Hansueli Loosli
Proposal The Board of Directors proposes that Hansueli Loosli be re-elected to the Remuneration Committee as member without voting rights for the duration until the conclusion of the next Ordinary Shareholders’ Meeting. 12
5.4
Re-election of Theophil Schlatter
Proposal The Board of Directors proposes that Theophil Schlatter be re-elected to the Remuneration Committee for the duration until the conclusion of the next Ordinary Shareholders’ Meeting. 5.5
Re-election of Hans Werder
Proposal The Board of Directors proposes that Hans Werder be re-elected to the Remuneration Committee for the duration until the conclusion of the next Ordinary Shareholders’ Meeting.
Explanatory notes Hans Werder (1946), Dr. rer. soc. and lic. iur., has been on the Board of Directors as the representative of the main shareholder, the Swiss Confederation, since 2011. He was a member of the Finance Committee until the end of 2013. Since 1 January 2014, he has had a seat on the Audit Committee. In addition, he is a member of the Remuneration Committee. Hans Werder worked in the cantonal and Swiss administration for several years, most recently until the end of 2010 as secretary general of the Federal Department of Environment, Transport, Energy and Communications (UVEK). He has one other mandate.
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Remuneration of the members of the Board of Directors and the Group Executive Board
6.1
Approval of the total remuneration of the members of the Board of Directors for 2016
Proposal The Board of Directors proposes that the maximum total amount of CHF 2.6 million for the remuneration of the Board of Directors in the 2016 financial year be approved.
Explanatory notes The proposed maximum total amount of CHF 2.6 million is based on the remuneration of nine members of the Board of Directors. The director’s fees and meeting attendance fees considered in the calculation of this sum remain unchanged in comparison to 2014. The Board of Directors has no plans to increase remuneration above the 2015 level. 13
The total amount is expected to comprise the following subtotals allocated to the individual remuneration components: >> director’s fees (base remuneration and functional allowances) of CHF 2.1 million >> meeting attendance fees of CHF 0.3 million >> employer social insurance contributions of CHF 0.2 million
The definitive remuneration amounts will be presented in the Remuneration Report for the 2016 financial year and will be subject to the consultative vote in relation to the report, to be held at the 2017 Shareholders’ Meeting.
6.2
Approval of the total remuneration of the members of the Group Executive Board for 2016
Proposal The Board of Directors proposes that the maximum total amount of CHF 9.7 million for the remuneration of the Group Executive Board in the 2016 financial year be approved.
Explanatory notes The proposed maximum total amount of CHF 9.7 million is based on the remuneration of seven members of the Group Executive Board. In comparison to the total remuneration amount approved for 2015, this constitutes an increase of CHF 0.3 million or 3% on a like-for-like basis.
The total amount is expected to comprise the following subtotals allocated to the respective remuneration components: >> Base salaries of CHF 3.9 million. In comparison to the current figure, as approved by the Board of Directors for 2015, this constitutes a potential increase of 3%. As a rule, the individual remuneration for members of the Group Executive Board is reviewed every three years of employment. Whether the Board of Directors will actually increase the base salary of a member of the Group Executive Board will predominantly depend on the evaluation of the market value of the respective function based on compensation benchmark information, as well as individual performance. The Board of Directors will determine the base remuneration for 2016 at the end of 2015. >> Variable performance-related remuneration of CHF 3.9 million should all members of the Group Executive Board outperform their targets. Variable performance-related remuneration can total a maximum of 100% of base salaries
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should targets be outperformed. In comparison to the maximum variable remuneration for 2015, this constitutes a potential increase of 3%, which corresponds to the potential increase in base salaries. >> Pension contributions, fringe benefits and employer social insurance contributions of CHF 1.9 million. This figure comprises the maximum possible legal and contractual employer obligations for contributions to pensions and social insurance, as well as fringe benefits. The exact amount due to cover these obligations depends, among other factors, on the base and variable remuneration effectively paid, the age of the Group Executive Board members and the insurance contribution rates.
If targets are achieved at 100% , the total remuneration is expected to amount to CHF 8.4 million. This figure is composed of an expected fixed base salaries of CHF 3.9 million, an expected variable remuneration of CHF 2.9 million and an expected CHF 1.6 million in pension contributions, fringe benefits and social insurance contributions.
The definitive remuneration amounts will be presented in the Remuneration Report for the 2016 financial year and will be subject to the consultative vote in relation to the report, to be held at the 2017 Shareholders’ Meeting.
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Re-election of the independent proxy
Proposal The Board of Directors proposes that the law firm Reber Rechtsanwälte, Zurich, be re-elected as independent proxy for the duration until the conclusion of the next Ordinary Shareholders’ Meeting.
Explanatory notes The partners of the law firm Reber Rechtsanwälte and the persons involved in performing the function of independent proxy meet the statutory requirements for independence. Swisscom maintains the normal customer relationships for telecommunications services with the persons involved. These are transacted on the same conditions as with third parties. There are no contractual or other relationships that could impair their independence. Reber Rechtsanwälte has confirmed that their firm meets the independence requirements to perform this mandate.
