The Management Development & Remuneration Committee (the “Committee”) has adopted the principles of good governance as set out in the Combined Code. This report, which has been prepared by the Committee and approved by the Board, complies with the requirements of the Companies Act and The Directors’ Remuneration Report Regulations 2002 (the “Regulations”) and meets the relevant requirements of the Financial Services Authority’s Listing Rules. As the Regulations provide that certain of the information is to be the subject of the auditors’ report and other information is not, this report is divided into sections of audited and unaudited information.

This report explains the Group’s remuneration policy and provides details of the remuneration of the Executive and Non-Executive Directors for services to the Company from 1 October 2008 to 30 September 2009 (the “Financial Year”). The comparative figures in the audited information are for the period from 1 November 2007 to 30 September 2008; this was an 11 month period because the Company amended its accounting reference date to 30 September during that period.

The Committee has a policy of transparent reporting of Executive Director remuneration arrangements. The Chairman of the Committee, the Group Company Secretary and Group HR Director met with major institutional shareholders and bodies during the Financial Year to discuss key remuneration issues. The Committee is committed to participating in full consultation with the Company’s major shareholders prior to any future change to, or deviation from, the Company’s remuneration policy.

This report will be the subject of a separate resolution for approval at the Annual General Meeting to be held on Thursday 25 March 2010.

Information not subject to audit

Composition of the Committee

All members of the Committee are Non-Executive Directors. Consistent with the Relationship Agreement that existed between the Company and Arcandor AG (“Arcandor”) up to 10 September 2009 (see the Corporate Governance Report for details), the Arcandor-nominated Directors who held office for periods in the year and who did not therefore meet the test of independence, were members of the Committee. However, the other members of the Committee who served during the Financial Year were independent. During the year, the Arcandor-nominated Directors Peter Diesch, Thomas Middelhoff and Karl-Gerhard Eick, resigned from the Board, and therefore ceased to be members of the Committee on 22 December 2008, 17 March 2009 and 10 September 2009 respectively. Hemjö Klein resigned from the Board and therefore ceased to be a member of the Committee on 18 September 2009.

Following his appointment as Chairman of the Company, Michael Beckett resigned from the Committee on 24 September 2009 and was replaced as Chairman of the Committee by Nigel Northridge. Bo Lerenius was also appointed to the Committee on 24 September 2009. As of that date, the Committee comprised the following members, all of whom were Independent Non-Executive Directors:

Nigel Northridge (Chairman)
Roger Burnell
Bo Lerenius

Meetings of the Committee are normally attended by the Chairman of the Company and the Group Chief Executive Officer, (other than in respect of matters specifically related to their own remuneration), the Group HR Director and the Group Company Secretary.

No Director or senior executive is present at meetings when his or her own remuneration arrangements are being discussed.

Committee responsibilities

The responsibilities of the Committee include:

• making recommendations to the Board on the Company’s framework of executive remuneration and its cost;
• reviewing and determining, on behalf of the Board, the remuneration and incentive packages of the Executive Directors to ensure that they are fairly rewarded for their individual contributions to Thomas Cook’s overall performance; and
• formulating remuneration policy with regard to the strategic objectives and operational performance of the Company.

The terms of reference of the Committee are available on www.thomascookgroup.com or from the Group Company Secretary at the registered office.

Principal activities during the year

The Committee held eight meetings during the Financial Year. Attendance at those meetings is disclosed in the Corporate Governance Report. Matters discussed by the Committee during the Financial Year included:

• the Group’s remuneration policy;
• achievement of the annual bonus targets for Executive Directors in respect of the previous financial period;
• the market competitiveness of the remuneration packages for Executive Directors;
• appointment of new remuneration advisers;
• current trends in executive reward including use of long-term incentives;
• awards under Thomas Cook Group plc 2007 Performance Share Plan and the Thomas Cook Group plc 2008 Co-Investment Plan including the setting of the performance targets and review of the performance targets set in relation to previous awards;
• the structure and targets of the annual bonus arrangements for the current Financial Year; and
• institutional shareholder and governance body pre-AGM voting recommendations.

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Committee evaluation

Details of the Committee evaluation, which took place during the Financial Year, are included in the Corporate Governance Report.

Committee’s advisers

The Committee invites individuals to attend meetings as it deems beneficial to assist it in reviewing matters for consideration. During the Financial Year, these individuals included the Chairman of the Company, the Group Chief Executive Officer, the Group HR Director and the Group Company Secretary.

