08/03/2022 - Dufry AG: Remuneration Report 2021

In the name of the Board of Directors and the Remuneration Committee, I am pleased to introduce the 2021 Remuneration Report.

2021 was a very demanding year for the travel retail and tourism industry, as the COVID-19 pandemic continued to show its negative effects in terms of travel restrictions and limitations around the world. As reported by our CEO and CFO in their letters, we saw gradual improvements in the business environment during the first half of the year, and a strong re-bound of travel, predominantly in the Western hemisphere, during the second half. Across the entire company, our teams have shown a remarkable performance and strong commitment to Dufry enabling us to reopen shop-by-shop and to safeguard our leadership position in global travel retail despite the ongoing challenges.

Dufry was able to increase turnover by 53.2 % compared to 2020, organically reaching a level of 46.5 % of pre-crisis 2019. Equity Free Cash Flow strongly improved and amounted to CHF -33.4 million in total for the year 2021, significantly better than expected and achieved through cost savings and continued tight cash management. Overall savings for full year 2021 amounted to CHF 1,919.7 million consisting of MAG re- liefs, personnel and other expense savings. We are prepared to take full advantage of the expected recovery in traveling and travel retail during 2022 and beyond.

In this Remuneration Report, we outline our current remuneration policies and the decisions made in relation to the 2021 compensation of the Board of Directors and the Global Executive Committee.

At the 2021 General Meeting of Shareholders, two binding votes on the aggregate maximum remuneration amount for the Board of Directors and for the Global Executive Committee as well as a consultative

vote on the Remuneration Report were conducted, so that shareholders could express their opinion on our remuneration programs and principles. While the shareholders approved the remuneration amounts for the Board of Directors and for the Global Executive Committee with a voting result of 86.57 % and 88.74 % respectively, the consultative vote on the Remuneration Report was approved with a rate of 63.65 % only. Following this result, the company reached out to investors and proxy advisors to understand and address their concerns. Further details on the outcomes of this dialogue are included in this report.

The Remuneration Committee focused its activities during fiscal year 2021 on the annual review of the remuneration programs for the Board of Directors and the Global Executive Committee, the performance objective setting for the incentive plans and their performance assessment. In addition, the Remuneration Committee reviewed the remuneration for each member of the Board of Directors and of the Global Executive Committee, as well as the Remuneration Report and the voting proposals on remuneration to the General Meeting of Shareholders. Furthermore, in 2021 and early 2022, the Remuneration Committee discussed how to include Environmental, Social and Governance (ESG) topics into the compensation structure of the Global Executive Committee going forward. ESG targets should be rigorously aligned with Dufry's overall strategy, long-term oriented, measurable, and any compensation should be strictly linked to achievement of the ESG targets. An additional discussion by the Remuneration Committee was on the possible introduction of a relative Total Shareholder Return (TSR) metric. Final work needs to be done and decisions taken on both matters, but the Remuneration Committee and the Board of Directors intend to introduce such additional measures to the long-term incentive for the Global Executive Committee in 2022.

To improve the performance alignment of our executive remuneration framework in these challenging times and also take account of shareholder feedback, several changes to the remuneration programs were implemented in fiscal year 2021:

• In order to reflect the short-term priorities of the Group navigating through the Covid-19 pandemic, the performance objectives for the annual bonus of the Global Executive Committee focus on the Group turnover, with a 50 % weighting, and the Group cost savings, with a 50 % weighting, similar to fiscal year 2020. The respective targets were set at the begin- ning of the fiscal years;
• In order to foster the long-term commitment and pay-for-performance alignment of our executives, a grant of performance share units (PSU) was awarded in the reporting year (unlike in the previous year, when the PSU plan was suspended for the one-year period 2020 and no PSU were granted). The vesting of those performance share units is conditional upon the achievement of two performance conditions: Cumulative Adjusted EPS with a 50 % weighting and Cumulative Equity Free Cash Flow with a 50 % weighting. Those objectives reflect the mid- and long-term priorities of the Group. The three-year performance period of the PSU remained unchanged compared with earlier PSU plans;
• Regular basic salary payments in fiscal year 2021 compared to a 30 % voluntary salary reduction for the period April to June 2020. A single member of the Global Executive Committee (not the CEO) re- ceived a pre-defined basic salary increase in 2021 related to the increase in experience and responsi- bility. All other members of the Global Executive Committee did not receive any basic salary increase in the reporting year.

Furthermore, the fees for the Chairs of Board Committees were raised for the first time in the last seven

years to compensate for the additional workload of the Chairpersons and the increasing complexities in the committee work.

As in previous years, we will submit the Remuneration Report 2021 for a consultative vote at our Annual Shareholders' Meeting on May 17, 2021.

On behalf of the Remuneration Committee and the entire Board of Directors, I would like to thank you for your continued contributions, your trust in Dufry and in our long-term strategy and I trust that you will find this report informative.

