Corporate Governance Report

Transcription

1 Corporate Governance Report 2014

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3 Corporate Governance Report 2014 (Translation from the Italian original which remains the definitive version)

4 Glossary (Translation from the Italian original which remains the definitive version) Designated Director The designated director for the internal control and risk management system designated by WDF in accordance with principle 7.P.3(a)(i) of the Voluntary Code of Conduct. Shareholders Meeting The Issuer s Shareholders Meeting. Autogrill Autogrill S.p.A., with registered office in Novara, Via L. Giulietti n. 9. Shareholders The WDF shareholders. Borsa Italiana Borsa Italiana S.p.A. c.c. The Italian Civil Code. Code/Voluntary Code of Conduct The Voluntary Code of Conduct of the listed companies approved in July 2014 by the Committee for Corporate Governance and promoted by Borsa Italiana, ABI, Ania, Assogestioni, Assonime and Confindustria. WDF code The Voluntary Code of Conduct approved by the Board of Directors in the session of 20 September 2013 and subsequently modified on 18 December Board of Statutory Auditors The Issuer s board of statutory auditors. Control, Risk and Corporate Governance Committee The committee internal to the Board of Directors set up in accordance with principle 7.P.4 of the Voluntary Code of Conduct. Related Party Transaction Committee The committee for transactions with related parties, set up within the Board of Directors pursuant to the Related Party Regulations. Human Resources Committee The committee internal to the Board of Directors set up in accordance with point 6.P.3 of the Voluntary Code of Conduct. Board of Directors The Board of Directors of the Issuer. CONSOB The National Commission for Companies and the Stock Exchange with office in Rome, Via G.B. Martini n. 3. Subsidiaries Companies directly and indirectly controlled by WDF pursuant to article 2359 c.c. and article 93 of the TUF (Consolidated Finance Act). Strategic Subsidiaries The subsidiaries that the Board of Directors picks out, from time to time, as having strategic importance. Internal Audit Director The manager responsible for WDF s internal audit function, appointed on 20 September 2013 pursuant to application criteria 7.C.5 of the Voluntary Code of Conduct. Executive in Charge The executive in charge of drafting the corporate accounting documents appointed by the Board of Directors on 20 September 2013 in compliance with article 154-bis of the TUF (consolidated finance act) and with article 18 of the Corporate By-laws. Legislative Decree 231/2001 Legislative decree no. 231 of 8 June 2001, as subsequently amended, stating Rules and regulations governing the

5 administrative liability of juridical persons, companies and associations including those without legal status, in accordance with article 11 of Law no. 300 of 29 September Issuer or Company or WDF World Duty Free S.p.A. with registered office in via Greppi no. 2, Novara and branch office in Corso di Porta Vittoria no. 16, Milan. Group or WDF Group Collectively, the Company and companies controlled, at any time, either directly or indirectly, by WDF pursuant to article 2359 c.c. and article 93 of the TUF. Instructions to the Borsa Regulations The instructions to the regulations of the markets organized and managed by Borsa Italiana in force at the time of the Report. Model The organization, management and control model provided for by Legislative Decree 231/2001, adopted by the Board of Directors. MTA The electronic stock exchange organized and managed by Borsa Italiana. Supervisory Body The supervisory body appointed to supervise the operation and compliance with the Model, drawn up by the Board of Directors pursuant to Legislative Decree 231/2001. Phantom Stock Option Plan The Phantom Stock Option Plan approved by the Ordinary Shareholders Meeting on 14 May Stock Grant Plan The New Leadership Team Long Term Incentive Plan Autogrill L-LTIP approved by the Ordinary Shareholders Meeting on 21 April Listing Admission to listing on the MTA of WDF s ordinary shares. Borsa Regulations The regulations of the markets organized and managed by Borsa Italiana, approved by the shareholders meeting of Borsa Italiana, in force on the date of the Report. Issuers Regulations The regulations issued by CONSOB with resolution no of 14 May, 1999 on the subject of issuers and subsequent amendments and additions. Market Regulations the regulations issued by CONSOB with resolution no of 29 October 2007 on the subject of markets and subsequent amendments and additions. Related Party Regulations The regulations on the subject of transactions with related parties approved by CONSOB with resolution no of 12 March 2010, as subsequently amended and integrated. Report This report on corporate governance and ownership structure drawn up pursuant to article 123-bis of the TUF. Remuneration Report The remuneration report drawn up in accordance with article 123-ter of the TUF and article 84-quater of the Issuers Regulations and in compliance with Diagram no. 7-bis of Annex 3A of the Issuers Regulations. Demerger The proportional partial demerger of Autogrill (the demerged company) implemented through allocation in favour of WDF (the beneficiary company) of the share of Autogrill s equity pertaining to activities indirectly performed by Autogrill in the Travel Retail & Duty Free sector with effect from 1 October Control and Risk System The internal control and risk management system adopted by WDF. Independent Auditing Firm The auditing firm registered with the Italian Registry of External Auditors kept at the Ministry of Economy and Finance, assigned to carry out the external audits of the Issuer s accounts. Corporate By-laws the By-laws of the company in force on the date of this Report. TUF Legislative Decree no. 58 and subsequent amendments and additions (Testo Unico della Finanza = Consolidated Finance Act). WDFG S.A. World Duty Free Group S.A., with registered office in calle Josefa Valcárcel 30, Merrimack Building IV, Madrid, Spain, a company resulting from the reverse merger by incorporation of World Duty Free S.A.U., a subsidiary wholly owned by WDF into World Duty Free España. WDFG UK WDFG UK Ltd., with registered office in 4 New Square, Bedfont Lakes, Feltham, Middlesex, TW14 8HA. WDFG UK Holdings WDFG UK Holdings Ltd., with registered office in 4 New Square, Bedfont Lakes, Feltham, Middlesex, TW14 8HA.