In the performance of its duties, the Committee seeks assistance from external advisers, where necessary, to ensure it is suitably advised. During the Financial Year, the remuneration advisers provided services relating to the benchmarking of salaries and benefits for Executive Directors and setting of performance targets for the long-term incentive plans. The appointment of these advisers is reviewed on a regular basis. The Committee was mindful of the dual role performed by PricewaterhouseCoopers LLP (“PwC”) as the Committee’s remuneration advisers and the Company’s external auditors. PwC held this dual role because prior to the merger they had acted as remuneration adviser to MyTravel Group plc and external auditor to Thomas Cook. The Board and its Committees concluded, at the time of the merger, that it was in the best interests of the Company at that stage of its development to have PwC acting in that dual role, at least in the short to medium-term. In April 2009, the Committee decided that this initial arrangement had served the Company well, but there was no reason for it to continue. Accordingly, the Committee reviewed a shortlist of potential remuneration advisers, following which Kepler Associates (“Kepler”) were appointed in June 2009. Kepler does not advise the Company in any other capacity.

Remuneration policy

The Group’s remuneration policy is to ensure that Executive Directors and senior executives are rewarded in a way which attracts and retains management of the highest quality and motivates them to achieve the highest level of performance consistent with the best interests of the Group, its shareholders and employees. In developing its remuneration policy, the Committee has had regard to the fact that the Group has significant international operations and, in order to compete in the global environment for the recruitment, retention and incentivisation of high quality Executive Directors and senior executives, it must offer upper-quartile rewards for upper-quartile performance.

The Committee has therefore set its remuneration policy in view of, and applying, the following principles:

• The Group’s objective is to deliver financial results which consistently outperform the average of the industry sector.
• The Group will look to retain and attract Executive Directors and senior executives with above-average skills and demonstrated leadership qualities.
• The remuneration of each Executive Director will be based on performance (both of the Group and the individual Executive Director), potential (i.e. the Executive Director’s potential to grow in responsibility and performance) and scarcity (i.e. the availability of candidates to replace the Executive Director should he leave the Group).
• The proportion between fixed and variable remuneration will typically be targeted at 30% fixed and 70% variable – see table below for the range between target and stretch performance.

The Committee has determined that its policy for the design of remuneration arrangements for Executive Directors is that the fixed elements of remuneration shall be set in line with the median of a specified comparator group of companies and that total earnings (made up of base salary, pension supplement, bonus and any other performance-related elements of reward, such as long-term incentive arrangements) shall be targeted at the upper-quartile of the comparator group subject to the attainment of upper-quartile performance as gauged by appropriate and challenging performance criteria. An exception to this policy was agreed for the Group Chief Executive Officer in September 2008, see below for details.

The remuneration of Executive Directors will be highly geared towards performance with the proportion of ‘at risk’ pay increasing disproportionately according to:

• the level of personal performance; and
• the seniority of the Executive Director and his/her ability to influence results.

The performance related portion of remuneration will reward short-term and long-term performance separately, with the potential level of payment being heavily weighted in favour of the long term.

A bespoke comparator group has been adopted to benchmark the remuneration of Executive Directors of the Group. This group consists of companies in the FTSE 350 with significant international operations. This particular comparator group has been chosen to reflect the international nature of the Group’s business. Where specialist functions are concerned, the Committee may have reference to other comparator groups as it considers appropriate.

The relative importance of the fixed and variable elements of the remuneration packages of Executive Directors in circumstances of target and stretch performance, is shown in the chart opposite.

The chart below assumes:

(a) Base salaries as at 30 September 2009 (or date of appointment in the case of new Directors);
(b) Value of benefits provided in the Financial Year to 30 September 2009;
(c) Pension: 25% of base salary;
(d) Annual bonus:

• 60% of full bonus paid at target performance;
• 100% of full bonus paid at maximum performance;

(e) Performance Share Plan: 25% of the award vests at target performance with 100% of the award vesting at maximum performance;
(f) Co-Investment Plan: an initial investment of:

• at target performance, 10% of net of tax base pay;
• at maximum performance, the excess of bonus paid above 100% of net of tax base pay.

At the end of the three-year performance period, initial investment will be matched (further details are disclosed below in the Thomas Cook Group plc 2008 Co-Investment Plan (“COIP”)):

a. 0.5:1 at target performance;
b. 3.5:1 at maximum performance.

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Remuneration arrangements

The remuneration of the Executive Directors in respect of the Financial Year is set out in the audited section of this report.

For the Financial Year, the remuneration of the Executive Directors comprised base salary, annual bonus, participation in the Performance Share Plan (“PSP”) and the Co-Investment Plan (“COIP”), other benefits including the provision of pensions, private health insurance, disability cover, personal accident cover, death in service benefit and a car allowance. The only component of executive remuneration which is pensionable is base salary.

