WH Smith PLC — AGM Information 2018

Dec 3, 2018

WH SMITH PLC Notice of WH Smith PLC Annual General Meeting

Herbert Smith Freehills LLP Exchange House, Primrose Street, London EC2A 2EG on Wednesday 23 January 2019 at 11.30am

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of the contents of this document or as to the action you should take in relation to the Annual General Meeting, you should consult your stockbroker, bank manager, solicitor, accountant or other professional independent adviser authorised pursuant to the Financial Services and Markets Act 2000. If you have sold or transferred all your shares in WH Smith PLC you should pass this notice and other enclosures to the person through whom the sale or transfer was effected for transmission to the purchaser or transferee.

WH Smith PLC Company Number: 5202036 Registered in England and Wales Registered Office: Greenbridge Road, Swindon, Wiltshire SN3 3RX VAT Registration Number: 238554836

Dear Shareholder

I have pleasure in sending you the Notice of our Annual General Meeting ('AGM') for shareholders which will be held at the offices of Herbert Smith Freehills LLP, Exchange House, Primrose Street, London EC2A 2EG on Wednesday 23 January 2019 at 11.30am. The formal Notice of Annual General Meeting is set out on pages 3 and 4 of this document.

The AGM is an important opportunity for all shareholders to express their views by raising questions and voting.

If you would like to vote on the resolutions but cannot come to the AGM, please fill in the Form of Proxy and return it to our registrars as soon as possible. Alternatively, you can register your proxy vote electronically by logging on to www.investorcentre.co.uk/eproxy or, if you are a member of CREST, via Computershare Investor Services PLC (ID 3RA50). The registrars must receive your proxy appointment by 11.30am on Monday 21 January 2019.

Final dividend

Shareholders are being asked to approve a final dividend of 38.1p per ordinary share for the year, giving a total dividend of 54.1p per share for the year ended 31 August 2018. If approved, the dividend will be paid on 31 January 2019 to shareholders on the register at the close of business on 11 January 2019.

If you have not already done so, may I take this opportunity to encourage you to arrange to have your dividends paid directly into your bank or building society account. Mandating your dividends is more secure than receiving a cheque by post and means that you will receive cleared funds automatically on the payment date. To receive future dividends directly into your bank or building society account, please register at www.investorcentre.co.uk using your Shareholder Reference Number which is printed on your Form of Proxy or contact our registrars, Computershare Investor Services PLC, on 0371 495 0100 for more information.

Notice of publication of Annual report

The WH Smith PLC Annual report 2018 has been published on the Company's website www.whsmithplc.co.uk. It can be accessed at www.whsmithplc.co.uk/investors/company_reports or by going to the Company's home page, clicking on the Investors section of the website and then clicking on Company reports. If you have elected to receive shareholder correspondence in hard copy, then the Annual report will accompany this Notice of Meeting. Should you wish to change your election at any time, or if you wish to request a hard copy of the Annual report, you can do so by contacting our registrars.

Explanatory notes

Explanatory notes on each of the resolutions being proposed at the AGM appear on pages 5 to 8 of this document.

Board succession planning

As discussed in the Annual report, board and senior executive succession planning has been carefully considered by the Board and Nominations Committee this year. As part of the Company's succession plans, we have appointed external recruitment consultants, Lygon, to assist with the search for a new non-executive director to join the Board.

Drummond Hall has decided to step down as Chair of the Remuneration Committee from the conclusion of the 2019 AGM and has decided not to stand for re-election as a non-executive director at the 2020 AGM. I would like to thank Drummond for his valuable contributions and strong commitment to his continuing role as Senior Independent Director.

Following Drummond stepping down as Chair of the Remuneration Committee, I am pleased to confirm that Annemarie Durbin will be appointed as Chair of the Remuneration Committee with effect from the conclusion of the 2019 AGM. Drummond will remain a member of the Remuneration Committee.

Remuneration policy and Deferred Bonus Plan

Resolution 3 is seeking approval from shareholders for a new directors' remuneration policy (the existing policy having been approved by shareholders in 2016). If approved by shareholders, this policy will apply for up to three years from the date of the AGM.

The proposed policy is largely unchanged from the current one except for the introduction of bonus deferral from 2019 and widening the malus/claw-back provisions.