6 Index (Translation from the Italian original which remains the definitive version)

7 1. Issuer s Profile 6 2. Information on the ownership structure on the date of this Report 8 3. Compliance Board of Directors Appointment and replacement Composition Role of the Board of Directors Delegated bodies Other Executive Directors Independent Directors Lead Independent Director Processing of corporate information Committees internal to the board of Directors Appointments Committee Human Resources Committee Composition and operation Functions of the Human Resources Directors remuneration Control, Risk and Corporate Governance Committee Composition and operation Functions of the Control, Risk and Corporate Governance Committee Internal control and risk management system Persons involved Main characteristics of the risk management system Main characteristics of the existing risk management and internal control systems in relation to the financial reporting process pursuant to article 123-bis, paragraph 2, letter B), TUF Existing stages of the risk management and internal control system in relation to the financial reporting process Roles and functions involved Executive Director in charge of the internal control system Internal Audit Director Coordination safeguards Organizational model according to D.Lgs. 231/ Independent Auditing Firm Executive in charge of drawing up the corporate accounting documents Directors interests and related party transactions (RPT) Appointment of the board of statutory Auditors Auditors Shareholder relations Shareholders meetings Further corporate governance practices Changes since the end of the reference financial year 68 TABLES 69 Table 1 IMPORTANT INTERESTS IN SHARE CAPITAL 70 Table 2 STRUCTURE OF THE BOARD OF DIRECTORS AND COMMITTEES 70 Table 3 STRUCTURE OF THE BOARD OF AUDITORS 72

8 1. Issuer's Profile MISSION COMPANY PURPOSE Pursuant to article 2 of the current Corporate By-laws of WDF (the By-laws ), the purpose of the Company, also indirectly through associated companies, both in Italy and abroad, is the management of markets, shops and points of sale, and in particular shops and points of sale located inside airports, in the form of duty free and duty paid businesses, as well as connected commercial activities in all forms and for all articles permitted by the provisions of the law, including, by way of example but not limited to perfumes, books and magazines, other consumable goods and monopoly products, both taxed and duty free. The WDF Group is one of the leading operators in the airport travel retail sector on a worldwide scale (and the most important travel retail operator in Europe) with businesses in 20 countries, over 500 points of sale in more than 95 airports throughout the world and approx. 9,500 employees. The Group has developed a series of sales concepts that can be adapted to the shopping preferences of travellers in transit from the over 100 destinations in which it operates. The WDF Group is responsible for selling a wide range of products including perfumes, liqueurs, cosmetics, confectionery, gastronomic specialities, accessories and souvenirs. The WDF Group has become an international reference point for operators in the airport retail sector thanks its deep understanding of travellers needs. The ordinary shares of WDF were admitted to listing on the Mercato Telematico Azionario organised and managed by Borsa Italiana (MTA) on 1 October The Company, moreover, may here in Italy and abroad and still through its own associated Companies run bakeries, bars, restaurants, snack bars, boarding houses, hotels, motels, fuel service stations with connected services, as well as provision to the public and retailing of food and drinks, confectionery and similar products. For the achievement of the company purpose, the Company may also provide assistance and technical, commercial and administrative coordination services with or without the leasing of goods and services to the companies and bodies in which it has an interest, and, as an exception on a occasional and strictly instrumental basis, not to the public, carry out all necessary industrial, commercial, financial, investment and property transactions, grant endorsements, securities and any other kind of guarantee for the purpose of guaranteeing its own obligations and those of third parties, as well as assume, only for the purpose of stable investment, either directly or indirectly, holdings in other companies, bodies or consortia, stipulate contracts of association, in the capacity of either associating or associated party, have its company or part of it managed by third parties, manage companies or part of companies belonging to third parties. 6 Corporate Governance Report 2014 WORLD DUTY FREE S.P.A.

9 CORPORATE ORGANIZATION The Company s corporate governance system is based on principles acknowledged by international best practice as being key features of a good corporate governance system: the central role of the Board of Directors, the correct management of situations that present conflicts of interest, the efficiency of the internal control system and transparency in interaction with the market, especially relating to the communication of corporate management choices. WDF s governance as provided for by the By-laws, is structured according to the traditional administration and control model and consists of the following corporate bodies: The Shareholders Meeting; the Board of Directors, with the appointing of a chairman and one or more vice-chairmen, one or more CEOs and an executive committee; and the Board of Statutory Auditors. For the purposes of a more complete description of WDF s governance, on the date of this Report, the following are in office: the executive in charge of drafting the corporate accounting documents, appointed on 14 November 2014 in compliance with article 154-bis of the TUF and article 18 of the By-laws (the Executive in Charge ); the committee for transactions with related parties (the Related Party Transaction Committee ), set up on 20 September 2013 within the Board of Directors in compliance with the rules regarding transactions with related parties issued by CONSOB with resolution no of 12 March 2010 as subsequently amended (the Related Party Regulations ); the committee for internal control, risk management and corporate governance (the Control, Risk and Corporate Governance Committee ), set up within the Board of Directors on 20 September 2013 in accordance with principle 7.P.4 of the Voluntary Code of Conduct; the committee for human resources (the Human Resources Committee ), set up on 20 September 2013 within the Board of Directors in accordance with principle 6.P.3 of the Voluntary Code of Conduct; the director responsible for the internal control and risk management system, appointed on 20 September 2013 in accordance with principle 7.P.3(a)(I) of the Voluntary Code of Conduct (the Designated Director ); the director responsible for the internal audit function (the Internal Audit Director ), appointed on 20 September 2013 pursuant to the application criterion 7.C.5 of the Voluntary Code of Conduct; the supervisory body (the ODV ) set up by the Board of Directors on 20 September 2013 pursuant to Legislative Decree no. 231 of 8 June 2001, as subsequently amended ( Legislative Decree 231/2001 ); and the enterprise risk manager, appointed by the Board of Directors on 13 February The company designated to carry out the external auditing of WDF s accounts, appointed by the Ordinary Shareholders Meeting, on 18 July 2013, with reference to financial years from 2013 to 2021 inclusive, is KPMG S.p.A. SUSTAINABILITY REPORT Starting from the approval of the 2014 Financial Statements, WDF will publish a Sustainability Report on its website ( Sustainability Section). The Sustainability Report aims at creating a systematic dialogue with Stakeholders also on Corporate Social Responsibility and sustainable development issues, as well as at sharing and disseminating the sustainability culture throughout the Company. 7

