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10 Compensation Report

As a company which is listed on the SIX Swiss Exchange, Kuoni Travel Holding Ltd. is required to observe the provisions of the Swiss Code of Obligations (Article 663b bis and Article 663c, Paragraph 3) and the Directive on Information Relating to Corporate Governance issued by SIX Exchange Regulation (Section 5.1) in terms of its reporting on its compensation policy for and the compensation paid to its Board of Directors and its Group Executive Board. In its corporate governance provisions and its reporting thereof, the Kuoni Group also observes the Swiss Code of Best Practice for Corporate Governance issued by economiesuisse, the umbrella association for Swiss business and industry. The Kuoni Group’s financial statements are compiled in accordance with International Financial Reporting Standards (IFRS). The directives issued by each of these bodies and authorities show slight variations in their presentation and interpretation provisions.

The Compensation Report below complies with the provisions of Section 5.1 of the Directive on Information Relating to Corporate Governance issued by the SIX Swiss Exchange, and also pays due regard to Annex 1 of the Swiss Code of Best Practice for Corporate Governance issued by economiesuisse. The Report presents the compensation system used by the Kuoni Group. The compensation paid in accordance with the aforementioned provisions of the Swiss Code of Obligations is shown and commented in the financial statements of Kuoni Travel Holding Ltd. (pages 101 to 102).

The present Compensation Report is intended to inform the public about the compensation paid by the Kuoni Group. This Compensation Report will be presented to the 2011 Ordinary General Meeting of Shareholders both for approval as an integral part of the 2010 Annual Report and for its separate consultative voting approval.

The Kuoni Group strives to be a first-choice employer which is able to recruit, retain and motivate the best and most professional employees around the world who are of the calibre that is essential to Kuoni’s continued success.

10.1 Compensation Guidelines for the Board of Directors and the Group Executive Board

The compensation guidelines of the Kuoni Group are an integral part of Kuoni’s personnel policy, and are intended to motivate and retain our employees, to recruit talented new personnel and to help and encourage all employees to deliver a performance that is of a continuously high level. The Kuoni Group’s compensation system is based on the “total compensation” principle and comprises the following compensation components:
Basic salary
Short-term incentives (personal performance in relation to quality/quantity goals, and financial results in relation to budget)
Long-term incentives (value-adding performance and further corporate development in relation to the objectives set)
Fringe benefits
Total compensation

The short-term and long-term incentives offered are closely linked to the company’s financial development and success. This establishes and maintains a commonality of interests between the company’s shareholders and its employees.

The Kuoni Group maintains various forms of pension and other benefit schemes for employees entitled to such retirement benefits. These schemes cover a large majority of the Kuoni Group’s personnel. For further details, please refer to pages 23 to 26 in the Financial Report.