In resolution 14 we are seeking shareholder approval to adopt the new WH Smith Deferred Bonus Plan (the 'DBP') which is consistent with developments in the market. From 2019, bonuses will be paid in cash and shares.

A summary of the principal terms of the DBP is set out in the Appendix to this Notice.

Recommendation

The Board considers that each of the proposals detailed in this Notice of Meeting will be of benefit to and in the best interests of the Company and the shareholders as a whole. The directors intend to vote in favour of all resolutions in respect of their own beneficial holdings of ordinary shares in the Company and unanimously recommend other shareholders to do likewise.

Yours sincerely

Henry Staunton

Chairman

Notice of Annual General Meeting

Notice is hereby given that the thirteenth Annual General Meeting of WH Smith PLC (the 'Company') will be held at the offices of Herbert Smith Freehills LLP, Exchange House, Primrose Street, London EC2A 2EG, on Wednesday 23 January 2019 at 11.30am to consider and, if thought fit, to pass Resolutions 1 to 15 inclusive as ordinary resolutions and Resolutions 16 to 19 inclusive as special resolutions.

Report and accounts

Resolution 1: to receive the reports and accounts of the directors and auditors for the year ended 31 August 2018.

Remuneration report

Resolution 2: to approve the directors' remuneration report (excluding the Directors' remuneration policy set out on pages 42 to 50 of the report) for the year ended 31 August 2018, as set out on pages 51 to 59 of the 2018 Annual report.

Remuneration policy

Resolution 3: to approve the directors' remuneration policy, the full text of which is contained in the directors' remuneration report for the financial year ended 31 August 2018, as set out on pages 42 to 50 of the 2018 Annual report.

Final dividend

Resolution 4: to declare a final dividend of 38.1p per share, to be paid on 31 January 2019 to shareholders on the register at the close of business on 11 January 2019.

Directors

Resolution 5: to re-elect Suzanne Baxter as a director of the Company.

Resolution 6: to re-elect Stephen Clarke as a director of the Company.

Resolution 7: to re-elect Annemarie Durbin as a director of the Company.

Resolution 8: to re-elect Drummond Hall as a director of the Company.

Resolution 9: to re-elect Robert Moorhead as a director of the Company.

Resolution 10: to re-elect Henry Staunton as a director of the Company.

Auditors

Resolution 11: to re-appoint PricewaterhouseCoopers LLP as Auditors until the conclusion of the next Annual General Meeting at which accounts are laid before the Company.

Resolution 12: to authorise the Audit Committee of the Board to determine the Auditors' remuneration.

Authority to make political donations

Resolution 13: to resolve that, in accordance with Section 366 of the Companies Act 2006, the Company and all companies that are subsidiaries of the Company at any time during the period for which this resolution has effect be and are hereby authorised to:

• (a) make political donations to political parties or independent election candidates not exceeding £50,000 in total;
• (b) make political donations to political organisations other than political parties not exceeding £50,000 in total; and

(c) incur political expenditure not exceeding £50,000 in total,

during the period from the date of passing this resolution up to and including the conclusion of the next Annual General Meeting of the Company or up to and including 29 February 2020, whichever is the earlier.

For the purpose of this resolution the terms 'political donations', 'political parties', 'independent election candidates', 'political organisations' and 'political expenditure' have the meanings set out in Sections 363 to 365 of the Companies Act 2006.

WH Smith Deferred Bonus Plan

Resolution 14: to resolve that the WH Smith Deferred Bonus Plan (the 'DBP'), the principal terms of which are summarised in the Appendix to this Notice and the draft rules of which are produced to the meeting and initialled by the Chairman for the purposes of identification, be approved and the directors be authorised to do all acts and things they consider necessary or expedient for the purposes of implementing and giving effect to the DBP, and to establish further plans based on the DBP for the benefit of directors and employees of the Company and its subsidiaries who are located outside the United Kingdom but modified to take account of local tax, exchange control or securities laws as the directors consider appropriate, provided that any shares made available under such further plans are treated as counting against any limits on individual or overall participation in the DBP.