10 A. STRUCTURE OF THE SHARE CAPITAL 2. Information on the ownership structure on the date of this Report The Company was founded on 27 March 2013, and registered in the register of companies of Novara on 3 April 2013, with an initial share capital of 120, EURO. By effect of the share capital increase resulting from the Demerger, on the date of this Report, the issued and paid up share capital of WDF is equivalent to 63,720, EURO, represented by 254,520,000 ordinary shares without par value. Classes of shares making up the share capital: STRUCTURE OF THE SHARE CAPITAL N OF SHARES % COMPARED TO THE SHARE CAPITAL LISTED / NOT LISTED RIGHTS AND OBLIGATIONS Ordinary shares 254,520, % MTA (electronic stock exchange) As per law and By-laws All the WDF ordinary shares attribute the same rights to their owners, that can be exercised without limitation. The Shareholders Meeting of 14 May 2014, in ordinary session, authorized the Board of Directors, pursuant to Article 2357 and subsequent of the Italian Civil Code to purchase, on one or more occasions, in the following eighteen months, a maximum number of 12,726,000 ordinary shares of World Duty Free, and to sell in full or in part treasury shares held in the Company s portfolio in order to service, inter alia, share incentive plans reserved to Directors and employees of World Duty Free and or the Companies it directly or indirectly controls. 8 Corporate Governance Report 2014 WORLD DUTY FREE S.P.A.

11 B. RESTRICTIONS ON THE TRANSFER OF SECURITIES F. RESTRICTIONS ON VOTING RIGHT There are no restrictions on the transfer of securities, nor limitations to the possession of the same, nor are there any approval clauses for access to the shareholder structure. There are no mechanisms restricting the voting rights of the Shareholders, subject to the terms and conditions for exercising the right to speak and vote in the Shareholders Meeting referred to in the next Paragraph 16 of this Report. C. SIGNIFICANT SHAREHOLDINGS Significant holdings, direct or indirect, in the share capital of WDF, according to communications sent to the Company, pursuant to article 120 of the TUF, up until the date of this Report, are shown in Table 1 annexed hereto. G. AGREEMENTS BETWEEN SHAREHOLDERS No shareholders agreements pursuant to article 122 of the TUF have been communicated to the Company. D. SECURITIES GRANTING SPECIAL RIGHTS H. CHANGE OF CONTROL CLAUSES AND STATUTORY PROVISIONS ON THE SUBJECT OF PUBLIC TAKEOVER BIDS No securities have been issued granting special control rights, nor are there any holders having special powers pursuant to the regulatory and statutory provisions in force. E. EMPLOYEE SHAREHOLDINGS: MECHANISM FOR EXERCISING VOTING RIGHTS There are no mechanisms that exclude or limit the direct exercising of the voting rights of the beneficiaries of the Stock Grant Plan. To be thorough, note that as concerns the Stock Option Plan for the termination of the work and administration relationship in effect with Josè Maria Palencia Saucedo, it was agreed that the former maintains the right to participate in the Grant Stock Option Plan Wave 2 with vesting in April Commercial contracts Concession agreements usually include provisions that attribute to the licensors the right to terminate the said agreement in the event of a change of control of the licensee without the prior consent of the licensors or of other parties. Concession agreements that generate the highest volume of proceeds, and hence significant, for the WDF Group concern the most important airports of the United Kingdom. The framework concession agreement on the strength of which the WDF Group manages points of sale at the airports of London Heathrow, Gatwick, Southampton, Edinburgh, Glasgow and Aberdeen, gives the respective airport operators the right to terminate the individual concession agreement if a change of change of control takes place in WDFG UK and they believe that the new controlling body does not offer sufficient guarantees in terms of, for example, financial reliability or if it is a competitor of Heathrow Airport Holding Limited (formerly BAA Limited), the parent company of some of the 9

