Dear Shareholders,

On behalf of the Board of Directors and the Remuneration Committee (“RC”), I am very pleased to present the Remuneration Report 2017 to you.

2017 was another successful year for Dufry with the synergies from the integration of World Duty Free being fully reflected in our 2017 financials. Furthermore, we were able to accelerate our organic growth and have launched the implementation of the new Business Operating Model. For further details on our operational and financial performance, please refer to the letters of the CEO and CFO.

At the 2017 Shareholders’ Meeting, Ms. Heekyung (Jo) Min, Mr. Xavier Bouton and myself, all three being non-executive independent members of the Board of Directors, were re-elected by the shareholders as members of the Remuneration Committee. The shareholders also approved the proposed maximum aggregate amount of compensation for the Board of CHF 8.4 million for the period from AGM 2017 to AGM 2018 with a majority of 89.2%. The proposal for the maximum aggregate amount of compensation for the Group Executive Committee of CHF 53.5 million for the fiscal year 2018 period was accepted with a majority of 88.2%. The Remuneration Report 2016 was approved by the Shareholders’ Meeting in a consultative, non-binding vote by 90.7% of the votes represented. The current Remuneration Report 2017 will again be submitted to a consultative vote at the Shareholders’ Meeting on May 3, 2018.

In fiscal year 2017, our Remuneration Committee held three meetings, with attendance ratio of 100% for all meetings.

PricewaterhouseCoopers was also mandated in 2017 to carry out a compensation benchmarking for the Group Executive Committee. The benchmarking continued to represent a group of 18 companies, all of them being comparable in size, geographic reach and market profile.

The Board of Directors, upon proposal of the Remuneration Committee, decided on the following changes to the compensation system for fiscal year 2017:

  • Board of Directors: For the bonus of the Chairman, which is based on the growth of reported Cash EPS, a minimum threshold (of 50%) and a maximum threshold (of 150%) were introduced. The cap for the maximum pay-out for the Chairman’s bonus was set at 150% of the target bonus. The board fee for the Chairman was raised by TCHF 96 and for the Vice-Chairman by TCHF 100.

  • Group Executive Committee: Pay-out of the short-term annual bonus was done 100% in cash. Regarding the achievement of financial performance concerning the 2017 bonus, this will be based on three components with the following weights: Organic growth with 20%, EBITDA with 60% and Free Cash Flow with 20%. Furthermore, the maximum vesting of the Performance Share Units (PSU) was set at 1.5 shares per PSU.

The Remuneration Committee reviews the remuneration system, including the bonus scheme and long-term incentive plans (Performance Share Unit plans) on an annual basis to ensure alignment with shareholders’ interests and best practices, and to provide fair management compensation. Over time, we will continue to evolve our compensation system according to the development of Dufry as a company as well as best practices and any regulatory or industry developments in relation to compensation.

On behalf of the Remuneration Committee and the Board of Directors, I would like to thank you, our shareholders, for your contributions and continued trust in Dufry.

Yours Sincerely,

Jorge Born
Chairman of the Remuneration Committee

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