Dear Shareholders,

2019 was once more a very successful year for Dufry. Our growth has been accelerating and with CHF 8,848.6 million of turnover reached a new record level. The adoption of IFRS 16, which became effective as of January 1, 2019, has affected the way we account for our concession and lease agreements, as we have already indicated in our 2018 Annual Report. You will find further explanations and reference to this change in the accounting rules in this Remuneration Report and in the letter of the CFO on page 110, as well as in the consolidated financial statements Note 2.4 on page 137, respectively.

Shareholder interaction and dialogue
Dufry engages with shareholders, analysts and investors on a regular basis to better understand their expectations, needs and concerns as part of the Company’s strategy with regards to stakeholder dialoque and ESG engagement. Feedback is taken into consideration when evolving the Company strategy as well as corporate governance and remuneration matters. In this context, in 2019, management and the investor relations team had 870 contacts with shareholders and investors combining personal meetings, calls and emails. Discussions with analysts, potential investors and shareholders primarily involved questions and explanations of the Company strategy and clarifications on the IFRS 16 implementation. Shareholder feedback on remuneration practices was generally positive and were not a topic raised often. Related questions and remarks were taken into consideration by the Board of Directors and the Remuneration Committee.

The Company recently conducted investor perception studies - mandated to an external third party - to receive additional insights of shareholder expectations. The most recent perception studies were done in September 2018 and June /July 2019. For a more comprehensive overview of Dufry’s stakeholder ecosystem please refer to the ESG report section on page 78 of this Annual Report.

Remuneration Committee
The Remuneration Committee, whose members were re-elected at the General Meeting of Shareholders on May 9, 2019, 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 plan (Performance Share Unit plan) on an annual basis to ensure alignment with shareholders’ interests and best practices, and to provide fair and transparent management compensation.

In fiscal year 2019, the Remuneration Committee held six meetings, with attendance ratio of 100 %.

Results of Shareholders’ Meeting on May 9, 2019
Our Shareholders’ Meeting approved the Board of Directors’ proposal for the maximum aggregate amount of compensation for the Board of CHF 8.5 million from the AGM 2019 to the AGM 2020 with a majority of 89.8 %. The proposal for the maximum aggregate amount of compensation for the Global Executive Committee of CHF 42.53 million for the fiscal year 2020 was accepted with a majority of 71.16 %. Our Remuneration Report 2018 was approved by the Shareholders’ Meeting in a consultative, non-binding vote by 89.01 % of the votes represented.

This year’s Remuneration Report 2019 will again be submitted to a consultative vote at our Shareholders’ Meeting on May 7, 2020.

Changes in 2019 regarding compensation
The following changes regarding compensation were applied in fiscal year 2019:

Board of Directors:

  • The Shareholders’ Meeting approved an amendment of section 22 para. 2 of the Articles of Incorporation regarding the compensation of the Board of Directors (allowing compensation also in shares) by 99.25 %. The bonus of the Chairman, which is based on the Adjusted EPS for 2019, will be paid in cash.
  • The new position of Lead Independent Director was established in July 2019.
  •  In addition and as part of the Company’s ESG initiatives, one Board member was given responsibility to oversee Dufry’s ESG initiatives.

Global Executive Committee:

  • Short-term incentive: Due to the implementation of IFRS 16, with EBITDA no longer being reported in the income statement, and the implementation of the Business Operating Model being completed by the end of 2018, the measures regarding financial performance relevant for the annual bonus have been adjusted. The relevant metrics for 2019 were 40 % Organic Growth, 20 % Adjusted Operating Profit and 40 % Equity Free Cash Flow (2018: 50 % EBITDA, 25 % Business Operating Model Efficiency, 25 % Free Cash Flow). The alignment of the short-term incentive KPIs is in line with the current Company strategy and the operational focus of the management team.
  • Long-term incentive: Also as a result of the IFRS 16 implementation, the formerly used Normalized Cash EPS has been replaced with Adjusted EPS as metric for the calculation of the targets and achievement ratios of the Performance Share Unit (PSU) plan. The targets and achievement ratios of the PSU plan remain as challenging as before.

For further details on these changes please refer to the respective sections in this Remuneration Report.

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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