12 companies that are part of the framework agreement. WDFG UK shall inform the aforementioned operators of any changes of control at least 60 days prior to the change coming into effect. Financing agreements In the re-financing agreement of the existing facilities stipulated on 14 November 2014, between World Duty Free Group SAU, World Duty Free Group España S.A. (now merged by incorporation into WDFG S.A.), WDFG UK Holdings and WDFG UK and numerous financing institutes, which governs the provision of medium-term, revolving credit lines in various currencies, for a total sum of 1.25 billion EURO, which, among other things, WDF is not involved in, and in relation to which it does not act as guarantor of the fulfilment of the obligations of the borrowers, there is an early repayment obligation of the loans granted on the strength of this agreement in the event of a change of control, either direct or indirect, in WDFG S.A. In fact, the agreement envisages, in such a case, that the financing banks negotiate, for a period of not more than thirty days, the possibility to keep the credit lines open. Once this period has elapsed, the banks which do not intend to keep the credit lines open may ask each of the borrower companies for early repayment and cancel the share of the credit line allocated to it. Statutory provisions on the subject of public takeover bids With reference to the provisions in force on the subject of public takeover bids, it is specified that the By-laws do not provide for any derogation from the provisions concerning the operation of the passivity rule referred to in article 104, paragraphs 1 and 1-bis, of the TUF, neither does it provide for the application of the neutralization rules set out in article 104-bis, paragraphs 2 and 3, of the TUF. I. POWERS TO INCREASE SHARE CAPITAL AND AUTHORIZATIONS TO PURCHASE OWN SHARES On the date of this Report there are no powers granted to directors to increase the share capital in payments of one or two instalments, nor do directors have the faculty to issue convertible bonds in ordinary shares or savings shares or with warrants valid for the subscription of shares. The General Shareholders Meeting convened to approve the Financial Statements on 14 May 2014 resolved to authorise for a period of 18 months from the date in which the Shareholders Meeting would adopt the corresponding resolution the purchase and disposal of its treasury shares up to a maximum 10 Corporate Governance Report 2014 WORLD DUTY FREE S.P.A.

13 number of (treasury) shares so as not to exceed 5% of the share capital, having also considered own shares possessed both directly and indirectly (through subsidiaries) by the Company. For further information, refer to the Directors Report addressed to the General Shareholders Meeting convened to approve the Financial Statements of J. MANAGEMENT AND COORDINATION ACTIVITIES On 18 December 2014, the Board of Directors deemed that the conditions no longer existed for keeping the Company subject to the management and coordination of the the parent company Edizione S.r.l., pursuant to art bis c.c. Within the framework of the aforementioned authorisation, WDF initiated the treasury share purchase plan on 18 June Even if the plan had been started on the date of this Report, the Company does not own any treasury shares. It should be noted that the Board of Directors Meeting held on 11 March 2015 resolved to propose to the 2015 Annual General Meeting to (I) revoke the authorisation resolution for the purchase and disposal of treasury shares approved by the Ordinary Shareholders Meeting on 14 May 2014 and (II) approve the draft delegated power in favour of the Board of Directors for the purchase and disposal of treasury shares, to be submitted to the Shareholders Meeting pursuant to Article 2357 and subsequent of the Italian Civil Code, Article 132 of TUF and Article 144-bis of Issuers Regulation. In particular, the Board of Directors deemed that the relations existing with Edizione S.r.l. (through Schematrentaquattro S.p.A.) do not provide evidence to suggest the need for the exercising of management and coordination activities, since no positive indication of such activities was found. Furthermore: * * * the information required by article 123-bis, paragraph 1, letter i) of the TUF (regarding the agreements between the company and directors [ ] which envisage indemnity in the event of resignation or dismissal without just cause or if their work relationship ceases subsequent to a public takeover bid ) is contained in the Remuneration Report available from the corporate headquarters and the Company website ( Governance Section); the information required by article 123-bis, paragraph 1, letter 1) of the TUF (regarding the provisions applicable to the appointment and replacement of directors [ ] and to the amendment of the By-laws, if different from the legislative and regulatory provisions that might also apply ) is illustrated in the section of the Report on the Board of Directors (next Paragraph 4.1). 11

14 3. Compliance The WDF Code can be viewed on the Company s website ( under the Governance Section. The Company s Governance System is completed by the provisions enshrined in the Company By-laws and the dedicated Shareholders Meeting Regulations. The Company s Corporate Governance System is based on the principles of the Voluntary Code of Conduct and, more generally, on international best practice adapted to take into account the specific characteristics of the activity or activities performed by the Company. WDF adheres to the Voluntary Code of Conduct. The Voluntary Code of Conduct is available on the website of Borsa Italiana ( On 20 September 2013, the Board of Directors adopted WDF s Voluntary Code of Conduct (the WDF Code ) subsequently amended on 18 December 2014 to align it with the amendments to the Voluntary Code of Conduct by Borsa Italiana s Corporate Governance Committee in July The WDF code gathers in a single, systematically organized document, the basic rules of governance that the Company undertakes to implement and aims to provide Shareholders and other stakeholders with a useful tool for understanding, with greater ease and immediacy, the essential structure of WDF s corporate governance. In the next paragraphs of the Report, an account will be given according to the comply or explain principle pursuant to EU Recommendation no. 208/2014 and the guidelines of the Voluntary Code of Conduct of the small number of principles and application criteria of the Voluntary Code of Conduct that the Company has, at least for the time being, decided not to comply with. This Report has been prepared also taking into account the indications of the Format developed by Borsa Italiana for the Corporate Governance Report (V Edition January 2015). Neither the Company nor its Subsidiaries are subject to non-italian provisions of law that affect the structure of WDF s corporate governance. 12 Corporate Governance Report 2014 WORLD DUTY FREE S.P.A.

