Message from the Chairman of the Compensation and Nomination Committee to the Shareholders

Dear Shareholders

On behalf of the Board of Directors and the Compensation and Nomination Committee (CNC), I am pleased to introduce the 2017 Compensation Report of Cembra Money Bank AG (hereafter referred as “the Bank”, together with its subsidiaries, “the Group”).

In 2017 the Group achieved another year of solid performance despite pressure on revenues resulting from regulatory changes. With a net income of CHF 144.5 million and a corresponding return on equity (ROE) of 16.7%, we delivered again solid results on previous year’s level. Net financing receivables increased by 12% to CHF 4,562 million driven by both acquisitions and organic growth. We made further steps in executing on our strategy for growth with the acquisitions of Swissbilling and EFL Autoleasing as well as the refinancing transaction with eny Finance. The Group’s performance was also reflected in the share price performance leading to a total shareholder return (including dividend) of 28% in 2017.

These achievements are reflected in the compensation decisions for 2017. As a result of the strong financial performance, the total compensation for the Group’s Management Board was TCHF 4,035 for 2017, as compared to the budget of TCHF 5,300 comprising the fixed compensation approved by the General Meeting 2016 and the variable compensation approved by the General Meeting 2017. The total compensation in the previous year was TCHF 3,891 compared to an approved total compensation of TCHF 5,300.

To ensure the compensation system fulfils its purpose of supporting the achievement of our long-term business objectives and to ensure alignment of executive compensation with the interests of our shareholders, we:

• Regularly review our compensation policy;
• Maintain a compensation system that is premised on pay for performance;
• Clearly define the expected performance through a robust performance management process; and
• Pay market competitive compensation levels for comparable roles and experience.

Our Executive Variable Compensation Plan consists of a short-term incentive and a separate long-term incentive programme:

• For the short-term variable compensation, the performance is predominantly tied to financial results (70% to 80% weight) and the assessment of qualitative results (20% to 30% weight).
• Awards under the long-term incentive plan are granted in form of performance share units subject to a three-year performance-based cliff-vesting period. The performance conditions include relative total shareholder return and fully diluted earnings per share. This programme directly links the interests of the executives to those of the shareholders.

For the further development of our compensation strategy, we consider the opinion of our stakeholders as relevant and highly valuable. You will have the opportunity to express your opinion on the compensation programmes through a non-binding, consultative shareholders’ vote on this Compensation Report at the General Meeting in April 2018. Furthermore, we will ask you to vote on the maximum aggregate compensation amount for the Board of Directors for the General Meeting 2018 to General Meeting 2019 term of office and on the maximum aggregate compensation for the Management Board to be paid out in the financial year 2019.

Looking ahead, we will continue to assess and review our compensation programmes to ensure that they are still fulfilling their purpose in the evolving context in which the Group operates and that they are aligned to the interests of our shareholders. We would like to thank you for taking the time to share your views with us during the entire year and trust that you find this report informative.

Urs Baumann

Chairman of the Compensation and Nomination Committee