El Ciclo de Vida PHVA en inglés (PDCA)

element Base salary

Purpose and link to strategy Set at levels to attract and retain executive directors of the high calibre required to develop and deliver the strategy.

To reflect the individual’s skills, experience and role within the Group.

Operation When determining salaries, the Committee typically takes into account: • business and individual performance;

• salary levels at companies of a similar size, industry, global scope and complexity to TUI Travel PLC; and • the pay and conditions of employees elsewhere in the group.

Paid monthly in cash.

Salaries are generally reviewed annually in October, although an out-of-cycle review may be conducted

if the committee determines appropriate. a review will not necessarily lead to an increase in salary.

maximum opportunity Salary increases will typically be in line with the general level of increase awarded to other employees in the group.

In exceptional circumstances, at the Committee’s discretion, higher increases may be made. These could include: • increase in the scope and/or responsibility of the individual’s role;

• development of the individual within the role; and/or

• where a larger increase is considered necessary for the retention of an executive director.

Salary levels for the year ending 30 September 2014 are detailed in the annual report on remuneration for the year ended 30 September 2013.

Performance measures individual and business performance are considerations in deciding salary levels.

element Retirement benefits

Purpose and link to strategy to attract and retain executive directors of the right calibre.

To provide a market competitive retirement benefit.

to reassure executive directors about their provision in retirement.

Operation Executive Directors can choose to participate in the relevant local defined contribution pension or receive a cash

allowance or a combination thereof.

William Waggott has deferred pension entitlements under the final salary section of the TUI Pension Scheme (UK).

he ceased to be an active member on 3 September 2007.

When appointing new Executive Directors, the Committee may apply alternative pension provisions. In such circumstances the Committee will consider a range of factors including cost, market practice and pension policy

elsewhere in the group.

maximum opportunity the maximum company contribution to an executive director’s pension (or equivalent cash allowance) may not exceed 50% of base salary.

Performance measures not performance related.

element Other benefits

Purpose and link to strategy to ensure broad competitiveness with market practice. to support personal health and well-being.

Operation Benefits provision is set at an appropriate market level, taking into account the individual’s home jurisdiction, the jurisdiction in which the individual is based, market practice at similar companies and the level of benefits provided

elsewhere in the group.

The benefits to which Executive Directors are entitled include (but are not limited to) private medical insurance (for the individual and his family), life assurance, permanent health insurance, car provision/allowance, holiday travel concessions (up to an annual limit of £2,500) and interest-free loans.

Global relocation support (for up to five years) and any associated costs or benefits (including but not limited to housing benefits, personal tax advice and school fees) may also be provided if business needs require it. The Company

may also provide tax equalisation arrangements.

The Committee may remove benefits that Executive Directors receive or introduce other benefits if considered

appropriate to do so.

Executive Directors are eligible to participate, on the same basis as other employees, in the Company’s HMRC-

approved Share incentive Plan or any other all-employee share plan operated in the future.

maximum opportunity The maximum level of benefits provided to an individual Executive Director may not exceed £70,000 per annum. In exceptional circumstances, at the Committee’s discretion, an exception to the above limit might be approved,

e.g. where global relocation of an executive director is considered necessary to deliver business objectives.

Purpose and link to strategy To encourage and reward the attainment of challenging financial and strategic performance targets during an

annual period.

the performance measures closely align to the strategy of the business as outlined on pages 14 to 25 and shareholder value creation as summarised in the investment case on page 4.

The deferred element drives and rewards delivery of sustained long-term performance, aligns Executive Director

and shareholder interests and supports retention. Operation Performance is normally assessed over one financial year.

25% of any bonus paid must normally be deferred into shares under daBS for three years. Participants may either

voluntarily choose to defer up to an additional 25% or the Committee may, in certain circumstances, determine that

an additional 25% of the bonus should be deferred on a compulsory basis.

as outlined in the notes to this table the last awards of matching shares under daBS will be made in december 2013.

The awards will relate to performance in the year ended 30 September 2013. These, and other previous DABS awards currently outstanding, will vest in subsequent years. The vesting of matching awards is subject to continued

employment, achievement of performance conditions and compliance with the policy on payment for loss of office.

dividend equivalent payments may be made equal to the amount of dividends that would have been payable during the period between the grant and vesting of an award.

Share awards are normally made in the form of nil-cost options but may be awarded in other forms if appropriate (such as conditional share awards). nil-cost options may normally be exercised until the tenth anniversary of the date

of grant. Awards may also be satisfied in cash and may be granted to a Director’s personal service company at the

discretion of the committee.

For bonuses awarded in respect of the year commencing 1 October 2014, and subsequently, malus provisions will apply. These allow the Committee to cancel or reduce vesting of unvested awards in certain circumstances including: • a misstatement of results that resulted in a bonus or award being paid at too high a level;

• a material failure of risk management or health and safety;

• serious reputational damage to the company; and/or

• personal misconduct.

the committee may adjust and amend the terms of the awards in accordance with the plan rules.

maximum opportunity the maximum bonus opportunity (as a percentage of salary) is up to 175% for the ceO and up to 140% for the other executive directors.

the last award of daBS matching shares will be made in december 2013. the award will relate to performance in the year ended 30 September 2013. the maximum multiple awarded will be a ratio of four matching shares to one deferred share.

