Dear Shareholders,

2018 was yet another very successful year for Dufry with turnover, EBITDA and free cash flow reaching new all-time highs. Based on our sound business model and the vast opportunities that we see in the travel retail market, we plan to grow our Company and to further develop our market leadership position in the coming years. For details on our operational and financial performance in fiscal year 2018, please refer to the letters of the CEO and CFO.

The Remuneration Committee, elected at the General Meeting of Shareholders on May 3, 2018, consists of Claire Chiang, Jorge Born and myself, all of us being non-executive and independent members of the Board of Directors. Our 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.

The Shareholders’ Meeting approved the Board of Directors’ proposal for the maximum aggregate amount of compensation for the Board of CHF 8.7 million from the AGM 2018 to AGM 2019 with a majority of 86.0%. The proposal for the maximum aggregate amount of compensation for the Global Executive Committee of CHF 37.1 million prospective for the fiscal year 2019 period was accepted with a majority of 80.2 %. Our Remuneration Report 2017 was approved by the Shareholders’ Meeting in a consultative, non-binding vote by 91.7 % of the votes represented. This year’s Remuneration Report 2018 will again be submitted to a consultative vote at our Shareholders’ Meeting on May 9, 2019. In fiscal year 2018, the Remuneration Committee held four meetings, with average attendance ratio of 83 %.

The following changes regarding compensation were applied in fiscal year 2018:

  • Board of Directors: Certain members of Dufry AG’s Board of Directors are also members of the Board of Directors of Hudson Ltd., our subsidiary listed on the New York Stock Exchange. Two Board members (Heekyung Jo Min and Joaquin Moya-Angeler Cabrera) received additional compensation for their services in the Board of Directors at Hudson Ltd. No other changes took place with regard to the Board compensation in 2018.

  • Global Executive Committee: The measures regarding financial performance relevant for the annual bonus have been adjusted. The relevant metrics for 2018 were 50% EBITDA, 25% Business Operating Model Efficiency, 25% Free Cash Flow (2017: 60% EBITDA, 20 % Organic growth, 20 % Free Cash Flow). The changes and especially the introduction of the new Business Operating Model Efficiency were done in order to align the whole organization on this crucial project for Dufry. The successful implementation of the Business Operating Model will create the basis for further development of the Group going forward.

The adoption of IFRS 16, which becomes effective as of January 1, 2019, will affect the way we account for our concession agreements and lease agreements. This will have an impact on the balance sheets and income statements going forward. We will for example discontinue using EBITDA as a key performance indicator and our reported net earnings will also be different. The Remuneration Committee will examine in detail during 2019 what changes need to be made to the compensation measures and system for the Global Executive Committee remuneration in order to align compensation to new IFRS 16 accounting standard rules. For further details on this subject please see explanations on page 255 of this Report and in Note 4 of the Consolidated Financial Statements.

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

Yours Sincerely,

Lynda Tyler-Cagni
Chairwoman of the Remuneration Committee

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