2. Enhanced disclosure

Following the outcome of the AGM vote on the compensation report 2023/24, we established a task force led by the NCC to thoroughly review the feedback received by shareholders and to develop a comprehensive action plan. We have engaged in extensive outreach and have held numerous meetings with our key shareholders and proxy advisors followed by discussions with the NCC and the Management Board. The NCC values the feedback received on the compensation report which predominantly related to disclosure matters rather than the compensation levels or the compensation system. In this regard, the following advancements were made in this yearʼs report:

	Shareholder Concern	Sonova’s Response
Disclosure	Clarity on Targets and Achievements	First of all, we simplified the disclosure around the structure of the performance objectives of the short-term cash incentive (VCC) and we provided more details around the categories of individual objectives for the CEO and the Management Board.
	Clarity on Targets and Achievements	Secondly, for both the VCC and long-term incentive plans (EEAP), we will disclose the performance targets, achievements and related payout percentages for all Group objectives (Group financial and Group ESG objectives.). This includes the ex-post disclosure of the ROCE targets and achievements for all the tranches that vest in the reporting year under EEAP.
	Disclosure of vesting value of the long-term incentive / realized pay	As mentioned above, the performance targets, achievements and related payout percentages are now disclosed ex-post for all Group objectives, which includes the relative TSR and ROCE targets and achievements under the EEAP for each tranche that vests in the reporting year.
		As in previous years, the disclosure in the compensation tables is based on the grant value of the EEAP, as per Swiss regulations and market standards.
LTI	Vesting period for performance options	Shareholders expressed that they consider the vesting period of the performance options to be too short, because it is below three years for two of the four tranches. However, the EEAP awards (performance options and PSUs) are subject to a blocking period of five years counted from the grant date, which means that the overall plan duration (vesting + blocking period) is five years.
	Vesting period for performance options	The NCC is convinced that the current plan set-up is well aligned with shareholder’s interests.
	Possible payout for below median TSR performance of the PSU	Our remuneration philosophy is to pay for performance and to maintain a reasonable risk profile for our incentive plans. Therefore, a partial payout is possible if the performance exceeds the first quartile of the peer group. Symmetrically, the payout is capped in case of outstanding performance. This mechanism provides for a robust balance. Nevertheless, the NCC decided to align the payout curve for the PSU grant with market practice by increasing the threshold from 20th to 25th percentile and decreasing when the cap is met from 80th to 75th percentile.
	Possible payout for below median TSR performance of the PSU	We will continue to apply the existing rule to cap the vesting at 100% in case of negative TSR regardless of the positioning in the peer group.
	Clawback/malus provisions	The NCC has decided to introduce clawback and malus provisions in the EEAP, starting with the grant in 2025. Those provisions will allow the company to reduce the vesting level of unvested awards (malus) or recover paid EEAP awards (clawback) in case of fraud, violation of law or financial restatement due to material non-compliance with accounting standards. These provisions are comparable to those already existing in the VCC.