Performance measures annual bonus

The annual bonus is based on a mix of financial and individual business objectives, with the majority of the weighting being given to financial metrics.

• financial performance-related measures (typically 75% to 85% of total) are chosen carefully to ensure a strong link

between reward and underlying Company financial performance. As an example, these measures may typically include profit, cash flow or other measures as appropriate.

• individual performance (15% to 25% of total) is measured through an assessment of comprehensive business

deliverables, financial targets, personal performance and the achievement of specific individual objectives. The exact measures, weightings and targets are determined by the Committee each year taking into account the

group’s key strategic priorities and the approved budget for the year.

a sliding scale between 0% and 100% of the maximum award applies for achievement between threshold and maximum performance under the bonus plan.

element performance share plan (psp)

Purpose and link to strategy to incentivise long-term value creation through the setting of stretching targets that ensure a strong link between

reward, underlying Group financial performance and shareholder returns.

to support recruitment and retention.

Operation awards are discretionary and normally vest subject to performance over a three-year performance period.

The vesting of awards is subject to continued employment or compliance with the policy on payment for loss of office.

dividend equivalent payments may be made equal to the amount of dividends that would have been payable during the period between the grant and vesting of an award.

Share awards are normally made in the form of nil-cost options but may be awarded in other forms if appropriate (such as conditional share awards). nil-cost options may normally be exercised until the tenth anniversary of the date

of grant. Awards may also be satisfied in cash and may be granted to a Director’s personal service company at the

discretion of the committee.

For awards made in respect of the year commencing 1 October 2014, malus provisions will apply.

These allow the Committee to cancel or reduce vesting of unvested awards in certain circumstances including: • a misstatement of results that led to the award being granted at too high a level;

• a material failure of risk management or health and safety;

• serious reputational damage to the company; and/or

• personal misconduct.

the committee may adjust and amend the terms of the awards in accordance with the plan rules. maximum opportunity The maximum award opportunity under the PSP is 400% of salary in any financial year.

It is currently envisaged that awards will be made of up to an operational limit of 300% of salary, although a larger

award may be made in exceptional circumstances. the committee also retains power to increase the operational limit

to up to the maximum plan limit without shareholder approval if it considers it appropriate to do so, in which case the

committee will aim to engage with shareholders.

Performance measures Awards vest based on performance against EPS (as defined in the plan rules), relative TSR and ROIC measures over

a three-year period.

Normally, these will be broadly weighted as below, although the Committee may vary the precise weightings, as well as setting the specific targets for each measure as appropriate to reflect business and strategic priorities.

• ePS – 50%

• relative tSr – 25%

• rOic – 25%

To ensure that the PSP awards vest only when shareholder value is being created, awards will be subject to the achievement of an initial financial performance hurdle. This will normally be based on a return on capital measure.

failure to achieve this hurdle will usually result in none of the award vesting.

Should the hurdle be achieved vesting for threshold performance will be up to, but no more than, 15% of the

maximum award opportunity.

if events happen that cause the committee to determine that the performance conditions are no longer a fair measure

of the Company’s performance, the Committee can amend the conditions as it determines to be appropriate, with due

regard to the best interests of shareholders.

notes to the executive Directors’ Future policy table legacy matters

the committee reserves the right to make remuneration payments and payments for loss of office (including the exercise of any discretions available to the committee in connection with such payments) that fall outside the Policy where the terms of the payment were agreed before the Policy came into effect or at a time when the relevant individual was not a director of the company and the payment was not in consideration for the individual becoming a director of the company.

For these purposes, payments include the Committee satisfying awards of variable remuneration and, in relation to an award over shares, the terms of the payment agreed at the time the award was granted. the share awards under the PSP and daBS held by the executive directors which were granted, or which are anticipated to be, prior to the Policy coming into effect are set out in the annual report on remuneration.

matching shares

the last award of daBS matching shares will be made in december 2013. the award will relate to performance in the year ended 30 September 2013. the maximum multiple awarded will be a ratio of four matching shares to one deferred share. these and other previous daBS awards that are currently outstanding will therefore vest in subsequent years.

performance, the Committee can amend the target if considered appropriate, with due regard to the best interests of shareholders. Selection of performance measures – annual bonus

the committee will choose annual bonus performance measures and targets which will provide an appropriate balance between incentivising Executive Directors to achieve financial targets for the year and driving the delivery of specific business deliverables, strategic objectives and personal goals.

Selection of performance measures – PSP

the company aims to create sustainable long-term shareholder value. To encourage and reward this, the Company aims to align performance measures under the PSP with the strategy of the business and set stretching targets, achievement of which it considers should result in long-term value creation. In particular:

• financial performance measures – a direct measure of business health, reflecting the strength of our underlying financial performance. We take into account a number of internal and external reference points to ensure that targets are appropriately stretching; and

• share price performance measures – the most focused indicator of our ultimate delivery of shareholder returns and intended to promote

no further performance measures apply to deferred share awards granted under the daBS as these represent the deferral of annual bonus amounts that have already been earned.

The Company’s existing PSP and DABS rules, approved by shareholders on 25 July 2007, can continue to be operated until 25 July 2017. However, subject to shareholder approval at the AGM on 6 February 2014, all future awards granted to Executive Directors will only be made under the renewed and updated versions of these rules.