Authority to allot shares

Resolution 15: to resolve that:

• (a) in accordance with Article 7 of the Company's Articles of Association, the directors be authorised to allot shares in the Company or grant rights to subscribe for, or convert any security into, shares in the Company:
• (i) up to an aggregate nominal amount of £8,009,569; and
• (ii) up to a further aggregate nominal amount of £8,009,569 provided that they comprise equity securities (as defined in Article 8 of the Company's Articles of Association) and they are offered in connection with an offer by way of a rights issue (as defined in Article 8 of the Company's Articles of Association) by means of a renounceable letter (or other negotiable document or rights) which may be traded for a period before payment for the securities is due to holders of ordinary shares on such record date as the directors may determine; and
• (b) this authority shall expire at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution or, if earlier, at the close of business on 29 February 2020.

General disapplication of pre-emption rights

Resolution 16: to resolve that, if Resolution 15 above is passed:

• (a) in accordance with Article 8 of the Company's Articles of Association, the directors be given power to allot equity securities (as defined in Article 8 of the Company's Articles of Association) for cash;
• (b) the power under paragraph (a) above shall be limited to:
• (i) the allotment of equity securities in connection with an offer of securities in connection with a rights issue (as defined in Article 8 of the Company's Articles of Association); and

Notice of Annual General Meeting

• (ii) the allotment of equity securities to any person or persons (other than in connection with a rights issue, as defined in Article 8 of the Company's Articles of Association) having a nominal amount not exceeding in aggregate £1,201,555; and
• (c) this authority shall expire at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution or, if earlier, at the close of business on 29 February 2020.

Additional disapplication of pre-emption rights

Resolution 17: to resolve that, if Resolution 15 above is passed and in addition to any authority granted under Resolution 16:

• (a) in accordance with Article 8 of the Company's Articles of Association, the directors be given power to allot equity securities (as defined in Article 8 of the Company's Articles of Association) for cash;
• (b) the power under paragraph (a) above shall:
• (i) be limited to the allotment of equity securities up to a maximum nominal amount of £1,201,555; and
• (ii) be used only for the purposes of financing (or refinancing, if the authority is to be used within six months after the original transaction) a transaction which the Board of the Company determines to be an acquisition or other capital investment of a kind contemplated by the Statement of Principles on Disapplying Pre-Emption Rights most recently published by the Pre-Emption Group prior to the date of this Notice; and
• (c) this power shall expire at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution or, if earlier, at the close of business on 29 February 2020.

Market purchases of ordinary shares

Resolution 18: to resolve that, pursuant to Section 701 of the Companies Act 2006, the Company be and is hereby generally and unconditionally authorised to make market purchases (as defined in Section 693(4) of the Companies Act 2006) of any of its own ordinary shares in such manner and on such terms as the directors may from time to time determine provided that:

• (a) the maximum aggregate number of ordinary shares that may be purchased under this authority is 10,878,949 shares;
• (b) the minimum price which may be paid for each ordinary share is 226 ⁄67p (exclusive of all expenses);
• (c) the maximum price which may be paid for each ordinary share is an amount (exclusive of all expenses) equal to the higher of:
• (i) 105 per cent of the average of the middle market quotations for an ordinary share as derived from the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which the ordinary share is purchased; and
• (ii) the amount stipulated by Article 3(2) of the EU Buy-back and Stabilisation Regulation (2016/1052/EU) being the higher of the price of the last independent trade and the highest current independent bid for an ordinary share in the Company on the trading venues where the market purchases by the Company pursuant to the authority conferred by this Resolution 18 will be carried out; and

(d) the authority shall, unless previously varied, revoked or renewed, expire at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution or at close of business on 29 February 2020, whichever is the earlier, save that the Company shall be entitled under such authority to make at any time before such expiry any contract or contracts to purchase its own shares which will or might be executed wholly or partly after such expiry and make a purchase of shares in pursuance of any such contract or contracts.

Notice of general meetings

Resolution 19: to resolve that a general meeting (other than an Annual General Meeting) may be called on not less than 14 clear days' notice.

By Order of the Board

Ian Houghton

Company Secretary

15 November 2018

Registered Office: Greenbridge Road, Swindon, Wiltshire SN3 3RX

Explanatory notes

Resolution 1

Report and accounts

The Chairman will present the reports and accounts of the directors and auditors for the year ended 31 August 2018 to the AGM.