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Re-election of the statutory auditors
Proposal The Board of Directors proposes that KPMG Ltd, of Muri near Berne, be re-elected as statutory auditors for the 2015 financial year.
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Explanatory notes KPMG is a state-supervised audit company registered with the Federal Audit Supervisory Authority and has confirmed to Swisscom that it fulfils the legal requirements concerning independence. KPMG has been acting as Swisscom’s auditor since 1 January 2004. Further details about the statutory auditor, in particular the lead auditor and the audit fees, are provided in the 2014 Annual Report in the chapter on Corporate Governance, section 8.
Organisational information > Annual Report The 2014 Annual Report is available for inspection at the company headquarters of Swisscom Ltd (Alte Tiefenaustrasse 6, CH-3048 Worblaufen). It can also be viewed on the Internet at www.swisscom.ch/report2014 or be requested using the enclosed registration form or via the shareholder platform Sherpany (please tick the appropriate box). > Voting entitlement Shareholders whose shares have been entered in the Share Register with voting rights by 4 p.m. (CET) on 2 April 2015 are entitled to vote at the Shareholders’ Meeting. > Admission card and voting documents Admission cards and voting documents can be ordered upon registration or via the shareholder platform Sherpany. They will be dispatched between 12 March and 2 April 2015. If you do not receive the documents in due time, you can collect them in person from the information desk (GV desk) before the start of the Shareholders’ Meeting, upon presentation of proof of identity. Admission cards that have already been issued are no longer valid should the corresponding shares be sold and the disposal of the shares be recorded in the Share Register. > Representation Shareholders who do not take part in person can have themselves represented as follows: a) by another shareholder who is entitled to vote. The proxy can be issued with the enclosed registration form, with the admission card or electronically via the shareholder platform Sherpany. b) by the independent proxy Reber Rechtsanwälte, PO Box, CH-8034 Zurich. The proxy and instructions can be issued in writing with the enclosed registra- tion form, with the admission card or electronically via the shareholder platform Sherpany. If instructions are sent to the independent proxy both electronical- ly via Sherpany and in writing, only the electronic instructions will be taken into account. The instructions can be amended at any time until 5 April 2015, 11.59 p.m. (CET). Executive body and deposit proxies are not permissible. > Translation The Shareholders’ Meeting will be held in German. Simultaneous interpreting will be provided into French and English. 17
> Webcast The Shareholders’ Meeting will be broadcast live at http://www.swisscom.ch/shareholdersmeeting. > Minutes The minutes of the Shareholders’ Meeting can be viewed from 28 April 2015 on the Internet at http://www.swisscom.ch/shareholdersmeeting and at the headquarters of Swisscom Ltd. > Refreshments We invite all participants to partake of refreshments following the Shareholders’ Meeting. > Contact For information on the Shareholders’ Meeting Phone: 0800 800 512 (free from within Switzerland) E-mail: gvswisscom15@sag.ch www.swisscom.ch/shareholdersmeeting
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For address changes Phone: +41 (0)58 399 61 61 E-mail: gvswisscom15@sag.ch
Enclosures > Pre-paid reply envelopes (Swisscom Ltd / independent proxy) > Registration with proxy and instruction form > Information and access data for the shareholder platform Sherpany
Information on the arrival > Arrival by public transport Within city zone 110 of the ZVV All public transport in zone 110, second class, in Zurich’s ZVV transport network can be used free of charge for the journey to the Hallenstadion and back. If checked by a ticket inspector, show your admission card to the Shareholders’ Meeting. > S-Bahn: S2, S5, S6, S7, S8, S14, S16 (takes approx. 7 minutes) > VBZ: Bus nos. 10/14 to Sternen Oerlikon, bus no. 11 to Messe/Hallenstadion (takes approx. 18 minutes).
From Swiss stations outside the ZVV zone Under a partnership between AG Hallenstadion and SBB RailAway, shareholders are entitled to a 20% round-trip discount from Swiss stations outside the ZVV zone to Zurich HB or Zurich Oerlikon. The transfer from Zurich HB to the Hallenstadion is free with the admission card. You can purchase your discounted rail ticket at the station, at most ticket machines and online in the SBB Ticketshop. If checked by a ticket inspector, show your admission card to the Shareholders’ Meeting. For information and online purchases, go to www.sbb.ch/hallenstadion
ZVV zone ticket Shareholders living inside the ZVV zone also receive a 10% round-trip discount by showing their admission card to the Shareholders’ Meeting (ticket must be purchased at a station ticket counter).
> Arrival by car From all directions, follow the sign “((Z)) Messe Zürich-Hallenstadion” as far as Hagenholzstrasse, where you will see the entrance to the Messe/Hallenstadion car park. From the car park, there is a footpath leading directly to the Hallenstadion (approx. 500 m). www.parkhaeuser.ch
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