MELIA HOTELS INTERNATIONAL S.A.

Transcription

1 EXHIBIT I ANNUAL REPORT ON DIRECTORS REMUNERATION AT LISTED COMPANIES DATA IDENTIFYING THE ISSUER FINANCIAL YEAR END: 12/31/2017 TAX ID A COMPANY NAME MELIA HOTELS INTERNATIONAL S.A. REGISTERED ADDRESS GREMIO DE TONELEROS,24 POL.IND. SON CASTELLO (PALMA DE MALLORCA) BALEARES 1

2 ANNUAL REPORT ON DIRECTORS' REMUNERATION MODEL AT LISTED COMPANIES A REPORTING COMPANY S REMUNERATION POLICY FOR THE YEAR IN PROGRESS A.1 Explain the corporate remuneration policy. Thi ection will include information on: - General remuneration policy principle and fundamental. - The mot ignificant change in remuneration policy with repect to that applied during the prior reporting period, including any change made during the year to the term for exerciing tock option already granted. - Criteria ued to determine, and compoition of, the group of comparable companie whoe remuneration policie have been examined in the coure of etablihing the company' remuneration policy. - The relative importance of the remuneration input ued to determine fixed pay and the criteria followed to determine the variou component of the director remuneration package (remuneration mix). Explanation of the remuneration policy (i) General remuneration policy principle and fundamental. The remuneration policie for ( Meliá Hotel International or the Company ) applied in 2018 endeavor to adapt to the Company true ituation, with deeply ingrained baic principle of moderation, prudence, and the generation of long-term value, while at all-time enuring an internal balance while boltering external competitivene, o that the Company may annually boat the renowned Spencer Stuart (an American company founded in 1956 which tand out a one of the leading conulting and executive earch firm worldwide, and publihe it Board Index. ). Company Bylaw and Board of Director Regulation include all baic principle, and exprely foreee the remuneration paid to it member baed on effective dedication, and at all time adapted to market demand. Alo, the remuneration policy defined in the bylaw and regulation eek to offer Independent Executive Director incentive to award their dedication, while auring that at no time thi repreent an obtacle to independence. In any event, the Board of Director Regulation etablih that Board of Director remuneration be tranparent, reporting on the total amount in the note to the Financial Statement a well a the Annual Corporate Governance Report. (ii) Key amendment during 2018 A change in the current remuneration policy will be put to the General Shareholder Meeting to be held in 2018 that will include: - A change in the amount of the cap on total remuneration of Director in their capacity a uch for financial A technical improvement in the wording of the explanation of the amount to be received a long-term Variable Remuneration. - Incluion of a reference to market practice in relation to life and accident inurance for Executive Director. - Incluion of penion plan for Executive Director to align with market practice for the 2

3 poition. In addition, the change will reflect the rule etablihed in article of the Companie Act that tate that The remuneration of Director hall at all time be in reaonable proportion to the importance of the company, it economic ituation at each moment and the market tandard for comparable companie. The remuneration ytem that i etablihed mut be deigned to encourage the company profitability and long-term utainability, and hould include the neceary afeguard to prevent exceive rik-taking and the rewarding of unfavorable reult. (iii) Criteria adopted To define the company remuneration policy an analyi i made of public data for lited companie with a imilar market capitalization, and the remuneration formulae of companie in a imilar line of buine are taken into conideration. (iv) Remuneration item Apart from the fixed and variable component detailed further on, a remuneration cheme referenced to the lited value of hare or which involve the delivery of hare or hare option on them. The application of the above remuneration cheme mut be approved by the hareholder general meeting, who will determine the value of the hare taken a a reference, the number of hare to be delivered to each Board member, the exercie price of the hare option, the duration of the remuneration ytem, and other applicable condition. The hort-term variable component i a et percentage on the fixed alary, deigned to reward reult and the compliance with annual objective. Percentage and cap on variable remuneration in relation to fixed remuneration in particular are indicated in the correponding ection decribing the variable component of the remuneration ytem (ee Section A.4). In the cae of the criteria for determining the component of the remuneration package for Director, thee have been baed on market alary urvey for imilar poition in companie of a imilar type and capitalization obtained from variou internationally-renowned conultant a well a from public information. The remuneration concept are baed on the type of director, with a differentiated remuneration for the Chief Executive Officer, given the reponibility of the poition a the Company mot enior executive. Executive and Non-executive Director: To reflect board member dedication and reponibility inherent to their role, their remuneration i compried of two part: - A fixed annual allocation related to their reponibility a board member. - Fee for attendance at Board meeting and their Committee. Chief Executive Officer: In addition to the above, in the cae of Chief Executive Officer due to the added reponibility ariing from performing the Company /Group management function, they are entitled to a compenation packet including: - A fixed annual remuneration for carrying out executive dutie. - A variable portion linked to reult, a detailed in Section A.4 of thi report. - A pluri-annual triennial remuneration a decribed in Section A-4 of thi report. The fixed annual remuneration will be paid at the end of the month, in that each member compenation i proportional to the amount of time the party in quetion ha exercied hi/her poition during the year related to the compenation. Article 24 of the bylaw tate that the outlined term hall be compatible with and independent of any alarie, remuneration, indemnitie, penion or compenation applicable generally or pecifically for Executive Director for the performance of their executive dutie or who have a common or enior management employment relationhip, regardle of the nature of their 3