The remuneration arrangements for the newly appointed Deputy to the Group Chief Executive Officer, Sam Weihagen (appointed 6 November 2009), and the new Group Chief Financial Officer (as announced on 29 November 2009) were set in line with the remuneration policy.

Base salary

In accordance with the Group’s remuneration policy, the base salary of Executive Directors reflects the size and scope of their responsibilities. As an exception to the policy to set base salaries at median, the base salary of the Group Chief Executive Officer was increased in September 2008 to the upper quartile of the comparator group. This recognised his appointment as sole Group Chief Executive Officer (from June to December 2007 he was joint Chief Executive Officer) and operational, financial and strategic achievements. At the time of awarding this increase the Committee agreed that the Group Chief Executive Officer’s base salary should next be reviewed in December 2009, and thereafter at annual intervals, and an increase would only be made if it was required to bring his base salary in line with the remuneration policy. The Committee reviewed the base salary of the Group Chief Executive Officer in November 2009 and agreed that it should remain at its current level. The Committee reviewed the base salary of the Group Chief Financial Officer in December 2008 and it was agreed that it should remain at its then current level. A review of market rates of base salary was conducted in November 2009 prior to the appointment of Sam Weihagen as Deputy to the Group Chief Executive Officer and agreeing to appoint Paul Hollingworth as Group Chief Financial Officer.

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The annual rates of base salary, as at 29 November 2009, for the Executive Directors are shown in the table below:

Name	2009 £000	2008 £000
Manny Fontenla-Novoa	850	850
Paul Hollingworth1	480	–
Sam Weihagen2	500	–

1. 1Paul Hollingworth has been appointed with effect from 1 January 2010.
2. 2Sam Weihagen receives the sterling equivalent of 5.6 million Swedish krona per annum as base salary.

Annual bonus

Should all objectives be achieved in full, the maximum annual bonus opportunity for all Executive Directors is 175% of base salary. Of the maximum bonus payable:

1. (i)75% is linked to the attainment of Group financial targets and is earned on a pro rata basis by reference to the achievement of those targets; and
2. (ii)25% is linked to the attainment of individual and other non-financial criteria linked to the development of the Group and the implementation of the Board’s strategy.

These targets are set by the Committee at the start of the financial year and are individually tailored for each Executive Director. The individual and other non-financial criteria for the Group Chief Executive Officer for the Financial Year included targets in relation to development of Group strategy, succession planning, customer satisfaction, health and safety and employee engagement. The criteria for the Group Chief Financial Officer included strategic sourcing and segmental structures. The non-financial based element of the bonus will only vest and become payable rateably to the extent that the financially based element of that Executive Director’s bonus vests.

The Committee determines the extent to which it considers the targets and objectives have been met and the annual bonus payable. For the Financial Year, the Committee took into account financial and overall business and personal performance and awarded Manny Fontenla-Novoa, Group Chief Executive Officer, a total bonus of 96% of maximum and Jürgen Büser, Group Chief Financial Officer, (on the basis of a part year) a total bonus of 48% of maximum.

Pensions

The Company contributes each year into a pension scheme or other arrangement for each of the Executive Directors to an amount equivalent to 25% of base salary.

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Long-term incentive plans

The Committee believes the close alignment of Executive Directors’ remuneration with the interests of shareholders is an important element of the Company’s remuneration policy. The following two share-based long-term incentive plans, both of which have been approved by shareholders, have been designed with an appropriate blend of performance criteria with that in mind.

During the Financial Year, the Committee undertook a review of the current long-term incentives offered to Executive Directors and senior executives against those offered in comparable companies. The review included whether the types of executive share plans operated by the Company and participation levels were still appropriate. On completion, the Committee agreed to retain both plans in their current format as the plans have only been introduced relatively recently and participants are still building up a portfolio of awards. The Committee will conduct a further review next year.

Thomas Cook Group plc 2007 Performance Share Plan (“PSP”)
During the Financial Year ended 30 September 2009, a PSP award equal to 175% of base salary was made to Manny Fontenla-Novoa, the Group Chief Executive Officer, and an award of 150% of base salary was made to Jürgen Büser, the Group Chief Financial Officer. Awards with a value of 100% or less of base salary were also made to other senior executives. The Committee currently intends to make awards in January 2010 of 175%, 200% and 150% of base salary to the Group Chief Executive Officer, the newly appointed Group Chief Financial Officer and the Deputy to the Group Chief Executive Officer respectively, with awards to other senior executives of 100% or less. Unless there are exceptional circumstances, awards to Executive Directors are made annually within 42 days of the Company’s final results being announced. In line with market practice, awards vest three years after the award date, providing the participant is still employed by a company within the Group and to the extent that the performance conditions have been met. No award can be made under the PSP later than ten years after the anniversary of the adoption date and options are not exercisable later than 10 years after the date of the award. Under the rules of the PSP there is no retest provision. For UK participants £30,000 of awards can be made and held under a HMRC approved Company Share Option Plan arrangement.