Resolution 2 Remuneration report

In accordance with Section 439 of the Companies Act 2006 ('CA 2006'), shareholders are asked to approve the directors' remuneration report that appears on pages 51 to 59 of the 2018 Annual report. This vote is advisory, and the directors' entitlement to any remuneration or loss of office payment is not conditional on it.

Resolution 3

Remuneration policy

The existing directors' remuneration policy was approved by shareholders at the Company's 2016 AGM. As required by the CA 2006, the Company is asking shareholders to approve the directors' remuneration policy which is set out in full in the remuneration report that appears on pages 42 to 50 of the 2018 Annual report. Once the directors' remuneration policy is approved, the Company will not be able to make a remuneration payment to a current or future director or a payment for loss of office to a current or past director, unless that payment is consistent with the policy or has been approved by a resolution of the members of the Company. If the directors' remuneration policy is approved and remains unchanged, it will be valid for up to three financial years without a new shareholder approval.

Resolution 4

Final dividend

A final dividend of 38.1p per share for the year ended 31 August 2018 is recommended for payment by the directors. If approved, the recommended final dividend will be paid on 31 January 2019 to all ordinary shareholders who were on the register of members at the close of business on 11 January 2019.

Resolutions 5 to 10

Retirement and re-election of directors

In accordance with the UK Corporate Governance Code, the directors have resolved that they will all retire and that those wishing to serve again shall submit themselves for re-election by the shareholders. The Board has confirmed, following a performance review, that all directors standing for re-election continue to perform effectively and demonstrate commitment to their roles. Biographies of all the directors are below:

Resolution 5: Suzanne Baxter

Suzanne Baxter joined the Board in February 2013. She is Chair of the Audit Committee and is a member of the Nominations and Remuneration Committees. Suzanne was formerly the Group Finance Director of Mitie Group Plc. She is a Chartered Accountant having trained at Price Waterhouse. She is a Commissioner on the Board of the Equality and Human Rights Commission and is a member of its Audit and Risk Assurance Committee and Treaty Monitoring Commissioner Working Group. She has also been the Chair of the Business in the Community South West Strategic Advisory Board, Deputy Chair of Opportunity Now and Chair of the Business Services Association. Suzanne's experience, coupled with her role as Chair of the Company's Audit Committee, allows her to provide substantial insight into the Company's reporting and risk management processes. The Chairman confirms that,

following the formal performance evaluation carried out in August 2018, Suzanne Baxter continues to make an effective contribution and commitment to Board and Committee meetings and her other duties.

Resolution 6: Stephen Clarke

Stephen Clarke joined the Board in June 2012 and became Group Chief Executive on 1 July 2013. He is a member of the Nominations Committee. Stephen joined WH Smith in August 2004 as Marketing Director for WH Smith High Street. In 2006 he was appointed Commercial and Marketing Director and in 2008 became Managing Director of WH Smith High Street. Stephen joined WH Smith High Street from Argos where he had been Head of Product Marketing since 2001. Stephen began his career at the Dixons Group where he carried out a number of store, product and marketing roles. Stephen has extensive retail experience and continues to create shareholder value through his strong leadership of the Company.

Resolution 7: Annemarie Durbin

Annemarie Durbin joined the Board in December 2012. She is a member of the Audit, Nominations and Remuneration Committees. Annemarie is a non-executive director and Chair of the Remuneration Committee of Santander UK plc. Annemarie has 25 years' international banking experience particularly across Asia, Africa and the Middle East operating at board and executive committee level. She is an executive coach, a conflict mediator and provides board governance consultancy services. Annemarie's international background and her legal experience and knowledge of regulatory and compliance matters provides a valuable contribution to the operation of WH Smith. The Chairman confirms that, following the formal performance evaluation carried out in August 2018, Annemarie Durbin continues to make an effective contribution and commitment to Board and Committee meetings and her other duties. She will, subject to re-election, succeed Drummond Hall as Chair of the Remuneration Committee with effect from the conclusion of the AGM.