4 relationhip with the Company be it legal, common or enior management employment relationhip or ervice proviion relationhip which are compatible with the poition of board member. A.2 Information on the preparatory work and deciion-making proce followed to determine the remuneration policy and role, if any, performed by the remuneration committee and other uperviory bodie in haping the remuneration policy. Thi information will include, where appropriate, the mandate given to the remuneration committee, it compoition and the identity of the external conultant whoe ervice have been ued to define the remuneration policy. Alo decribe the character of the director, if any, who have been involved in the definition of the remuneration policy. Explain the remuneration policy deign proce In compliance with article 37 of the Company bylaw, board member remuneration conit of an annual aignment, global for all, the maximum amount of which mut be approved by the hareholder general meeting, prevailing a long a no modification are made, all without prejudice to the payment of the fee or remuneration ariing from a contractual relationhip other than that of board member, which mut be ubmitted to applicable legilation. The determination of each board member individual remuneration i made by the Board of Director, at the propoal of the Appointment and Remuneration Committee, at all-time contemplating the function and reponibilitie attributed to each member in hi/her role a uch, a well a belonging to the Delegated Committee and other objective circumtance conidered relevant. Thi include the analyi of general market data on remuneration practice prepared by the Human Reource Department and extracted from the Spencer Stuart Board of Director Report, which wa made available to the Appointment and Remuneration Committee. The Board member performing the role of executive director receive additional remuneration for the dicharge of their executive dutie in accordance with the Board of Director remuneration policie approved by the hareholder in general meeting; the Board approve the term and condition of the agreement between the board member and the Company, baed on preliminary approval by the Appointment and Remuneration Committee. A etablihed by the Capital Companie Law, Company bylaw and the Board of Director Regulation. To that end the Appointment and Remuneration Committee. Contemplate the prior remuneration data analyi prepared by the Company Human Reource Department taken from the Hay Group (a global management conultancy created in 1943, pecializing in tranforming organization and the preparation of worldwide remuneration analye) Study on Management/Executive Director Remuneration, in relation to the remuneration poitioning of the Executive Director v. the market. Remuneration cheme linked to the value of lited hare or which repreent the delivery of hare or hare option right are applied baed on approval at the General Shareholder meeting in the term et forth in above Section A.1. The Appointment and Remuneration Committee wa compried of the following at year-end 2017 and at the date of approval of thi report: Mr. Francico Javier Campo García, Independent External Director. Hotele Mallorquine Conolidado, repreented by M. María Antonia Ecarrer Jaume, Non- Executive Director. Mr. Fernando D Ornella Silva, Independent External Director. M. Lui Maria Díaz de Butamante y Terminel, Independent External Director. The function of the Appointment and Remuneration Committee a regard the above proce a exprely tated in Article 39 of the bylaw and 15 of the Board of Director Regulation, which follow: - Propoe the remuneration policie for board member and General Manager to the Board, or for individual carrying out top management poition under the direct uperviion of the Board, the Executive Committee, a well a individual remuneration, a well a any other contractual condition for Executive Director, a well a enuring their obervance. Periodically reviewing the 4