Thomas Cook Group plc 2008 Co-Investment Plan (“COIP”)
Executive Directors and a small group of key executives are eligible to participate in the COIP, which is designed to reward and retain these individuals over the longer term whilst also aligning their interests with those of the Company’s shareholders. Under the COIP, participants must purchase the Company’s shares out of their bonus. If the bonus paid is below 100% of salary, 10% of the participant’s net base salary (or the whole of the net bonus if less) must be invested. If the bonus paid is above 100% of base salary, all of the bonus payable above 100% of base salary (subject to the minimum investment of 10% of net base salary) must be used to acquire shares. Participants can also choose to defer a further part of their bonus to purchase shares. The shares purchased, either on a voluntary or mandatory basis, are referred to as Lodged Shares. Participants may receive up to three and a half Matching Shares for every one Lodged Share at the end of the three-year performance period subject to the satisfaction of the performance condition. The requirement for compulsory investment under the COIP will cease once the value of all shares held by a participant reaches a value equal to 200% of base salary. This level of shareholding must be maintained. Unless there are exceptional circumstances, awards of Matching Shares are made within 42 days of the Company’s final or half-year results being announced. No award of Matching Shares can be made under the COIP later than ten years after the anniversary of the adoption date and options are not exercisable later than 10 years after the date of the award. Under the rules of the COIP there is no retest provision.

Selection of long-term incentive performance conditions

PSP
The performance conditions are split into two elements, the vesting of up to 50% of the award is dependent on the Total Shareholder Return (“TSR”) of the Company relative to the TSR of the comparator group. TSR is considered by the Committee to be aligned with shareholder interests and inclusion of an Earnings Per Share (“EPS”) target provides an appropriate balance between relative and absolute performance. The remaining 50% of the award will only vest if an adjusted EPS target is achieved. None of the PSP awards has been held for a full performance period as the first awards were made in 2007. At the end of the performance period TSR calculations will be made by the Company’s external advisers using the 90 day average share price at the start and end of the performance period. EPS will be derived from the income statement for the last financial year ending prior to the end of the performance period.

COIP
Two and a half Matching Shares for every one Lodged Share purchased will be awarded subject to the achievement of EPS linked performance targets, agreed by the Committee, measured over a three-year period. The EPS targets for the 2008 and 2009 COIP awards are the same for the equivalent PSP awards. EPS will be derived from the income statement for the last financial year ending prior to the end of the performance period.

Participants can receive up to one additional Matching Share for superior Return On Invested Capital (“ROIC”) performance but the number of Matching Shares awarded is reduced to nil for a below target ROIC performance.

A further explanation of each performance element is given below:

• TSR in relation to the PSP: The TSR comparator group consists of the 50 companies at the bottom of the FTSE 100 and the 50 companies at the top of the FTSE 250. This was chosen as it is a broad group of companies of similar size and against which the performance of the Company’s management should be judged. This comparator group excludes investment companies. The comparator group is determined at the date the PSP awards are made.
• EPS in relation to the PSP and COIP: EPS was chosen as it is regarded as a good reflector of business performance. The Committee was advised that an absolute target was considered more appropriate than a percentage growth target as there was little historic data for the Company, having only been established in 2007. The EPS target range was set by reference to early consensus forecasts.
• ROIC in relation to the COIP: ROIC was chosen to measure the efficiency of the use of the Group’s capital in achieving the underlying earnings target. The ROIC ranges were set by reference to the Weighted Average Cost of Capital used by the Group for the purposes of impairment testing. ROIC will be calculated over the three-year performance period by taking the post tax operating profit over the performance period and dividing this by the sum of the opening capital for each year in the period.

The Committee will review the performance conditions attached to any future awards to ensure they are stretching and that the interests of the Executive Directors and senior management are aligned with shareholders.

