2018 Annual General Meeting Invitation, Proxy Statement and Annual Report

2018 Annual General Meeting Invitation, Proxy Statement and Annual Report TO OUR SHAREHOLDERS We are pleased to report we finished another strong We are building our online go-to-market capabilities. year. Our Fiscal Year 2018 sales grew +13% in constant More than 30% of our sales now happen online, and currency (+16% in U.S. dollars) and profits were up +14% sales in our second biggest country - our fastest growing in non-GAAP terms, to a level almost four times that of one, China - are about 70% online. Our online capability FY 2013. By the time you read this, we will be well into will keep growing all over the world. the next fiscal year. We are also building up our manufacturing and sourcing There are so many things we could have done better in capability as well as our global supply chain. For example, FY 2018 - the transition of our U.S. distribution center, for did you know that one in three of our mice is now made in example. We have learned from each of them and are a fully automated line from assembly to packaging? This leveraging them to help drive our transformation. Rather gives us further cost advantage and flexibility. than going into the details of our FY 2018 performance - Letter to Shareholders which you can find in this annual report - we want to look Growth also comes from breathing new life into the forward and discuss two fundamental questions you are company from the outside. As we’ve built our design likely asking yourselves after our five consecutive years team, for example, we have brought in talent from all of growth: “can we keep growing?”, and “what will we over ... ideo, Nike, Nokia, Microsoft, smaller companies look like if we do?” and design firms. Our new seed teams have been an attraction for entrepreneurs from outside. These new CAN WE KEEP GROWING? team members of all types have changed us. The same is happening in engineering with machine learning and Growth is not optional. It’s not just our business model; software engineering skill recruitment in general. We’ve it’s the imperative for all companies. Companies can get done the same in other capabilities. And acquisitions like away without growth for a year or two, but in the end, flat ASTRO, Saitek and Jaybird are having a similar effect. or declining companies eventually disappear. Innovating in our current categories and building new So how do we continue to grow? Well, we are doing capabilities are only part of our growth story. We are several things. systematically entering new categories and will continue to do so. Let’s start with the most important one: we are continually innovating in our product categories, using design. And We first aim to pick winnable, growing categories. While our formula for design-centered growth has delivered. it might not be obvious at first how we can win in one You can see it in our five consecutive years of growth category or another, as we assess the category in which reaching into double digits the past two years; you can we participate, we also see how we can win. And that’s see it in the reinvigoration of our gaming business, crucial. If we can’t win, we would never enter in the first creation of our video collaboration business, and more. place or we would exit. And we have. We won’t always be right, of course! But that’s okay too. We build capabilities And as part of that design-centered view of innovation, we as we enter new spaces, and those capabilities create keep building capabilities beyond design. Engineering is new opportunities as well. now not just hardware but increasingly software. Almost a third of our engineering team members in product Almost all of our categories can grow, or do. There are development are now software engineers, up from about going to be times when a category declines, but if we a tenth six years ago. And we continue to hire software innovate and manage them well these businesses can engineers at a fast rate. either grow profit or return to revenue growth. (i) One of the critical things we do to drive growth is that Growth of “big company” behaviors (and titles, levels, and we don’t primarily focus on our competitors, whoever bureaucracy) begins to suffocate growth of innovation. they might be. We have good competitors in all of our More teams and layers are added to augment or oversee categories. Of course we are aware of them and what the slowing growth. Segregation of responsibilities creates they are doing. But we focus on the users instead. By deeper expertise but less coordination and increasing doing that deeply and thoroughly, and by innovating for political challenges. The soul of the company takes blow them - for what they know they want, and even for what after blow. The company increasingly focuses internally. we know they want but they haven’t quite realized yet - The customer is no longer the center of everything. we will usually succeed. And that will drive growth. It can happen to the best companies. And it happens with WHAT WILL WE LOOK LIKE? good intentions. Beyond sustaining growth, the other question we want So how do we stop this from happening to little Logitech to address is what kind of company we will be as we as it grows? The big company symptoms happen in Letter to Shareholders continue to grow. The answer is not as simple. parts of our organization even now. We see the early warning signs. And they have been here before. This big- Growth is good. But growth can have some negative company disease will infect us … if we don’t acknowledge side effects. That’s why large companies sooner or later it, and plan to defeat it. Again and again and again. By usually “hit the wall” ... and fall. The Fortune 500 turns innovating in how we work; how we are organized; and over by half every ten years. GE is the latest example of how we help users. a large company falling; at least for now. How can that be when they had all the advantages of scale? Can’t they We will fight to make sure we keep growing and feeling recruit the best, buy other companies, and spread best even smaller as we do. This obsession to be that little practices inside their walls faster? mouse company in feel and behavior, even as we look bigger and bigger from a financial point of view, will No. Because big is generally bad. It’s good for scale, of remain our obsession. Like Switzerland, we won’t lose course, but bad for agility and speed. We don’t want to our humility or ambition as we grow. behave like a big company (though we do love the scale we have in manufacturing and procurement as well as In closing, yes, FY 2018 was a very good year. But we our market reach). are focused on FY 2019 and well beyond ... staying close to customers, innovating and fighting to be the small Logitech’s unique formula includes our smallness, company we are in our soul… and intend to stay. just like the mice that created us. Our organization is not hierarchical, with multiple layers of executive vice Thank you for your confidence in Logitech and your presidents, senior vice presidents and assistant vice continued support. presidents sitting in offices. We are trying to stay flat and flexible, fast and fun. Hungry. That’s not easy as you grow. It takes a lot of work. But it’s worth it. Scaling is one of the most popular words around these days. Scale seen in isolation is often a clear advantage. Guerrino De Luca But scaling can have a bitter aftertaste. Scaling can eat Chairman of the Board the soul of the company and replace it with another kind of growth - not of revenues and profits, but rather of titles and hierarchical layers, of politics and bureaucracy. Bracken Darrell President and Chief Executive Officer (ii) 2018 Annual General Meeting Invitation, Proxy Statement 2018 Annual General Meeting Invitation, Proxy Statement and Annual Report July 24, 2018 To our shareholders: You are cordially invited to attend Logitech’s 2018 Annual General Meeting. The meeting will be held on Wednesday, September 5, 2018 at 2:00 p.m. at the SwissTech Convention Center, EPFL, in Lausanne, Switzerland. Enclosed is the Invitation and Proxy Statement for the meeting, which includes an agenda and discussion of the items to be voted on at the meeting, instructions on how you can exercise your voting rights, information concerning Logitech’s compensation of its Board members and executive officers, and other relevant information. Whether or not you plan to attend the Annual General Meeting, your vote is important. Thank you for your continued support of Logitech. Guerrino De Luca Chairman of the Board This page is intentionally left blank. July 24, 2018 To our shareholders: You are cordially invited to attend Logitech’s 2018 Annual General Meeting. The meeting will be held on Wednesday, September 5, 2018 at 2:00 p.m. at the SwissTech Convention Center, EPFL, in Lausanne, Switzerland. Enclosed is the Invitation and Proxy Statement for the meeting, which includes an agenda and discussion of the items to be voted on at the meeting, instructions on how you can exercise your voting rights, information concerning Logitech’s compensation of its Board members and executive officers, and other relevant information. Whether or not you plan to attend the Annual General Meeting, your vote is important.

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