Yours sincerely,

Luis Maroto Camino

Chairman of the Remuneration Committee

4  Governance Report

DUFRY ANNUAL REPORT 2021

REMUNERATION AT A GLANCE

SUMMARY OF REMUNERATION SYSTEM

FOR FISCAL YEAR 2021 BOARD OF DIRECTORS

In order to ensure their independence in performing their supervisory function, non-executive members of the Board of Directors receive a fixed remuneration in cash only.

BOARD FEES (GROSS):(TCHF)

Chairman of the Board	2,010.5
Board member	250.0
ADDITIONAL FEES (GROSS):		(TCHF)
Lead Independent Director	100.0
ESG responsibility	100.0
Chair Audit Committee	100.0
Chair Remuneration or Nomination Committee	75.0
Committee member	50.0

The executive Chairman of the Board of Directors may receive an annual bonus based on performance criteria and capped at 130 % of his fixed fee.

SUMMARY OF REMUNERATION SYSTEM FOR FISCAL YEAR 2021 GLOBAL EXECUTIVE COMMITTEE

The remuneration of the Global Executive Committee consists of fixed and variable elements. Basic salary and other benefits form the fixed remuneration.

Variable remuneration drives and rewards best-in-class performance based on ambitious and stretched targets. It consists of an annual cash bonus and a grant of performance share units (PSU).

Basic salary	Pay for the position
	Covers retirement, death and disability risks,
Benefits	allowances in kind
Annual cash
bonus	Drive and reward annual performance
	Drive and reward long-term performance,
	align with shareholders' interests, 3-years
PSU plan	performance period

Remuneration policy and principles

In order to ensure the company's sustainable success, it is critical to attract, develop and retain the right talents. Dufry's remuneration programs are designed to support this fundamental objective and are based on the following principles:

• Pay for performance;
• Shareholder interests;
• Competitiveness;
• Transparency.

REMUNERATION FOR FISCAL YEAR 2021 BOARD OF DIRECTORS

The remuneration awarded to the Board of Directors for fiscal year 2021 is within the limits approved at the 2020 and 2021 Annual General Meetings of Shareholders (AGM).

		APPROVED		TOTAL COMPEN-
REMUNERATION PERIOD		BY AGM (TCHF)		SATION* (TCHF)
AGM 2020 - AGM 2021	8,500.0	7,179.8
AGM 2021 - AGM 2022	8,500.0	7,761.3

• Reconciled between reported Board compensation for fiscal years 2020 and 2021 and corresponding compensation from one Annual General Meeting of Shareholders to the next.

REMUNERATION FOR FISCAL YEAR 2021 GLOBAL EXECUTIVE COMMITTEE

The remuneration awarded to the Global Executive Committee for fiscal year 2021 is within the limits approved at the 2020 Annual General Meeting of Shareholders.

		APPROVED	TOTAL COMPEN-
REMUNERATION PERIOD		BY AGM (TCHF)		SATION (TCHF)
Fiscal year 2021	34,000.0	21,310.3

Annual bonus for fiscal year 2021

130 % of target: The total combined performance ratio for the two targets Turnover and Cost savings was 141 %, leading to the annual bonus being capped at the maximum payout of 130 %.

PSU grant and vesting in fiscal year 2021

The grant value of the PSU awarded in 2021 amounts to 26 % of the total compensation for FY 2021.

The PSU awarded in FY 2019 will not vest in May 2022, as the minimum performance threshold was not achieved.

Remuneration governance

• Authority for decisions related to remuneration are governed by the Articles of Incorporation and the Board Regulations of Dufry AG.
• The maximum aggregate amounts of remuneration of the Board of Directors and of the Global Executive Committee are subject to binding votes at the AGM.
• In addition, the Remuneration Report for the preceding pe- riod is subject to a consultative vote at the AGM.
• The Board of Directors is supported by the Remuneration Committee in preparing all remuneration-related decisions regarding the Board of Directors and the Global Executive Committee.

The long-term success of Dufry depends on our ability to attract, motivate and retain outstanding individuals who will ensure that we can further expand our global market leadership position in travel retail over the next years, remain a strong company with a sound balance sheet and cash flows, be a reliable employer, and offer good and fair working environments for our staff.

In order to achieve these goals, we continue to provide appropriate and competitive remuneration to all our employees and to support their development and working careers. Our executive compensation system is aligned with the strategy of being a high-performance organization and takes into account the short- term and long-term objectives of our business. Dufry operates a short-term annual bonus and a long-term incentive plan with a set of pre-defined performance targets for each.

The current Remuneration Report describes our remuneration principles and programs, as well as the governance framework related to the remuneration of the Board of Directors and of the Global Executive Committee. The report also provides information on the remuneration paid to the members of the Board of Directors and the Global Executive Committee for fiscal year 2021. The report is prepared in accordance with Articles 13 - 17 of the Ordinance against excessive Compensation (OaeC) in Listed Stock Corporations, item 5 of the Annex to the Corporate Governance Directive (DCG) of SIX Exchange Regulation governing disclosure of remuneration systems and remuneration paid to members of the Board of Directors and the Global Executive Committee, and the principles of the Swiss Code of Best Practice for Corporate Governance of economiesuisse.