15 4. Board of Directors Pursuant to the legislation in force for companies listed on regulated markets and in compliance with the recommendations of the Voluntary Code of Conduct, the Board of Directors covers a central role in the Company s governance system. In particular, paragraph 1.1. of the WDF Code states that the Board of Directors [ ] is the collective body appointed to govern the Company and it therefore has exclusive responsibility and full powers in relation to the management of the corporate enterprise, pursuing the priority purpose of the creation of value for the Shareholders in the medium-to-long term, compliance with the legislative and regulatory provisions applicable, with the corporate by-laws in force at the particular time in question [ ] and with this voluntary code of conduct. The Board of Directors elects from among its members a chairman, if the Shareholders Meeting has not already done so, and a Secretary, and the latter need not necessarily be a member of the Board. Pursuant to article 12 of the By-laws, the Board of Directors may also appoint one or more vice-chairmen and one or more CEOs, with joint and/or separate powers, and it may also assign special offices to the other members of the board. Moreover, in accordance with article 17 of the By-laws, it may appoint one or more general managers, deputy general managers, directors, attorneys-in-fact for single actions or categories of actions, establishing the powers, also as regards the representation of the company, and any emoluments involved. Lastly, the Board of Directors may appoint an executive committee pursuant to article 2381 c.c., establishing the number of members and their duration in office. The chairman and, if appointed, the vicechairman/ men and the CEOs are members, by right, of the executive committee. The Board of Directors, subject to mandatory consultation with the Board of Statutory Auditors, designates the Executive in Charge, granting him sufficient means and powers to fulfil the tasks assigned to him APPOINTMENT AND REPLACEMENT Pursuant to article 10 of the By-laws, the company is managed by a Board of Directors elected by the Shareholders Meeting and composed of a number of members, between five and fifteen, decided by the Shareholders Meeting prior to appointment. If the Shareholders Meeting fails to pass a resolution on the number of members of the Board of Directors, it will be automatically set at fifteen. The directors elected remain in office for three financial years or for the period no longer, in any case, than three financial years established at the time of their appointment. They may be re-elected. All directors must meet the eligibility, professionalism and probity criteria provided for by the law and by any other applicable provisions. 13

16 Pursuant to article 147-ter of the TUF, at least two directors must also meet the established independence requirements. In compliance with the legislative and regulatory provisions applicable to listed companies, article 10 of the By-laws states that the Board of Directors is appointed by the Shareholders Meeting on the basis of lists presented by the shareholders, according to the procedure described below. Only shareholders who, at the time of the presentation of the list, hold shares, either alone or together with other presenting shareholders, own shares representing at least 1.5% of the share capital or another percentage if inferior established by CONSOB pursuant to article 147-ter, paragraph 1, of the TUF and in compliance with the applicable terms of the Issuers Regulations. To this effect, it is important to note that with resolution no of 28 January 2015, CONSOB set the required percentage of share capital at 1%, in accordance with article 144-quater of the Issuers Regulations, for the presentation of lists of candidates for election to WDF s management and control bodies. The lists must be filed at the company s registered office within the terms laid down by the law, i.e. at least twenty-five days prior to the date scheduled for the Shareholders Meeting convened to resolve upon the appointment of the directors, on one call. Furthermore, the lists are placed at the disposal of the public in accordance with the procedures laid down in the regulations in force, by the company and within the term provided for by article 144-octies of the Issuers Regulations, i.e. at least twenty-one days prior to the date scheduled for the aforementioned Shareholders Meeting convened on one call. The lists may contain a number of candidates not exceeding fifteen, each associated with a progressive number. It must also be indicated which of the candidates meet the independence requirements provided for by the legislative and regulatory provisions in force. The lists that present a number of candidates equal to or greater than three must contain candidates belonging to both genders, so that at least a fifth (on the occasion of the first mandate subsequent to 6 June 2013), and then a third (rounded up) of the candidates belong to the lesser represented gender. Together with each list, within the terms provided for by the legislative and regulatory provisions in force at the time in question, it is also mandatory to file the declarations with which the individual candidates accept their nomination and attest, under their own responsibility, that there are no grounds for ineligibility or incompatibility and that they meet the requirements prescribed by law for the respective offices. Along with the declaration, a curriculum vitae of the personal and professional characteristics of the candidate will also be filed, which will also show whether a candidate is suitable to qualify as independent. Any lists that are not in accordance with the provisions described above will be considered as not presented. Each Shareholder may present or compete in the presentation of one list only and each candidate may only appear on one list only, otherwise they will be disqualified. At the end of voting, the candidates elected will be those of the two lists that obtained the highest number of votes according to the following criteria: a) number of directors equal to the total number of members to be elected except one will be selected from the list that obtained the highest number of votes expressed by the Shareholders, in the progressive order in which they appeared on the list itself; 14 Corporate Governance Report 2014 WORLD DUTY FREE S.P.A.