Resolution 8: Drummond Hall

Drummond Hall joined the Board in September 2008 and became Senior Independent Director on 1 September 2013. He is Chair of the Remuneration Committee and is a member of the Audit and Nominations Committees. Drummond is a non-executive director and Chair of the Remuneration Committee of The Sage Group plc and is the Senior Independent Director of First Group plc. He spent the early part of his career with Procter & Gamble, Mars and PepsiCo Inc, and from 2002 to 2006 was Chief Executive of Dairy Crest PLC. He was previously Chairman of Mitchell's and Butlers and a non executive Director of TNS. Drummond's commercial background and significant Board experience enables him to contribute greatly to the ongoing success of WH Smith. The Chairman confirms that, following the formal performance evaluation carried out in August 2018, Drummond Hall continues to make an effective contribution and commitment to Board and Committee meetings and his other duties. The Board also scrutinised the factors relevant to the determination of his independence given that he has been a director for ten years. The Board considers his continued membership of the Board is in the best interests of the Company and, having given careful consideration to the matter, the Board is satisfied that Drummond continues to demonstrate the qualities of independence in carrying out his role as a non-executive director. He will step down as Chair of the Remuneration Committee with effect from the AGM in 2019, but will remain a member of the Remuneration Committee.

Explanatory notes

Resolution 9: Robert Moorhead

Robert Moorhead joined the Board in December 2008. He is Chief Financial Officer and Chief Operating Officer. Robert is a Chartered Accountant and joined WH Smith in 2004 as Retail Finance Director. Previously, Robert was Group Finance Director at Specsavers Optical Group and Finance and IT Director of World Duty Free Europe. He started his career at Price Waterhouse and has also held a number of roles at B&Q and Kingfisher Group. Robert has over 25 years of retail and financial management experience, which has proved invaluable in his role as Chief Financial Officer and Chief Operating Officer.

Resolution 10: Henry Staunton

Henry Staunton joined the Board in September 2010 and became Chairman on 1 September 2013. He is also Chair of the Nominations Committee and a member of the Remuneration Committee. Henry has extensive finance, media and retail expertise and is also Chairman of Capital and Counties Properties plc. Henry was previously the Finance Director of Granada and ITV, Chairman of Ashtead Group, BrightHouse Group PLC, Phoenix Group Holdings and Vice Chairman of Legal and General PLC. Since being appointed as Chairman of WH Smith, Henry has successfully navigated the Board through change and encouraged the development of the Company's strategy to create shareholder value. Drummond Hall confirms that, following the formal performance evaluation carried out in August 2018, Henry Staunton continues to be an effective Chairman and demonstrates his commitment to the role.

Resolutions 11 and 12 Auditors

Resolution 11 relates to the reappointment of

PricewaterhouseCoopers LLP as the Company's auditor to hold office until the next AGM of the Company at which accounts are laid. Resolution 12 authorises the Audit Committee of the Board to set their remuneration.

Resolution 13

Authority to make political donations

Part 14 of the CA 2006, amongst other things, prohibits the Company and its subsidiaries from making political donations or from incurring political expenditure in respect of a political party or other political organisation or an independent election candidate unless authorised by the Company's shareholders. Aggregate donations made by the Group of £5,000 or less in any 12-month period will not be caught.

Neither the Company nor any of its subsidiaries has any intention of making any political donations or incurring any political expenditure. However, the CA 2006 defines 'political party', 'political organisation', 'political donation' and 'political expenditure' widely. For example, bodies, such as those concerned with policy review and law reform or with the representation of the business community or sections of it, which the Company and/or its subsidiaries may see benefit in supporting, may be caught.

Accordingly, the Company wishes to ensure that neither it nor its subsidiaries inadvertently commits any breaches of the CA 2006 through the undertaking of routine activities, which would not normally be considered to result in the making of political donations and political expenditure being incurred.

As permitted under the CA 2006, the resolution extends not only to the Company but also covers all companies which are subsidiaries of the Company at any time the authority is in place. The resolution reflects the three categories covered by the rules and authorises the Company and its subsidiaries to:

• (a) make political donations to political parties or independent election candidates not exceeding £50,000 in total;
• (b) make political donations to political organisations other than political parties not exceeding £50,000 in total; and
• (c) incur political expenditure not exceeding £50,000 in total,

in the period up to the Company's next Annual General Meeting or up to and including 29 February 2020 whichever is the earlier.

As required by the CA 2006, the resolution is in general terms and does not purport to authorise particular donations.