5 remuneration program, conidering their appropriatene and utility, - and to enure tranparency on remuneration matter. In addition to the above, the Appointment and Remuneration Committee actively participate in determining remuneration policie throughout the entire proce, making legally-applicable propoal and/or report, while alo being involved in pecific procee detailed in thi report. A.3 Indicate the amount and nature of the fixed component, with a breakdown where neceary, of the remuneration for the performance of enior management function by the executive director, the additional remuneration a chairman or member of any board committee, per diem payment for participation in the board and it committee and other fixed payment for the directorhip and an etimate of the fixed annual remuneration to which they give rie. Identify other benefit not paid in cah and the baic parameter for which they are given. Decribe fixed remuneration component Within the fixed remuneration component for board member, item applicable to all Executive Director differ from thoe that apply only to the Chief Executive Officer Executive and Non-executive Director: To reflect board member dedication and reponibility inherent to their role, their remuneration i compried of two part: - A fixed annual allocation related to their reponibility a board member. - Fee for attendance at Board meeting and their Committee. They are quantified by board member a follow: 21, fixed annual remuneration for board member reponibilitie. 5, Board of Director meeting attendance fee. 3,000 Committee attendance fee. Chairman of the appointment and remuneration committee: an additional 3,000 for each Appointment Committee held. To the Chairman of the Audit and Compliance Committee: an additional 3,000 for each Audit and Compliance Committee meeting attended. Secretary to the Board:6,000 for each Board of Director meeting attended. Executive Director: In addition to the above, the Chief Executive Officer receive a compenation package with an annual fixed remuneration for performing of executive dutie. At the date of thi report the Chief Executive Officer receive a fixed gro annual alary of 731, euro,. An increae in the maximum amount payable a total remuneration for the Director in their capacity a uch will be ubmitted for the approval of the General Shareholder Meeting to be held in A.4 Explain the amount, nature and main characteritic of the variable component of the remuneration ytem. In particular: - Decribe each of the compenation plan benefiting each Board member, their cope, approval and implementation date, duration, and key characteritic. Information on tock option plan and other financial intrument plan hould include their general term, and information on the condition for exerciing them. 5

6 - Indicate any payment made under profit-haring or bonu cheme, and the reaon for their accrual. - Key parameter and ground for any ytem of annual bonue. - Type of board member (executive director, external director, independent director, or other executive director) who are the recipient of remuneration cheme or plan involving variable compenation. - The bai for thee variable remuneration cheme or plan, election of performanceaeing criteria, a well a the component and method for determining whether etablihed criteria ha been met, a well an etimated um total of variable payment ariing from the remuneration policy, baed on degree of compliance with pre-et target or benchmark. - Where neceary, provide information on deferment or payment intallment plan etablihed, and/or retention period for any tock or other financial intrument. 6

7 Decribe variable component of remuneration policie A indicated in Section A.1, only the Chief Executive Officer receive variable compenation linked to objective a part of hi remuneration cheme. The above mentioned CEO variable compenation i compried of a hort-term pluri-annual variable compenation, while the Chairman receive a variable pluri-annual, triennial compenation. Short-term variable remuneration: The variable remuneration item for the Chief Executive Officer are etablihed a a percentage of hi fixed remuneration, which in thi cae will be a target remuneration of 60% of hi fixed remuneration at the date of iue of the report, that i to ay 439,089 euro. Thi target amount conit of a theoretical minimum of 0% and a maximum of 141%, reulting from the combination of the variou aement cale and the weighting aigned to each objective. The maximum amount receivable by the Chief Executive Officer a at the date of thi report for hort-term variable remuneration i 619,115 euro. To determine thi amount, and calculate the total, different reult-linked Company objective and annual objective are weighted. The ame criteria are etablihed for top Company management to determine the CEO variable portion, and final level of compliance. The approval of the CEO objective for the year underway a well a the determination of degree of compliance for the year ended take place annually during the Board of Director meeting, baed on their preentation by the Appointment and Remuneration Committee. The hort-term variable compenation model i aligned with that applied by the Company to thoe peron with hort-term variable remuneration, and etablihe for the year of the report indicator and annual goal linked to: - Meeting annual economic target etablihed. - Mitigating rik identified a the mot relevant to the Company. - Peronal performance in the role. - Company Expanion Model Compliance objective are divided into two group: - Economic objective (EBITDA and indebtedne ratio), in which the maximum compliance i 150%, and the minimum 0%, with a cale linking the collection and compliance percentage. The evaluation of thee objective i baed on compliance with annual target (budget) defined individually for each, uing the true accounting figure are yearend a compliance reference. All thee type of objective include quantifiable target and reult, o that the compliance percentage i the reult from dividing the true amount by the budgeted amount. - Non-economic objective (epecially thoe ariing from the Board a CEO and the number of Expanion Project igned and operational during the accrual period), which include a maximum compliance of 130% and a minimum of 0%, on a gradual four-tier compliance cale (0%, 75%, 100%, and130%). Thee objective are evaluated baed on a cale defined by the Appointment and Remuneration Committee. Each level of compliance involve reaching a erie of benchmark; all mut be met ucceively to reach the topmot. The variable compenation model for company management which by definition include the 7