Award date	Vesting criteria	Performance conditions over three-year period
Performance Share Plan
2007, 2008 and 2009	50% – Total Shareholder Return ranked against comparator group	Full vesting for upper quartile ranking. Zero vesting for sub-median ranking. Vesting will increase on a straight line basis from 25% to 100% of the TSR linked part of the initial award for ranking between median and upper-quartiles.
	50% – Earnings Per Share	July 2007 award: Full vesting for adjusted EPS of 28 pence or above. Zero vesting for EPS below 23 pence. Vesting will increase on a straight line basis from 25% to 100% of the EPS linked part of the initial award for EPS between 23 pence and 28 pence. March 2008 award: The same vesting schedule applies as for the July 2007 awards but the EPS targets are 28 pence to 33 pence. January and June 2009 award: The same vesting schedule applies as for the July 2007 awards but the EPS targets are 35 pence to 40 pence.
Co-Investment Plan
2008 and 2009	Earnings Per Share	June 2008 award: Vesting of up to 2.5 Matching Shares for adjusted EPS of 33 pence or above. Zero vesting for EPS below 28 pence. Vesting will increase on a straight line basis from 0.5 Matching Shares to 2.5 Matching Shares for EPS between 28 pence and 33 pence subject to ratchet. January, June and August 2009 award: The same vesting schedule applies as for the June 2008 awards but the EPS targets are 35 pence to 40 pence.
	Return On Invested Capital achievement	If ROIC is below 4% no Matching Shares will vest. If ROIC is between 4% and 6%, a reduction of up to 40% is applied on a straight line basis. If ROIC is between 6% and 10%, Matching Shares vest according to EPS performance only (overall opportunity of up to 2.5 times a participant’s investment). If ROIC is between 10% and 14%, an uplift of up to 40% is applied on a straight line basis, subject to a maximum uplift of 40% for ROIC in excess of 14%.

Following the decision by the Company to state its results in sterling, the EPS targets were restated to the following in 2008:

	July 2007		March 2008
PSP EPS target	€c	£p	€c	£p
Zero vesting	34	23	41	28
Full vesting	41	28	47	33

COIP EPS target	€c	£p
Zero vesting	41	28
Full vesting	47	33

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The Committee elected to use the exchange rate of €1.4733:£1.00 for the July 2007 PSP award as it was the exchange rate as at the award date of 12 July 2007. The Committee elected to use the exchange rate of €1.442:£1.00 for the 2008 PSP and COIP awards as it was the exchange rate as at 1 November 2007, the date the performance period began.

In October 2009, the Committee conducted a detailed review of the performance targets for the long-term incentive plans to ensure that they were in line with the Group’s strategic and financial plans, and that they were sufficiently stretching. As a result of that review, the Committee has proposed a number of changes to the targets for the PSP and COIP on which it intends to consult the Company’s major shareholders and their representative bodies.

The Committee will refine its proposals based on the outcome of those consultations and, in accordance with corporate governance best practice, will put any proposed changes to a vote at the Company’s annual general meeting to be held on 25 March 2010.

In the event of a change of control, the awards under both the PSP and COIP shall vest at the Committee’s discretion taking into account the period of time for which the award has been held by participants and the extent to which performance conditions have been achieved since the award date after an independent valuation of performance to date. Where options have been granted, participants would have six months following the change of control to exercise their options, to the extent permitted by the Committee. On the death of a participant or in the case of early termination of a participant’s employment for ‘good leaver’ reasons participants (or their representatives) would have twelve and six months respectively to exercise their options, to the extent permitted by the Committee.

Funding of share plans
It is the Company’s current intention to satisfy the requirements of its share schemes in the method best suited to the interests of the Company, either by acquiring shares in the market or, subject to institutional guidelines, issuing new shares. The Committee has agreed that it is prudent and appropriate to hedge the shares awarded under the PSP and the matching element awarded under the COIP. As at 30 September 2009, 5,090,822 shares were held in the Thomas Cook Group plc 2007 Employee Benefit Trust, which represents 26% of share incentive awards held on that date and 0.6% of the total issued share capital. The level of hedging will be kept under review. Subject to the rules of the Plans, awards cannot be made if awards under any discretionary employee share scheme operated by Thomas Cook Group plc in the preceding ten-year period would exceed 5% of the Company’s issued share capital at that time.

The Trustee would not normally vote at general meetings on the Thomas Cook Group plc shares held in the Employee Benefit Trust and did not vote at the AGM held in March 2009.