Resolution 14

WH Smith Deferred Bonus Plan

Shareholders are requested to approve the new WH Smith Deferred Bonus Plan (the 'DBP') which is consistent with developments in the market. A summary of the principal terms of the DBP are set out in the Appendix to this Notice. From 2019, bonuses for executive directors will be paid in cash and shares. Any bonus payable over target performance will be deferred into shares for a period of up to 3 years. One-third of the shares will be released on each anniversary of assessment. There will be a transitional arrangement with one-third of any bonus payable over target performance being deferred in 2019, two-thirds of any bonus payable over target performance being deferred in 2020 and full implementation of bonus deferral from 2021.

A copy of the draft rules of the DBP may be inspected at the registered office of the Company and at the offices of Herbert Smith Freehills LLP, the Company's solicitors, at Exchange House, Primrose Street, London EC2A 2EG at any time during normal business hours on any weekday (Saturdays, Sundays and public holidays are excluded) up to and including the day of the AGM until the close of the meeting and at the venue for the AGM for 15 minutes prior to and during the meeting.

Resolution 15 Authority to allot shares

At the Annual General Meeting held on 24 January 2018, the shareholders authorised the directors to allot shares in the Company or grant rights to subscribe for, or convert any security into, shares in the Company. This authority is due to expire at the end of the AGM. The directors propose to renew this authority.

The Investment Association ('IA') guidelines on directors' authority to allot shares state that IA members will regard as routine resolutions seeking authority to allot shares representing up to two-thirds of the Company's issued share capital, provided that any amount in excess of one-third of the Company's issued share capital is only used to allot shares pursuant to a fully pre-emptive rights issue.

In light of these guidelines, paragraph (a)(i) of Resolution 15 would allow the directors to allot shares up to a maximum nominal amount of £8,009,569, representing approximately one-third (33.33 per cent) of the Company's issued share capital, calculated as at 12 November 2018 (being the latest practicable date prior to publication of this Notice). Paragraph (a)(ii) of Resolution 15 would allow the directors to allot shares up to a maximum nominal amount of £8,009,569 representing a further one-third (33.33 per cent) of the Company's issued share capital calculated as at 12 November 2018 (being the latest practicable date prior to

Explanatory notes

publication of this Notice) which may only be allotted pursuant to a fully pre-emptive rights issue.

The authority would expire at the conclusion of the next Annual General Meeting of the Company or at close of business on 29 February 2020, whichever is the earlier. Although the directors have no present intention of exercising this authority, it is considered prudent to maintain the flexibility it provides.

As at the date of this Notice, the Company does not hold any ordinary shares in the capital of the Company in treasury.

Resolutions 16 and 17 Disapplication of pre-emption rights

Resolutions 16 and 17 would allow the directors authority to allot ordinary shares in the capital of the Company pursuant to the authority granted under Resolution 15 above for cash without complying with the pre-emption rights in the CA 2006 in certain circumstances.

At the Annual General Meeting held on 24 January 2018, two special resolutions were passed empowering the directors to allot equity securities for cash without first being required to offer such shares to existing shareholders. These authorities are due to expire at the end of the AGM. It is proposed to renew these authorities at the AGM.

The disapplication authorities being sought are in line with institutional shareholder guidance, and in particular with the Pre-Emption Group's Statement of Principles (the 'Pre-Emption Principles'). The Pre-Emption Principles allow the authority for an issue of shares for cash otherwise than in connection with a pre-emptive offer to include: (i) an authority over five per cent of a company's issued share capital for use on an unrestricted basis; and (ii) an additional authority over a further five per cent of a company's issued share capital for use in connection with an acquisition or specified capital investment announced contemporaneously with the issue, or has taken place in the six month period preceding the announcement of the issue.

Resolution 16 will permit the directors to allot:

• (a) equity securities for cash and sell treasury shares up to a nominal amount of £16,021,541, representing two-thirds of the company's issued share capital as at 12 November 2018 (being the latest practicable date prior to publication of this Notice) on an offer to existing shareholders on a pre-emptive basis (that is including a rights issue or an open offer), with one-third being available only in connection with a rights issue (in each case subject to any adjustments, such as for fractional entitlements and overseas shareholders, as the directors see fit); and
• (b) equity securities for cash and sell treasury shares up to a maximum nominal value of £1,201,555, representing approximately 5 per cent of the issued ordinary share capital of the Company as at 12 November 2018 (being the latest practicable date prior to publication of this Notice) otherwise than in connection with a pre-emptive offer to existing shareholders.