8 Executive Director i reviewed annually, adjuting indicator and goal in accordance with Group prioritie. In keeping with principle of good governance, the hort-term variable compenation payment i made once a prudent period ubequent to year-end ha tranpired, taking place within the firt 60 calendar day after the preparation of the financial tatement, once the board ha approved the Appointment and Remuneration Committee propoal. Pluri-annual variable compenation In hi/her role a Chief Executive Officer, in conjunction with other member of the Company management team, the Executive Director i included in the Pluri-annual Variable Remuneration Plan, a approved by the hareholder in general meeting held on June 23, 2016, effective from The above remuneration ytem wa approved in conformity with the tipulation of Article 37.2 of the bylaw, a well a Article 219 of Capital Companie Law, all in order to boot the market value of the hare, and making the Company director reponible for it ucce by haring in hareholder rik and reward. The three-year Pluri-annual compenation i linked to the longterm reult of the Company, the target and objective for which are for the ame period a the accrual of the Pluri-annual compenation. The target amount (100%) of that pluri-annual variable remuneration will be the amount of one annual fixed alary, with the maximum to be received being 130% and the minimum 10%. The long-term objective for the period to which the pluri-annual remuneration for financial 2018 refer are grouped into everal block: - Development of the hare price [20%]: Growth in the value of the Meliá hare price v. the average growth of the IBEX 35 and the Dow Jone Europe Travel and Leiure index, a calculation that i obtained from the percentage difference between the following two value: Value 1: The average daily cloing rate of the lited price of the Company hare between 12/15/2018 and 02/15/2019 (both incluive) and the final cloing price for the hare on 12/31/2015. Value 2: The arithmetic mean of the development of the following two tock market indexe: the IBEX 35 and the Dow Jone Europe Travel and Leiure index for the ame period a Value 1, that i to ay, between 12/15/2018 and 02/15/2019 (both incluive) and the final cloing level of the two indexe on 12/31/2015 The percentage difference between Value 1 and Value 2 will be remunerated baed on the impact of the reult on a bae of 100, that i to ay, if it i poitive it will be added to 100 and if it i negative, it will ubtract from 100. The end reult will be equal to the percentage to be received. - Financial Solvency [35%]: A group of target baed on EBITDA excluding capital gain, the indebtedne ratio and revenue per available room. - Buine objective [30%]: Thi group the peron own target linked to quantitative and qualitative buine reult, uch a average of new hotel opened and igned, recognition and loyalty program. - Intangible [15%] Thee are meaured by the Leaderhip Index and the Governance Model. In the cae of long-term objective, the minimum level granting a right to receive the payment i 80%, with the top of the cale being 130%. If the minimum threhold i not reached, the remuneration will be ZERO in the cae of all target, except for the remuneration linked to the hare price, for which the minimum right to receive the remuneration i et at 50%. In the cae of the remaining objective that have reached between 80% and 130%, the percentage to be received 8

