2020 turned out to be a most difficult year for manycompanies and industries – and especially so for thetravel retail and tourism industry. As reported in detailby our CEO and CFO in their respective letters, Dufrysuffered from the persistent spread of the COVID-19 pandemic and the related travel restrictions and limitations. Despite these challenges, we were able to quickly adapt our company to the new business environment and to prepare ourselves for the recovery phase. As I write this letter to you, we still face substantial restrictive measures across many countries worldwide, but remain hopeful that COVID-19 will ebb away during the course of 2021 and we will be able to see a significant upturn in traveling and travel retail again.
Remuneration Report and compensation approvals at the Shareholders’ Meeting on May 18, 2020
In a consultative, non-binding vote during our ordinary Shareholders’ Meeting 2020, the Remuneration Report 2019 was approved by 88.53 % of the votes represented. The Board of Directors’ proposal for the maximum aggregate amount of compensation for the Board of CHF 8.5 million covering the period from the AGM 2020 to the AGM 2021 was accepted with a majority of 89.39 %. The proposal for the maximum aggregate amount of compensation for the Global Executive Committee of CHF 34.0 million for the financial year 2021 was approved with 91.46 %.
As in previous years, Dufry will submit the current Remuneration Report 2020 to a consultative vote at our ordinary Shareholders’ Meeting on May 18, 2021.
Remuneration Committee in 2020
Our Remuneration Committee consists of three nonexecutive and independent members of the Board of Directors, who are elected annually by the General Meeting of Shareholders. At the General Meeting held on May 18, 2020, the current three members, Jorge Born, Claire Chiang and myself were elected individually with high approval rates of above 92 % for each member.
The Remuneration Committee reviews the remuneration system, including the bonus scheme and longterm 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. We use competitive benchmarking including peer group comparisons and the service of external consultants.
In fiscal year 2020, the Remuneration Committee held 4 meetings, with an attendance ratio of 92 %.
Remuneration changes in 2020
The following changes were made in fiscal year 2020, impacting the remuneration of the Board of Directors and of the Global Executive Committee:
Board of Directors:
- 30 % reduction in Board and Committee fees for the three-month period from April to June 2020. All members of the Board of Directors agreed to and participated in this voluntary fee reduction initiative.
- The Board of Directors was expanded from nine to ten members as of the Extraordinary Shareholders’ Meeting on October 6, 2020. Mr. Ranjan Sen was elected as a new member to our Board of Directors as of that date.
Global Executive Committee:
- New Global Executive Committee structure with eight members (ten members previously) was implemented in the context of the company reorganization announced on June 9, 2020, and effective September 1, 2020.
- 30% salary reduction for the three-month period from April to June 2020. This was also on a voluntary basis, and all members of the Global Executive Committee agreed to and participated in this salary reduction.
- For the annual bonus (short-term incentive), the key performance indicators used in 2019 were replaced with new targets to address the COVID-19 related market environment and the respective restructuring efforts of the company. The new key performance indicators for the annual bonus in 2020 were (i) Turnover and (ii) Agreements with airport authorities to get relief of the fixed minimal guaranteed amount on sales (“MAG” Relief). Further, a special bonus was approved to additionally reward exceptional individual performances by members of the Global Executive Committee in 2020, as they have been instrumental in rescuing the company and initiating innovative, forward-looking steps to set up the company for emerging stronger post-COVID and beyond.
- The long-term Performance Share Units (PSU) plan for fiscal year 2020 was suspended and no PSU were granted in the year under review. The existing PSU plan will remain effective as such and resume as soon as business performance recovery allows.
- With the delisting of Hudson Ltd. from the NY Stock Exchange and the full re-integration of Hudson Group into Dufry, adjustments were necessary to the previous long-term incentive plans for Hudson employees. Within the Global Executive Committee, this only concerned the CEO North America and his Hudson LTI plan holdings.
Shareholder dialogue and interactions during 2020
Dufry has a consistent and open dialogue with shareholders, analysts, potential investors as well as with the media through direct phone calls, emails, roadshows, participation at brokers’ investor seminars, dedicated Dufry investor days and one-to-one meetings. Feedback received during these contacts is analyzed in detail and the results are taken into consideration when evolving the Company strategy, ESG engagement, corporate governance or remuneration matters. In 2020, management and the investor relations team were in regular contact with shareholders and investors through personal meetings, calls and emails. Discussions with these stakeholders mainly involved questions and explanations on the company restructuring efforts, our strategic initiatives and above all the challenges that we face in the current business environment.
The business year 2020 will be remembered as the most challenging period in our company history so far. We are proud that we have weathered this storm and are prepared to take full advantage of the travel and travel retail recovery with a leaner corporate structure and a strong balance sheet.
On behalf of the Remuneration Committee and the entire Board of Directors, I would like to thank you, our esteemed shareholders, for your continued contributions and trust in Dufry and in our long-term strategy.
Heekyung Jo Min
Chairwoman of the Remuneration Committee
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