All-employee share schemes
Thomas Cook operates two all-employee share schemes which have been approved by HM Revenue & Customs. The Thomas Cook Group plc 2008 SAYE Scheme (“SAYE”) operates in 20 countries and offers employees the opportunity to purchase shares in the Company at a 20% discount to the market value on the invitation date. The Thomas Cook Group plc 2008 Buy As You Earn Scheme (“BAYE”) is open to all UK based employees who have been employed by the Group for at least six months. Participants may contribute up to £125 per month, which the trustee of the Plan uses to purchase shares on their behalf. For every 10 shares purchased, participants are awarded one Matching Share. Executive Directors are eligible to participate in the SAYE and UK based Executive Directors are eligible to participate in the BAYE.

Service contracts

Each of the Executive Directors, who served during the year, has a service contract with the Company. The date of the service contract and notice period for each Executive Director are set out below:

Name	Date of contract	Outstanding term	Notice period	Compensation arrangements
Manny Fontenla-Novoa	30 January 2008	To age 65	12 months	See below
Paul Hollingworth	29 November 2009	To age 65	12 months	See below
Sam Weihagen	6 November 2009	To age 65	12 months	See below
Jürgen Büser	1 July 2008	To age 65	12 months	See below

The notice period for Executive Directors is 12 months. The Committee believes that this is appropriate given the need to retain the specialist skills that the Executive Directors bring to the business and to achieve continuity in the Company’s senior management. Either the Executive Director or the Company may terminate employment by giving one year’s written notice and the Company may pay compensation in lieu of notice. Under its terms of reference it is the Committee’s responsibility to determine the basis on which the employment of an Executive Director is terminated. The Committee aims to avoid rewarding poor performance and to take a robust line on reducing compensation to reflect any obligation to mitigate loss on the part of the departing Executive Director. There is no clause in the Executive Directors’ contracts providing them with additional protection in the form of compensation for severance as a result of change of control.

External appointments

The Company recognises the benefits to the individual, and to the Group, of Executive Directors taking on external appointments as non-executive directors. Subject to the approval of the Committee and to such conditions as the Committee may, in its discretion, attach, an Executive Director may accept such appointments at other companies or similar advisory or consultative roles. The Committee has set a limit of one external appointment for each Executive Director, to a FTSE 100 or FTSE 250 company, or an international company of a similar size, unless there is justification for a further appointment.

Until 7 September 2009, Manny Fontenla-Novoa served as a member of the Arcandor AG Management Board; he did not receive a fee for this appointment.

Non-Executive Directors

In view of the governance arrangements which existed under the Relationship Agreement (see the Corporate Governance Report) and prior to its termination on 10 September 2009, the remuneration arrangements for the Chairman were determined by the Committee of Independent Non-Executive Directors. On 24 September 2009, the terms of reference of the Committee were changed in line with the Code to include responsibility for determining the remuneration of the Chairman. The fees for the other Non-Executive Directors are set by the Board. No Director votes on his own remuneration.

Prior to 24 September 2009, the role of Committee Chairman was carried out by the Deputy Chairman as part of his overall responsibilities; for which he did not receive an additional fee. Following Nigel Northridge’s appointment as Committee Chairman, it was agreed that he should receive an additional fee of £20,000 per annum in recognition of his increased responsibilities. Additionally, it was agreed that the Chairman of the Health, Safety and Environmental Committee should be paid an additional £10,000 per annum to reflect his role and the importance to the Company of heath, safety and environmental issues.

During the Financial Year, Non-Executive Directors’ fees were reviewed, for the first time since the merger between MyTravel Group plc and Thomas Cook AG in June 2007. The fees were benchmarked against other companies in the bottom half of the FTSE 100 and companies who are constituents of the bespoke comparator group used by the Committee when benchmarking the remuneration of the Executive Directors. Following the review, it was agreed that no increase in the fees should be made, but a further review will take place in 2010. Non-Executive Directors do not participate in any bonus plans, are not eligible to participate in any long-term incentive plans and no pension contributions are made on their behalf.

The annual rates of Non-Executive Director fees are shown in the table below.

Position	Annual fees £000
Chairman	250
Non-Executive Director	60
Additional fee for the Chair of the Audit Committee	20
Additional fee for the Chair of the Management Development & Remuneration Committee	20
Additional fee for the Chair of the Health, Safety & Environmental Committee	10

The fees paid to the Chairman and the Non-Executive Directors in respect of the Financial Year are set out in the audited section of this report.