9 will be equal to the percentage of compliance, a all the long-ter objective have been quantified. In line with principle of good governance, payment of the pluri-annual variable remuneration will take place after a prudent interval following the cloe of the lat financial year of the three-year period, with payment being made within 60 calendar day following the preparation of the annual account for that year, once approved by the Board following a propoal by the Appointment and Remuneration Committee. A.5 Explain the main feature of the ytem of long-term aving, including retirement and any other urvivor benefit, partly or wholly funded by the company, whether endowed internally or externally, with an etimate of their amount or annual equivalent cot, indicating the type of plan, whether defined contribution or defined benefit, the condition for the veting of the director' economic right and their compatibility with any type of everance payment for early cancellation or termination of the contractual relationhip between the company and the director Alo reflect contribution on the director behalf to defined-contribution penion plan, or any increae in the director veted right in the cae of contribution to defined-benefit cheme. Long-term aving cheme A change in the current remuneration policy will be put to the General Shareholder Meeting to be held in 2018 that will include penion plan for Executive Director to align with market practice for the Chief Executive Officer poition. A.6 Indicate any indemnity payment agreed or paid in the event of termination of the directorhip. Decribe the indemnitie The Board member are to be indemnified with the amount equivalent to an annual alary in the following circumtance: - Unilateral removal by the Executive Director: due to infringement (grave and guilty) of the Company of the contractual obligation included in hi/her contract, or a ubtantial modification in function, power, or condition for proviion of ervice not hi/her fault. - Unilateral removal by the Company: not the reult of the Executive Director grave and guilty infringement of legally-etablihed obligation, general due diligence dutie, and loyalty with regard to thoe performed in the poition. Thee claue are applicable to the Chief Executive Officer and the Chairman until termination of the agreement (12/14/2016). A.7 Indicate the condition that the contract of executive director in enior management poition mut repect. Among other apect, give information on the duration, limit to the amount of indemnity, tenure claue, notice period and payment that can replace uch notice period, and any other claue regarding hiring bonue, a well a everance payment or ring-fencing for early cancellation or termination of the contractual relationhip between the company and the executive director. Include, inter alia, covenant or agreement regarding non-competition, excluivity, tenure or loyalty and non-competition after termination of contract. 9

10 Decribe the condition et forth in executive director contract During 2015, the Executive Director entered into a mercantile ervice agreement with the Company, in conformity with Article 249 of Capital Companie Law. Thi agreement outlined the obligation and function of the Executive Director with the Company, a well a a breakdown of the remuneration correponding to him for carrying out the related function. The eential term and condition of the Executive Director contract are, apart from the abovementioned remuneration, the following: Excluivity: Executive Director may not be devoted to any other profeional, mercantile, or profeional activity unle with the Company conent. Non-competition agreement: In accordance with Article 229 f) of Capital Companie Law, the Executive Director may not directly or indirectly perform any profeional ervice involving effective, current, or potential competition with the Company or it Group. There i alo a non-competition agreement for a year pot-contract, with the Company agreeing to compenate the Board member with an annual alary a Executive Director at the time the contract wa terminated. Should the Board member not comply with the pot-contractual non-competition claue, they mut repay the Company any amount received in thi regard, and indemnify the Company in the amount equal to 150% of the amount received in thi regard. Contract termination: The Executive Director will be terminated in the following circumtance etablihed by Capital Companie Law, and in uch cae are at the Board of Director dipoal to tender their reignation immediately. The Board member are to be indemnified with the amount equivalent to an annual alary in the following circumtance: - Unilateral removal by the Executive Director: due to infringement (grave and guilty) of the Company of the contractual obligation included in hi/her contract, or a ubtantial modification in function, power, or condition for proviion of ervice not hi/her fault. - Unilateral removal by the Company: not the reult of the Executive Director grave and guilty infringement of legally-etablihed obligation, general due diligence dutie, and loyalty with regard to thoe performed in the poition. A.8 Explain any additional remuneration paid to director for ervice rendered other than thoe inherent to their directorhip. Decribe upplementary remuneration Company Board member do not have upplementary remuneration. A.9 Indicate any remuneration granted in the form of advance, credit and guarantee, indicating the interet rate, key feature and any amount finally repaid, a well a the obligation againt them by way of guarantee. 1

11 Decribe advance, loan, and guarantee provided There were no advance, loan, or guarantee provided to any of the Company Director. A.10 Explain the main feature of remuneration in kind. Decribe remuneration in kind The Chief Executive Officer ha been provided with private medical inurance for himelf and hi family. Life and accident inurance: The Chief Executive Officer i the beneficiary of a life and accident inurance policy with an annual premium of 2, euro, providing the following coverage: 650,000 euro in the event of death for any reaon 650,000 euro for diability for any reaon 1,300,000 euro for accidental death A.11 Indicate the remuneration accruing to the director by virtue of payment made by the lited company to a third party in which the director provide ervice, when uch payment are intended to remunerate the director' ervice in the company. Compenation paid to board member ariing from payment by virtue of payment made by the lited company to a third-party entity in which the board member provide ervice. No payment were made to third-party entitie ariing from ervice provided to Board member. A.12 Any kind of remuneration item other than thoe lited above, regardle of their nature or the group entity paying them, epecially when it may be conidered a related-party tranaction or when it iuance would ditort the true picture of the total remuneration received by the director. Decribe other item of remuneration There were no additional remuneration complement in addition to thoe already mentioned. A.13 Explain the action taken by the company in connection with the remuneration ytem to reduce exceive rik expoure and match it to the long-term target, value and interet of the company. Include, where appropriate, a reference to: meaure deigned to enure that the remuneration policy i aligned with the long-term performance of the company; meaure etablihing an appropriate balance between fixed and variable compenation; meaure taken in relation to thoe categorie of taff whoe profeional activitie have a material impact on the rik profile of the entity; clawback formulae or claue to reclaim variable component of performance-baed remuneration when uch component have been paid on the bai of data that i ubequently proven to be wholly inaccurate; and meaure deigned to prevent conflict of interet, where applicable. 1