17 b) a director will be selected from the second list that obtained the highest number of votes in the Shareholders Meeting ( minority list ), which is not connected in any way whatsoever, even indirectly, with the Shareholders that presented or voted the list ranking first in terms of number of votes. In the event of a tie of list votes, a new vote will be held by the entire Shareholders Meeting, and the successful candidates will be those who obtain a simple majority of the votes, the terms below being understood in compliance with the applicable pro tempore regulations on the balance between genders. If the candidates elected by the above method do not include an adequate number of directors that meet the independence criteria provided for by the legislative and regulatory provisions in force, the last nonindependent candidate, according to the progressive numbering, of the list that obtained the highest number of votes will be excluded and replaced by the next candidate meeting the independence criteria among the non-elected candidates of the same list. If required, this procedure will be repeated until the required number of independent directors to be elected has been reached. If, moreover, even with the candidates elected following the procedure described above the Board of Directors is still not composed in compliance with the pro tempore regulations on the balance between genders, the candidate of the more represented gender elected last in terms of progressive order on the list that gained the highest number of votes will be replaced by the first candidate of the lesser represented gender not elected of the same list, according to the progressive order. This substitution procedure will be followed until the composition of the Board of Directors is in conformity with the pro tempore regulations on the balance between genders. If this procedure does not produce the latter result, the substitution will be effected through a resolution of the Shareholders Meeting by relative majority, after presentation of candidates belonging to the lesser represented gender. If only one list is presented, or if no lists are presented, or if the list presented does not permit the appointment of independent directors in compliance with the legislative and regulatory provisions in force, the Shareholders Meeting will resolve by legal majority, compliance with the pro tempore regulations on the balance between genders being understood. Even during the course of the mandate, the Shareholders Meeting may change the number of members of the Board of Directors, while still remaining within the limit of fifteen members, by making the relevant appointments. The term of Directors elected in this way will expire at the same time as those already in office. In relation to the substitution of Directors, article 10 of the By-laws states that, if in the course of the financial year one or more directors is no longer available, the procedure laid down in article 2386 c.c. will be followed. In derogation from other provisions contained in the aforementioned article 10 of the By-laws, if, for any reason whatsoever, the director drawn from the minority list cannot take office or if, having taken it, then falls from office, a candidate belonging to the same list who is still eligible and willing to accept the appointment will take over, following the progressive order. The Shareholders Meeting proceeds to confirm the director coopted by the Board of Directors, or to appoint another director in his/her place, by legal majority, it being understood that, if the coopted director, or the director replaced by the same, was drawn from the minority list, the Shareholder representing the majority of share capital present at the Shareholders Meeting and any other Shareholders connected to the former in any way, even indirectly, will not be allowed to vote. 15

18 In any case, compliance with the pro tempore regulations on the balance between genders must be guaranteed, both during cooptation and during the Shareholders Meeting. In the event of loss of the majority of the directors, the entire Board of Directors will resign and the Shareholders Meeting will be convened without delay by the Board of Directors to re-elect it. Succession plans The Group especially focuses on the international training of human resources from the perspective of the professional development of future managers of the Group, promoting training plans and career pathways that are both vertical (within the context of the same function and/or sector of activity) and horizontal (spanning different functions and/ or sectors of activity). experiences, coming both from within the WDF Group and other companies. At the end of the selection process, the Board of Directors co-opted as his replacement, with the favourable opinion of the Board of Statutory Auditors, Eugenio Andrades, appointing him Chief Executive Officer of WDF. It should also be noted that, in compliance with the provisions of criterion 5.C.2 of the Code of Voluntary Conduct, based on the analysis and the information available, the Company deems that the timescales required to identify suitable candidates were compatible with the requirement to not compromise the Company s ordinary operations, in view of the quality of first-line management and the know-how that the Company possesses COMPOSITION Human resources aims to identify the skills required in top positions, with a view to identifying the right instruments for selecting employees with suitable skills for being considered as replacements (both through promotion, and through horizontal career moves). The Company s current Board of Directors was appointed on the founding of the Company on 27 March 2013 and will remain in office until the approval of the financial statements for the financial year that will end on 31 December Human resources management is also oriented towards covering the position of the CEO although it is not yet possible to speak of a succession plan. Originally, the Board was composed of three directors, namely Gianmario Tondato da Ruos (Chairman), Gianni Mion and Paolo Roverato. In this respect, it should be noted that, following the termination of the employment and management relationship with Jose María Palencia Saucedo, a structured search and selection process for the new Chief Executive Officer was initiated using a major recruitment company that considered high-profile candidates of different nationalities and with a variety of professional backgrounds, competencies and On 18 July 2013, prior to the Listing, the Shareholders Assembly proceeded to increase the number of directors, bringing it from three to nine, and, in addition to the first three directors appointed when the company was founded, it appointed as of 16 September 2013 six directors, namely Lynda Christine Tyler-Cagni, Jose María Palencia Saucedo, Gilberto Benetton, Alberto De Vecchi, Laura Cioli 16 Corporate Governance Report 2014 WORLD DUTY FREE S.P.A.