Resolution 17 will permit the directors to allot additional equity securities for cash and sell treasury shares up to a maximum nominal value of £1,201,555, representing approximately a further 5 per cent of the issued ordinary share capital of the Company as at 12 November 2018 (being the latest practicable date prior to publication of this Notice), otherwise than in connection with a preemptive offer to existing shareholders for the purposes of financing or refinancing a transaction as contemplated by the Pre-Emption Principles described above.

The Board considers that it is in the best interests of the Company and its shareholders generally that the Company should seek the maximum authority permitted by the pre-emption guidelines and have the flexibility conferred by Resolutions 16 and 17 to conduct a pre-emptive offering without complying with the strict requirements of the statutory pre-emption provisions and to finance business opportunities quickly and efficiently when they arise.

The Board confirms that, in accordance with the Pre-Emption Principles, it does not intend to issue shares for cash representing more than 7.5 per cent of the company's issued ordinary share capital in any rolling three-year period to those who are not existing shareholders (save in accordance with Resolution 17) without prior consultation with shareholders.

As noted in relation to Resolution 15 above, the directors have no current intention of issuing ordinary shares.

Resolution 18

Market purchases of ordinary shares

With the authority of shareholders in general meeting, the Company may purchase its own ordinary shares in the market subject to the provisions of the CA 2006. The directors will only exercise the authority when satisfied that it is in the best interests of shareholders generally and that it would result in an increase in earnings per share.

The proposed authority would be limited to purchases up to 10,878,949 ordinary shares representing approximately 10 per cent of the issued ordinary shares in the Company as at 12 November 2018 (being the latest practicable date prior to publication of this Notice). The proposed authority would expire at the next Annual General Meeting of the Company or at close of business on 29 February 2020, whichever is the earlier. This resolution specifies that the minimum price which may be paid for each ordinary share is 226 ⁄67p (exclusive of all expenses) and the maximum price which may be paid (exclusive of all expenses) is the higher of:

• (a) 105 per cent of the average of the middle market quotations for an ordinary share as derived from the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which the ordinary share is purchased; and
• (b) the amount stipulated by Article 3(2) of the EU Buy-back and Stabilisation Regulation (2016/1052/EU) being the higher of the price of the last independent trade and the highest current independent bid for an ordinary share in the Company on the trading venues where the market purchases by the Company pursuant to the authority conferred by this Resolution 18 will be carried out.

As at 12 November 2018, (being the latest practicable date prior to publication of this Notice), there were outstanding 2,064,620 options to subscribe for ordinary shares, representing 1.9 per cent of the Company's issued ordinary share capital. If the Company's authority to purchase shares (existing and being sought) was exercised in full, the options would represent 2.1 per cent of the Company's issued ordinary share capital.

Explanatory notes

Under Part 17, Chapter 6 of the CA 2006, the Company is allowed to hold its own shares in treasury following a buyback as an alternative to cancelling them. Shares held in treasury may be subsequently cancelled, sold for cash or used to satisfy share options and share awards under employees' share schemes. However, all rights attaching to them, including voting rights and the right to receive dividends, are suspended while they are held in treasury. It is the Company's present intention to cancel any shares it buys back rather than hold them in treasury.

Resolution 19 Notice of general meetings

The notice period required by the CA 2006 for general meetings of the Company is 21 days, unless shareholders approve a shorter notice period, which cannot however be less than 14 clear days. AGMs must always be held on at least 21 clear days' notice.

At the Annual General Meeting held on 24 January 2018, shareholders authorised the calling of general meetings other than an AGM on not less than 14 clear days' notice, and it is proposed that this authority be renewed. The authority granted by Resolution 19, if passed, will be effective until the Company's next AGM, when it is intended that a similar resolution will be proposed.

In order to be able to call a general meeting on less than 21 clear days' notice, the Company must make a means of electronic voting available to all shareholders for that meeting. The flexibility offered by Resolution 19 will be used where, taking into account the circumstances, the directors consider this appropriate in relation to the business of the meeting and in the interests of the Company and shareholders as a whole.