The Remuneration Report will be submitted to the General Meeting of Shareholders on May 17, 2022 for a consultative vote.

ARTICLES OF INCORPORATION

AND SHAREHOLDERS

Dufry's Articles of Incorporation contain specific provisions on remuneration. The Articles of Incorpora- tion, and any amendments thereof, are subject to approval by the General Meeting of Shareholders. The remuneration provisions include rules concerning the election, the constitution and the powers of the Remuneration Committee (Art. 17 and 18); the approval of remuneration by the General Meeting of Shareholders (Art. 20); the supplementary amount in case of changes on the Global Executive Committee (Art. 21); the general remuneration principles (Art. 22); the agreements with members of the Board of Directors and of the Global Executive Committee (Art. 23); as well as the maximum number of mandates outside the company that a member of the Board of Directors or of the Global Executive Committee may hold (Art. 24 and 25). The Articles of Incorporation are available on the Company website under: www.dufry.com/en/investors/corporate-governancepage section "Featured downloads - Articles of Incor- poration".

Pursuant to Dufry's Articles of Incorporation, the General Meeting of Shareholders has to approve the proposal of the Board of Directors in relation to the maximum aggregate amounts of remuneration of the Board of Directors for the period until the next Annual General Meeting of Shareholders and of the Global Executive Committee for the following fiscal year. The votes on these maximum aggregate amounts of remuneration have a binding effect. Thereafter, the decision authority on the individual remuneration of the members of the Board of Directors and of the Global Executive Committee (within the limits approved by the General Meeting of Shareholders) is with the Board of Directors. In addition, the Remuneration Report is submitted to the Annual General Meeting of Shareholders for an advisory vote on a yearly basis, so that shareholders can express their opinion on the remuneration policy and programs.

Following the rather low 63.65 % approval rate of the Remuneration Report 2020 at the Annual General Meeting of Shareholders 2021, the company reached out to investors and proxy advisors to understand and address their concerns on the remuneration policy and programs.

Dufry's response to the stakeholders' feedback in- cludes:

• A simplified disclosure within the Remuneration Re- port and additional relevant information.
• To provide a more detailed performance assess- ment ex-post for the annual bonus and the vesting of the performance share units (PSU) plan. The per- formance targets used in the incentives of the Global Executive Committee are a commercially sensitive information, and as such, are not dis- closed.
• To base the annual bonus solely on pre-defined fi- nancial targets (performance objectives in 2021 are Turnover and Cost savings).
• To well balance between short-term and long-term remuneration, taking into account that PSU were granted and the fact that no grant of PSU was done for fiscal year 2020.
• PSU plan with two different performance conditions (cumulative adjusted EPS and cumulative Equity Free Cash Flow).

BOARD OF DIRECTORS AND

REMUNERATION COMMITTEE

Based on Dufry's Articles of Incorporation and applicable law, the Board of Directors has the overall responsibility for defining the remuneration policy of the Group, as well as the general terms and conditions of employment for members of the Global Executive Committee. It approves the individual remuneration of the members of the Board of Directors and the Global Executive Committee (within the limits approved by the General Meeting of Shareholders).

The Remuneration Committee, which consists of three non-executive independent members of the Board of Directors, supports the Board of Directors in fulfilling all remuneration related duties. The General Meeting of Shareholders held on May 18, 2021, elected Ms. Eugenia

M. Ulasewicz, Mr. Steven Tadler and Mr. Luis Maroto Camino (all individually elected) as members of the Remuneration Committee for a term of office until completion of the next Annual General Meeting of Shareholders in 2022. Luis Maroto Camino was appointed as Chairman of the Remuneration Committee. In August 2021, the Board of Directors appointed Mr. Joaquín Moya-Angeler Cabrera as member of the Remuneration Committee, to replace Mr. Tadler.

The Remuneration Committee has the following powers and duties:

• Review and assess the remuneration system of the Company and the Group (including the management incentive plans) and make proposals in connection thereto to the Board of Directors;
• Make recommendations regarding the proposals of the Board of Directors for the maximum aggregate amount of compensation of the Board of Directors and the Global Executive Committee to be submit- ted to the Annual General Meeting of Shareholders for approval;
• Make proposals in relation to the remuneration package of the Group CEO and the members of the Board of Directors;
• Make proposals on the grant of options or other se- curities under any management incentive plan of the Company;
• Review and recommend to the Board of Directors the remuneration report.

The Remuneration Committee discusses the annual compensation of the members of the Board of Directors (board fees, committee fees, target bonus for the Chairman) in separate meetings. The Chairman of the Board of Directors and the Chief Executive Officer usually participate in these meetings without any voting rights and they leave the room when their own compensation is discussed. The Remuneration Committee submits its proposals to the full Board of Directors an-