Non-Executive Directors, including the Chairman, do not hold service contracts. Each of the Non-Executive Directors has been appointed pursuant to a letter of appointment. The appointments under these letters continue until the expiry dates set out below unless terminated for cause or on the period of notice stated below:

Name	Date of letter of appointment	Expiry date	Notice period
Current Directors
Michael Beckett	13 June 2007	See note	6 months
David Allvey	18 June 2007	18 June 2010	6 months
Roger Burnell	18 June 2007	18 June 2010	6 months
Bo Lerenius	1 July 2007	30 June 2010	6 months
Nigel Northridge	1 August 2008	31 July 2011	6 months
Former Directors
Hemjö Klein	1 July 2007	See note	N/A
Karl-Gerhard Eick	22 December 2009	See note	N/A
Thomas Middelhoff	18 June 2007	See note	N/A
Peter Diesch	18 June 2007	See note	N/A

1. Michael Beckett’s appointment continues until terminated by either party on six months’ notice. Under the governance arrangements which existed under the Relationship Agreement with Arcandor (see Corporate Governance Report) and prior to its termination on 10 September 2009, Arcandor had the right to appoint two Non-Executive Directors. The following Arcandor appointed directors resigned during the year: Peter Diesch (22 December 2008), Thomas Middelhoff (17 March 2009) and Karl-Gerhard Eick (10 September 2009). Hemjö Klein resigned as an Independent Non-Executive Director due to personal reasons on 18 September 2009.

Performance graph

The graph below shows the total shareholder return for holders of Thomas Cook Group plc €0.10 ordinary shares for the period since listing on 19 June 2007, measured against the FTSE 100 Index and the FTSE Travel & Leisure Index. These indices were chosen as comparators because the Company has been a constituent of the FTSE 100 for the whole of the Financial Year and a member of the FTSE Travel & Leisure Index throughout the period since listing. The calculation of total shareholder return follows the provisions of the Regulations and is broadly the change in market price together with reinvestment of dividend income.

Information subject to audit

Directors’ interests in shares

The following table shows the beneficial interests of the Directors who held office at the end of the Financial Year in the €0.10 ordinary shares of the Company:

	Ordinary shares at 30 September 2009	Ordinary shares at 1 October 2008
Directors as at 30 September 2009
Executive Directors
Manny Fontenla-Novoa1	642,353	239,653
Jürgen Büser1	151,040	21,126
Non-Executive Directors
Michael Beckett	24,999	24,999
David Allvey	–	–
Roger Burnell	3,692	3,692
Bo Lerenius	10,000	10,000
Nigel Northridge	10,000	–

1. 1 The holdings of the Executive Directors include shares held as Lodged Shares under the COIP: 571,710 held by Manny Fontenla-Novoa and 151,040 held by Jürgen Büser.

None of the Directors of the Company held any interest in any other securities of Thomas Cook Group plc during the Financial Year. In the period between 30 September 2009 and 29 November 2009, there were no changes in the Directors’ interests referred to above.

Directors’ remuneration

Details of the remuneration of the Directors for services to the Company for the Financial Year are disclosed below.

Name	Base salary/fees £000	Annual bonus payments1 £000	Pay in lieu of pension2 £000	Benefits3 £000	Total emoluments 2009 £000	Total emoluments 20084 £000
Executive Directors
Manny Fontenla-Novoa	850	1,428	41	46	2,365	7,037
Non-Executive Directors
Michael Beckett	250	–	–	–	250	229
David Allvey	80	–	–	–	80	73
Roger Burnell	60	–	–	–	60	55
Bo Lerenius	60	–	–	–	60	55
Nigel Northridge	60	–	–	–	60	10
Past Executive Directors5
Jürgen Büser	425	306	80	30	841	1,572
John Bloodworth6	–	–	–	69	69	1,034
Past Non-Executive Directors5
Hemjö Klein	58	–	–	–	58	55
Karl-Gerhard Eick	136	–	–	–	136	–
Thomas Middelhoff	116	–	–	–	116	229
Peter Diesch	15	–	–	–	15	55
Total	2,110	1,734	121	145	4,110	10,404

1. 1 Annual bonus entitlement: Up to 175% and 150% of salary for the Group Chief Executive Officer and Group Chief Financial Officer respectively, with 75% paid by reference to financial targets and 25% payable by reference to personal objectives. Part of the annual bonus paid to the Executive Directors must be invested in Lodged Shares under the COIP - see the Remuneration report for details.
2. 2 The pay in lieu of pension which is paid as a salary supplement to Manny Fontenla-Novoa and Jürgen Büser is treated as a separate non-salary benefit and is excluded from the calculation of bonus entitlement and share scheme award calculations.
3. 3 Benefits received by the Executive Directors include a car allowance, petrol and private medical insurance or cash payment in lieu of medical cover and life assurance.
4. 4 The total emolument figures declared for 2008 were for the period 1 November 2007 to 30 September 2008. This is an 11 month period as the Company amended its accounting reference date to 30 September.
5. 5 The following Directors left office on the dates shown: Jürgen Büser (29 November 2009), Hemjö Klein (18 September 2009), Karl-Gerhard Eick (10 September 2009), Thomas Middelhoff (17 March 2009) and Peter Diesch (22 December 2008). No Director received any payment for loss of office.
6. 6 John Bloodworth resigned as an Executive Director from the Company on 31 December 2007. A tax equalisation payment of US$110,772 (£69,415) was paid to him during the year as a contractual entitlement.