12 Action etablihed to reduce rik According to Article 14 of the Regulation of the Board of Director, one of the dutie of the Audit and Compliance Committee i to upervie the effectivene of the company internal control, the Internal Audit ervice and the rik management ytem, including tax rik. Thi Committee i informed on a regular bai of the reult of the Group Rik Mapping with an analyi of the main rik faced by the Group and their development, a well a their matching againt the company trategy. The dutie of the Appointment and Remuneration Committee include ubmitting propoal to the Board on remuneration policy for Director, General Manager and other enior management level reporting to the Board, Executive Committee and Chief Executive Officer, and enuring they are oberved, a well a regularly reviewing the remuneration policy (article 15 of the Regulation of the Board of Director. The Chair of the Audit and Compliance Committee i alo a member of the Appointment and Remuneration Committee. Thi cro-memberhip of the two committee i helpful in the conideration of the rik of the variable remuneration ytem, both when defining it and in it preentation to the Board. The job decription for the company entire enior management team (Executive Committee and Direct Report member) contain pecific reponibilitie in relation to rik management, including the definition of the meaure neceary for the management of the main rik, a well a the ue of the Rik Map a a management tool to be conidered during the proce for the etting of objective. In etting the target linked to the Variable Remuneration in both the hort and long term the Company Rik Map i taken into conideration at all time for the purpoe of etablihing pecific target deigned to mitigate rik, with expre communication of the detail together with the ret of the guideline at the moment of the launching of the target-etting proce. The hort-term variable remuneration ytem for Meliá i deigned to take into account the longterm objective of the company, a well a the principal rik. The ytem differentiate between common target (60% of the total weight of the variable remuneration), aligned with the reult and objective of the company etablihed for the long term, and pecific target for each pecific area (40% of the variable remuneration). In line with good governance principle, the payment of variable hort and long-term remuneration take place after a prudent interval following the cloe of the lat financial year to be conidered for the evaluation, with payment being made within 60 calendar day following the preparation of the annual account for that year and their review by the external auditor. Payment i to be made with the approval by the Board at the propoal of the Appointment and Remuneration Committee. B REMUNERATION POLICIES FORESEEN FOR UPCOMING YEARS Repealed C OVERALL SUMMARY OF REMUNERATION POLICY APPROVAL PROCESS C.1 Give a brief explanation of the main feature of the tructure and remuneration item of the remuneration policy applied during the lat financial year, reulting in the breakdown of the individual remuneration accrued by each of the director lited in Section D of thi report, and a ummary of the reolution paed by the board to implement thee item. 1

13 Remuneration policy tructure and concept applied during the year The remuneration policy applicable during the reference year wa etablihed from the Board member Remuneration Policy, which wa ubmitted to a vote during the general hareholder meeting held on June 23, 2016, a tipulated in Law 31/2014, of December 31, which amend Capital Companie Law. The above policy enacted the new remuneration policy for the Board of Director in their role a uch for 2016, 2017, and 2018, without increaing the annual amount paid, differentiating the aignment of the annual fixed amount paid for board member reponibilitie and attendance fee to meeting and Commiion. The remuneration policy defined in the bylaw and the Regulation eek to enure that the remuneration of External Director provide an incentive for their dedication while enuring that it at no time repreent an obtacle to their independence. The Regulation of the Board etablih that the remuneration of the Board of Director hould be tranparent, and that it overall total mut be informed in both the Annual Report and the Annual Corporate Governance Report. The following i a ummary of the Company Board member remuneration during 2017 Board member a uch: Fixed remuneration: 238,000 Attendance fee: 593, Total fee for Board member a uch: 831, Executive Director ariing from their executive function in the Company: Fixed remuneration: 731,815 Short-term variable compenation: 412, (Correpond to evaluation of 2016 target) Other remuneration: Board meeting attendance fee: 113,767 Remuneration in kind, life and accident inurance premium - Chief Executive Officer: 2, Following a propoal by the Appointment and Remuneration Committee and approval by the Board of Director, the fixed remuneration of the Chief Executive Officer wa adjuted in April 2017, the month in which Company alarie are uually adjuted, with an increae in fixed remuneration of 3% and an increae of 10% in the variable remuneration, to align remuneration with market level for the poition. A indicated in the Board Regulation, it hall be the Board of Director, at the propoal of the Appointment and Remuneration Committee, that mut approve the remuneration policy for Director, General Manager and other enior management level reporting to the Board, Executive Committee and Chief Executive Officer, a well a the individual remuneration and other contractual condition for the Executive Director and for enuring they are oberved, in addition to regularly reviewing the remuneration policy to confirm it i appropriate and provide the deired reult and enuring the tranparency of the remuneration. 1