19 and Carla Cico. The newly-elected directors took office as of 16 September 2013 and their term of office will expire at the same time as that of the first three directors. Following the resignations of the CEO Jose Maria Palencia Saucedo, which occurred on 14 November 2014, the Board of Directors, held on the same date, decided to appoint Eugenio Andrades as the new Director, who will remain in office until the next Shareholders Meeting pursuant to Article 2386, first section of the Civil Code and Article 10 of the Articles of Association. During the same Board of Directors meeting, Eugenio Andrades was appointed the CEO to replace the outgoing Jose Maria Palencia Saucedo and he was given the relative delegations better described in the subsequent Paragraph 4.4 of this Report. In the light of the above and in accordance with Article 10 of the Articles of Association, on March 11, 2015 the Board of Directors resolved to subdue to the Shareholders Meeting the confirmation of the Director selected by the Board of Directors based on the majority votes as set forth by law. The list vote mechanism will first be applied when the new Board of Directors is to be appointed, i.e. at the Shareholders Meeting for the approval of the financial statements for the financial year that will end on 31 December Table 2 attached supplies the relevant information on each of the members of the Board of Directors in office on the date of this Report. A brief curriculum vitae follows below, illustrating the skills and experience in corporate management gained by each of the members of the Board of Directors. GIANMARIO TONDATO DA RUOS CHAIRMAN OF THE BOARD OF DIRECTORS Born in Oderzo (Treviso) in 1960, after graduating in Economics and Commerce at the University Ca Foscari of Venice, he began his professional career in 1985 at Nordica S.p.A., then continuing at Arnoldo Mondadori Editore and in various Benetton Group companies, where he worked in corporate reorganisation and international mobility. He joined the Autogrill Group in 2000, when he moved to the United States to manage the incorporation of the American subsidiary HMSHost Corporation after its acquisition, which he led to an intense strategic refocusing on concession assets and business diversification by sector, geographical area and channel. Through a policy of internal growth and acquisitions, Autogrill almost doubled its sales and acquired Aldeasa S.A., Alpha Group Plc. and World Duty Free Europe Ltd. and WDF Europe, and their subsequent incorporation transformed the Group into the leading operator in airport retail. A pathway that continued with the Demerger and the listing of WDF, launching a new phase of growth for both sectors of activity. He is Chief Executive Officer of Autogrill S.p.A. and Chairman of HMSHost Corporation. 17

20 EUGENIO ANDRADES CEO GILBERTO BENETTON DIRECTOR CARLA CICO DIRECTOR Born in Madrid in 1968, he graduated in Mining Engineering at Madrid s Polytechnic and gained a Master in Economics and Strategy at the Colorado School of Mines (Colorado, USA). He has worked as Chief Commercial Officer of WDF since 2011, when he took over responsibility for the Group s global commercial organisation. He joined Aldeasa S.A. in 1996 as Strategy, Development and Investor Relations Director, an office that he held until 2001 when he moved to Jordan as CEO of Aldeasa S.A. s businesses in the country and in the Middle East region. He moved back to Spain in 2002 and resumed the post of Strategy, Development and Investor Relations Director until 2007, when he was appointed Commercial Director and Operations Coordinator. He also played an active role in the integration of operational and commercial activities following the merger of Aldeasa S.A., Alpha and World Duty Free after the acquisition by Autogrill Group in Before joining Aldeasa S.A., he worked as a consultant for the McKinsey group and as an engineer for Carboex, a subsidiary of Endesa. Born in 1941 in Treviso, he directed the Benetton family s diversification into the retail, real estate and infrastructure sectors over the past 20 years, after having started in 1965, with his siblings Giuliana, Luciano and Carlo, the Benetton Group business, a leading company in the fashion industry. He is Chairman of Edizione S.r.l., the financial holding of the Benetton family, Chairman of the Board of Directors of Autogrill (since 1997), and director of Mediobanca S.p.A., Atlantia S.p.A., Sintonia S.p.A. and WDF. A passionate sportsman, he is the promoter of the Group s numerous sports activities, especially in the youth sector, in social activities and professional rugby. Through the Benetton Foundation he helped construct La Ghirada, a sports complex in Treviso. Since 1988 he has been the President of Verde Sport S.p.A, a company that deals with the management of the multi-purpose centre La Ghirada and the organization of its many activities focused on young people and the territory. He is also President of the Asolo Golf Club S.r.l., one of the most prestigious clubs in Europe. Born in Verona in 1961, after graduating in Oriental Languages from the Università Ca Foscari of Venice, she took an MSE at the University of London and an MBA at the London Business School. She began her professional career in Italtel, in China, after which she served as Chief Director at IRI in Beijing until From 1995 to 1999 she was manager of business development at Stet International (Telecom Italia Group). From 1999 till 2001 she worked as Senior Advisor for the CVC-Opportunity Fund in Brazil. From 2001 to 2005 she was CEO of Brasil Telecom (Brazil) and then of Ambrosetti China and Rivoli S.p.A. She is currently a member of the board of directors of Alcatel Lucent, of Allegion and EPTA. LAURA CIOLI DIRECTOR Born in Macerata in 1963, she graduated in Electronic Engineering at the University of Bologna, and obtained a Master s degree in Business Administration from SDA Bocconi in Milan in She is a member of the Board of Bocconi Alumni Association. She is currently CEO of Cartasì, an independent member of the Board of Directors of Telecom Italia S.p.A. and Impregilo S.p.A. She formerly held a series of top executive positions in leading global enterprises in the services sector. In particular she was: I) Chief Operating Officer in Sky Italia (News Corporation group), II) Senior 18 Corporate Governance Report 2014 WORLD DUTY FREE S.P.A.