Directors’ pensions

The Company contributes each year into a pension scheme or other arrangement for each of the Executive Directors to an amount equivalent to 25% of their annual base salary. The Executive Directors are active members of the Thomas Cook Pension Plan, a defined benefit pension scheme. For salary above that which is pensionable in the UK defined benefit scheme, the following arrangements are made:

• For Manny Fontenla-Novoa, a contribution of £144,900 was made to a UK based tax approved money purchase pension scheme and the balance was paid as a salary supplement; and
• For Jürgen Büser the balance was paid as a salary supplement.

The pay in lieu of pension salary supplement paid to Manny Fontenla-Novoa and Jürgen Büser are disclosed in the emoluments table in the Remuneration report.

	Accrued pension at 30 Sep 2009 £ pa	Increase in accrued pension during 2009 £ pa	Increase in accrued pension during 2009 (net of inflation) £ pa	Transfer value of accrued pension at 30 Sep 2009 £	Transfer value of accrued pension at 1 Oct 2008 £	Director’s contributions during 2009 £	Increase in transfer value during 2009 net of Director’s contributions £
Manny Fontenla-Novoa	22,750	3,280	2,307	400,961	214,408	6,375	180,178
Jürgen Büser	6,825	2,370	2,147	78,005	22,785	6,375	48,845

Share options and long-term incentive plans

The following tables show in respect of each person who served as a Director at any time during the Financial Year the number of ordinary shares of €0.10 each that were the subject of a share option or a share award at the start and at the end of the Financial Year. Holdings relate to the COIP and PSP. The Non-Executive Directors did not hold any options or share awards during the period.

The following table gives details of PSP awards held by Executive Directors who served during the Financial Year:

Date of award	12 July 2007	11 March 2008	9 January 2009	Total held at 30 September 2009
Manny Fontenla-Novoa	283,784	389,576	791,223	1,464,583
Jürgen Büser	56,306	88,339	339,096	483,741
Share price used to calculate award (pence)	333	283	188
End of performance period	12 July 2010	11 March 2011	9 January 2012
Expiration date	12 July 2017	11 March 2018	9 January 2019

The following table gives details of awards made under the HMRC Approved Company Share Option Plan in conjunction with the PSP:

Date of award	9 January 2009	Total held at 30 September 2009
Manny Fontenla-Novoa	15,957	15,957
Jürgen Büser	15,957	15,957
Option price (pence)	188
End of performance period	9 January 2012
Expiration date	9 January 2019

At the date of exercise, to the extent that there is a gain on the approved options, PSP options will be forfeited to the same value.

Vesting of awards made under the PSP (including the HMRC approved options) is dependent on 50% Total Shareholder Return ranked against the comparator group and 50% growth in Earnings Per Share. Further information on the performance conditions is detailed in the Remuneration report.

The following table gives details of the maximum number of Matching Shares each Executive Director can receive under the COIP if the performance conditions are met in full. Details of the Lodged Shares purchased under the COIP are in the Directors’ interests in shares table in the Remuneration report:

	Total number of Matching Shares held at 12 July 2007	Number of Matching Shares awarded 11 March 2008	Number of Matching Shares awarded 9 January 2009	Total held at 30 September 2009
Date of award
Manny Fontenla-Novoa	591,535	1,091,275	318,174	2,000,984
Jürgen Büser	73,941	454,699	–	528,640
Share price used to calculate award (pence)	192	218
End of performance period	12 January 2012	13 August 2012
Expiration date	12 January 2019	13 August 2019

Vesting of Matching Shares awarded under the COIP is dependent on growth in Earnings Per Share and Return on Invested Capital achievement. Further information on the performance conditions is detailed in the Remuneration report.

The mid-market price of the Company’s ordinary shares at the close of business on 30 September 2009 was 232.3p and the range during the Financial Year was 127.6p to 297.5p. These mid-market prices are as quoted on the London Stock Exchange.

This report on remuneration has been approved by the Board of Directors and signed on its behalf by:

Derek Woodward

Group Company Secretary
29 November 2009

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