14 D BREAKDOWN OF INDIVIDUAL REMUNERATION ACCRUED BY EACH BOARD MEMBER Name Type 2017 accrual period CARINA SZPILKA LAZARO Independent From 01/01/2017 to 12/31/2017 FERNANDO DORNELLAS SILVA Independent From 1/1/2016 to 12/31/2016 JUAN ARENA DE LA MORA Independent From 1/1/2017 to 12/31/2017 ALFREDO PASTOR BODMER Other External Director From 1/1/2017 to 12/31/2017 GABRIEL ESCARRER JULIA Proprietary From 1/1/2017 to 12/31/2017 SEBASTIAN ESCARRER JAUME Proprietary From 1/1/2017 to 12/31/2017 From 1/1/2016 to 12/31/2016 GABRIEL JUAN ESCARRER JAUME Executive From 1/1/2017 to 12/31/2017 FRANCISCO JAVIER CAMPO GARCIA Independent From 1/1/2017 to 12/31/2017 LUIS MARIA DIAZ DE BUSTAMANTE TERMINEL Independent From 1/1/2017 to 12/31/2017 HTLES. MALLORQU. CONSOLIDADOS,S.L. Proprietary From 1/1/2017 to 12/31/2017 JUAN VIVES CERDA Proprietary From 1/1/2017 to 12/31/2017 D.1 Complete the following table on the individual remuneration of each of the director (including remuneration for carrying out executive function) accrued during the year. a) Remuneration accrued in the reporting Company: i) Remuneration in cah (in thouand of euro) 14

15 Name Salarie Fixed compen ation Travel expen e Variable compenati on Shortterm Variable compenati on Longterm Attendance fee other Board Committee Termination benefit Other item Total 2017 Total 2016 FERNANDO DORNELLAS SILVA FRANCISCO JAVIER CAMPO GARCIA GABRIEL ESCARRER JULIA HOTELES. MALLORQU. CONSOLIDADOS,S.L JUAN VIVES CERDA JUAN ARENA DE LA MORA LUIS MARIA DIAZ DE BUSTAMANTE TERMINEL GABRIEL JUAN ESCARRER JAUME SEBASTIAN ESCARRER JAUME ALFREDO PASTOR BODMER CARINA SZPILKA LAZARO

16 ii) Share-baed employee benefit GABRIEL JUAN ESCARRER JAUME Not applicable Impleme ntation date # 0 Condition: Not applicable # hare acquired in Price affecte d Amou nt Ownerhip option at the beginning of 2017 acquired in Exer cie price ( ) Exer cie price Not applicable exercied in # affecte Exercie period Gro profit (m ) matured # # # affecte d affecte Exer cie price ( ) Not applicable at 2017 year end Exer cie price Exercie period Not applicable Other requirement during the year: Not applicable Exercie period iii) Decribe long-term aving cheme Name Contribution to the year by the Company Amount accumulated GABRIEL JUAN ESCARRER JAUME of 16

17 iv) Other benefit (thouand ) GABRIEL JUAN ESCARRER JAUME Remuneration in the form of advance and loan granted 0.00 Tranaction interet rate Eential characteritic of the tranaction Not applicable Amount finally returned Not applicable Life Year 2017 inurance Year 2016 Guarantee iued by the Company in favor of director Not applicable Not applicable 17