21 Vice President in ENI Gas & Power, III) Executive Director in Vodafone Italia holding various positions during this time such as Head of Strategy and Business Development, Operations Manager, Head of the Business Division, IV) Partner in Bain & Company. ALBERTO DE VECCHI DIRECTOR Born in Milan in 1955, he graduated in Social and Economic Sciences at the Università L. Bocconi of Milan. He began his professional career at Banca Commerciale Italiana. In 1985 he worked at Montedison, where he was appointed Director of Financial Planning. In 1995 he joined Esaote S.p.A. as Chief Financial Officer. From 2003 to 2006 he was Chief Financial Officer at Bracco S.p.A. He has been with Autogrill since 2006 as Chief Financial Officer and a Board Director of HMSHost Corporation. GIANNI MION DIRECTOR Born in 1943 in Vo (PD), he graduated in Economics and Commerce at the University Ca Foscari of Venice. Certified Accountant and Auditor, he became CEO of Edizione S.r.l. starting in 1986, a company in which, in June 2012, he became the Vice President. He is currently Chairman of the Board of Directors of Space S.p.A., Benetton Group S.r.l., Schema 39 S.p.A., Sintonia S.p.A and a member of the Board of Directors of Autogrill (since 1995), WDF, Eurostazioni S.p.A. PAOLO ROVERATO DIRECTOR Born in Padua in 1963, he graduated in Economics and Commerce at the University Ca Foscari of Venice. He is a Certified Accountant and Auditor. He began his professional career at a leading accounting firm in Padua and continued in 1989 at Arthur Andersen S.p.A., becoming manager in 1994, and over time he held positions of increasing responsibility within the national organization. Since 2002 he has held a management position in Edizione S.r.l. He has served on the Board of Directors of numerous companies including Telecom Italia Media S.p.A., Gemina S.p.A., Aeroporti di Roma S.p.A., Investimenti Infrastrutture S.p.A., Leonardo S.r.l., Schemaventotto S.p.A., Sagat- Aeroporto di Torino S.p.A., Aeroporto di Firenze S.p.A., WDFG SAU and was CEO at Aeroporti Holding S.p.A Currently he holds the following positions: member of the Board of Directors (since 2008), of the Control, Risk and Corporate Governance Committee and of the Human Resources Committee of Autogrill (since 2008), member of the Board of Directors, of the Control, Risk and Corporate Governance Committee and of the Human Resources Committee of World Duty Free, member of the Board of Directors of Edizione Property S.p.A., of Immobiliare Italia S.r.l., of Schematrentaquattro S.p.A. and CEO of Edizione Alberghi S.r.l. In addition, he is a standing auditor of Alì S.p.A. LYNDA CHRISTINE TYLER-CAGNI DIRECTOR Born in Bushey (United Kingdom) in 1956, she studied in France (at the Institut d Etudes Politiques), in the United Kingdom (earning a bachelor s degree in Languages, Economics and Politics at Kingston University) and in the United States. Afterwards, she served as Human Resources Director, France, at Air Products & Chemicals Inc. and from 1979 to 1988, at Mortimer Leman International as a Human Resources Consultant. From 1990 to 1994 she worked at Cummins Engine Company Inc. as Human Resources Director in Europe and as Director of Marketing and Sales in Europe, the Middle East and Africa. From 1995 to 2000 she was Vice President of Human Resources in Europe at Stanley Black & Decker, and from 2000 to 2010 she was Central Manager Human Resources in Ermenegildo Zegna. From 2011 to 2015 she was Group Officer and Senior Vice-President of Human Resources at Fast Retailing (holding of Uniqlo, Comptoir des Cotonniers, Princesse tam.tam, Theory, G.U., J Brand, etc.). At the beginning of 2015, she set up a strategic consultancy for HR and Organisation operating in the retail and luxury sectors. 19

22 Maximum number of offices held in other companies In application of the recommendations contained in application criterion 1.C.3 of the Voluntary Code of Conduct, paragraph 1.5 of the WDF Code states that for the Board of Directors will have the faculty to express its opinion with regard to the maximum number of offices as director or statutory auditor that the board members can hold in listed companies, also abroad, and in financial, banking, insurance or large scale companies, that may be compatible with the efficient performance of the role of Company Director. With regard to the maximum number of offices, the Board considers among the prerogatives for holding office as director or statutory auditor that the parties accepting such appointments have sufficient time to be able to satisfactorily perform the duties assigned to them. Moreover, paragraph 2.3 of the WDF Code obliges the members of the Board of Directors only to accept the appointment when they are sure that they will be able to dedicate the time required to the diligent performance of their duties, also taking into account the number of offices as director or statutory auditor they already cover in other companies listed on regulated markets (also abroad), and in financial, banking, insurance or large scale companies, considering, when relevant, the opinion expressed by the Board of Directors. The Board of Directors, with resolution of 13 February 2014, adopted, with the opinion of the Control, Risk and Corporate Governance Committee, the following position on the maximum number of offices held in other companies as director or statutory auditor: C. AN EXECUTIVE DIRECTOR MUST NOT HOLD: I) the office of executive director in other companies listed on regulated markets, or in a financial, banking, or insurance company, or in a company with net assets worth more than 10 billion EURO, II) the office of non-executive director or statutory auditor (or member of another supervisory body) in more than three of the aforementioned companies; D. A NON-EXECUTIVE DIRECTOR, IN ADDITION TO THE OFFICE COVERED IN THE COMPANY, MUST NOT HOLD: I) the office of executive director in one or more of the companies indicated in lett. a) I), and the office of non-executive director or statutory auditor (or member of another supervisory body) in more than three of the aforementioned companies, or II) the office of non-executive director or statutory auditor in more than six of the companies indicated in lett. a) I). Any offices held in companies belonging to the Edizione S.r.l. Group are expressly excluded. On 18 February 2015 the serving Board of Directors confirmed the aforementioned approach to the maximum number of offices held in other companies as director or statutory auditor, also ascertaining that the current composition of the Board of Directors complies with the aforementioned criteria. Pursuant to application criterion 2.C.5 of the Voluntary Code of Conduct, it is hereby declared that on the date of this Report, there are no cross-directorship situations. cross-directorship: the CEO of WDF, Eugenio Andrades, does not, in fact, hold offices as director in companies outside of the Group, in which another director of WDF is CEO. Annexed to this Report is a list of the offices held by the Directors in other companies on the date of the Report 20 Corporate Governance Report 2014 WORLD DUTY FREE S.P.A.