18 b) Remuneration accrued by Company board member ariing from their memberhip on other Group Board: i) Remuneration in cah (in thouand of euro) Name Salarie Fixed compe natio n Travel expen e Variable compen ation Short -term Variable compen ation Long -term Attendance fee other Board Committ ee Termination benefit GABRIEL JUAN ESCARRER JAUME Other item Tot al Tot al

19 ii) Share-baed employee benefit GABRIEL ESCARRER JULIA Not applicable Impleme ntation date 01/01/2017 # O ption affect 0 ed Condition: Not applicable # hare acquired in Price Amou nt Ownerhip option at the beginning of 2016 acquired in Exer cie price ( ) Exer cie price Not applicable exercied in # affecte Exercie period Gro profit (m ) matured # # # affecte d affecte Exer cie price ( ) Not applicable at 2017 year end Exer cie price Exercie period Not applicable The requirement during the year: Not applicable Exercie period iii) Decribe long-term aving cheme Name Contribution to the year by the Company Amount accumulated GABRIEL JUAN ESCARRER JAUME of 19

20 iv) Other benefit (thouand ) GABRIEL JUAN ESCARRER JAUME Remuneration in the form of advance and loan granted 0.00 Tranaction interet rate Eential characteritic of the tranaction Not applicable Amount finally returned Not applicable Life Year 2017 inurance Year 2016 Guarantee iued by the Company in favor of director Not applicable Not applicable 20

21 c) Summary of remuneration (in thouand ) Thi hould include the amount correponding to all remuneration concept accrued by the board member included herein, in thouand of euro. Contribution made or amount granted for long-term Saving Plan: Name Remuneration accrued in the Remuneration accrued in GroupTotal Company Total Amount Gro Total companie Total Amou Gro Total Total Total Contribu compen of profit 2017 compen nt of profit tion to ation hare option company ation hare Group aving paid in granted exercie paid in grante exercie cheme cah d cah d d during the ALFREDO PASTOR BODMER CARINA SZPILKA LAZARO FERNANDO DORNELLAS SILVA FRANCISCO JAVIER CAMPO GARCIA GABRIEL ESCARRER JULIA HOTELES. MALLORQU. CONSOLIDADOS, S.L JUAN VIVES CERDA JUAN ARENA DE LA MORA LUIS MARIA DIAZ DE BUSTAMANTE TERMINEL SEBASTIAN ESCARRER JAUME GABRIEL JUAN ESCARRER JAUME 1, , ,309 1,252 TOTAL 1, , ,

22 D.2 Give information on the relationhip between the remuneration received by the director and the earning or other performance indicator of the entity, explaining, where appropriate, how variation in the company' performance may have influenced the variation in director' remuneration. In the year ended December 31, 2017 only Gabriel Ecarrer Jaume, the Chief Executive Officer, received variable remuneration linked to the performance of the Company. A already indicated, the evaluation of thee objective, both financial and non-financial, i baed on a performance cale defined by the Appointment and Remuneration Committee. Both the financial reult for 2017 and the non-financial objective to which the variable remuneration i linked have achieved the etimate ued to determine the target, o that the level of variable remuneration for 2016, paid in 2017, ha reached 116%. Payment of the variable remuneration i made after a prudent interval after the end of the year, following approval by the Board at the propoal of the Appointment and Remuneration Committee D.3 Give information on the outcome of the conultative vote of the annual general meeting on the annual remuneration report of the previou year, indicating the number of vote cat againt, if any: Number % of total Total vote 199,916, % Vote againt Number 60,060,548 % of total 30.04% Vote in favor 139,854, % Abtention 1, % E OTHER INFORMATION OF INTEREST Relevant apect of director remuneration not reflected in the above ection of thi report, yet conidered neceary for incluion o a to provide more comprehenive and reaoned information on the Company remuneration tructure, and it practice with regard to compenating it director. There are no additional relevant apect apart from the abovementioned In Section D.1 a) 1, remuneration in kind for the Chief Executive Officer in the form of a life inurance policy ha been reported under Other item. A thi heading i not included in Section D.1.c) thi remuneration in kind ha been added under the heading of Total remuneration in cah. It hould be noted that in error thi item wa not reported on the 2016 IARC, and the information omitted in the previou period ha now been included in thi report. Thi remuneration report wa approved by the Company Board of Director at it meeting held on 03/23/2018. Indicate whether any director voted againt or abtained from voting on the approval of thi Report. Ye No X