Appendix

WH Smith Deferred Bonus Plan (DBP) – summary of DBP rules

Principal terms of the DBP:

General

The DBP permits the grant of awards to employees in the form of nil-cost options to acquire ordinary shares in the Company ("Share Awards") or contingent rights to payment of a cash amount linked to the value of the Company's shares ("Cash Awards" and, together with Share Awards, "Awards"). It is intended that all awards will be Share Awards and the DBP simply includes flexibility to make Cash Awards where direct share awards may give rise to technical challenges (such as overseas securities laws). The DBP is administered by the Remuneration Committee of the Board and Awards will be granted by the Company. The Company will determine where the shares required for the DBP will be sourced. This may include by new issue, transfer from treasury and/ or market purchase with any shares purchased in the market normally being held in the Company's employee benefit trust.

Eligibility

All employees (and former employees receiving a bonus in respect of the prior financial year) of the WH Smith Group, including executive directors, are eligible to participate in the DBP. The Remuneration Committee will determine which employees are granted Awards under the DBP.

Nature of Awards

Share Awards will be granted as nil-cost options to acquire shares. Cash Awards will be granted as contingent rights to payment of a cash amount. No consideration is payable by participants on the grant of an Award.

Awards under the DBP are not pensionable benefits and may not be transferred, assigned, charged or otherwise encumbered except that, on the death of a participant, an Award may be transmitted to the participant's personal representatives. Until a participant acquires any shares subject to a Share Award, the participant has no rights to the shares subject to a Share Award, including voting or dividend rights.

Grant of Awards

Awards will normally be granted within 42 days commencing on the day after the announcement of the Company's results for any period. However, Awards may also be granted at any other time if the Remuneration Committee determines that there are exceptional circumstances. No Awards can be granted under the DBP more than ten years after the DBP is adopted by the Company.

Plan limits

The number of shares which may be newly issued or transferred from treasury on any day under the DBP must not, when added to the aggregate of the number of shares which have been so issued or transferred in the previous ten years under the DBP and any other employee share plan operated by the Company, exceed ten per cent of the ordinary share capital of the Company in issue at that time. Any shares acquired by market purchase by, or for the purpose of, an employee share scheme operated by the Company will not be counted for this purpose. The use of shares transferred from treasury may be disregarded if institutional investor guidelines are amended to permit this. Within this ten per cent limit, not more than five per cent of the issued share capital of the Company from time to time may be used under the DBP and any other employee share plan operated by the Company on a selective basis. For the purposes of the limits, no account will be taken of any shares where the right to acquire them was released or lapsed without being exercised.

Individual limits

The maximum number of shares that may be awarded to an eligible employee in any year will be limited to a proportion of the individual's total annual bonus outcome for the preceding financial year. The proportion of bonus outcome that is deferred into an Award under the DBP will be determined by the Remuneration Committee from time to time.

Normal vesting

Awards will normally vest in equal amounts on the first, second and third anniversaries of their date of grant, provided that the participant is still employed within the Group at that time. Once an Award has vested, it will normally remain exercisable until the tenth anniversary of its date of grant.

The Company may determine that a participant will receive shares instead of cash following the vesting and exercise of a Cash Award. The shares received would be equal to the value of the cash the participant would have received.

Delivery of shares or cash

The shares or the cash amount in respect of which an Award has been exercised will be delivered to the participant as soon as practicable following the date of exercise.

Malus and clawback

The Remuneration Committee may apply malus and clawback to an Award at any time prior to or within three years following the determination of bonus amounts where there are circumstances which would justify such action. The relevant circumstances are: (i) the Company materially misstated its financial results for any reason and that misstatement would result or resulted either directly or indirectly in an Award being granted or vesting to a greater extent than would have been the case had that misstatement not been made; (ii) the extent to which any performance target and/or any other condition was satisfied was based on an error, or on inaccurate or misleading information or assumptions which resulted either directly or indirectly in an Award being granted or vesting to a greater extent than would have been the case had that error not been made; (iii) circumstances arose (or continued to arise) during the vesting period of an Award which would have warranted the summary dismissal of the participant; and (iv) an insolvency where the Remuneration Committee shall have regard to the circumstances and contribution of the individual to such event.

Payment on account of dividends

Following the exercise of Awards, participants will receive further cash or shares (at the discretion of the Remuneration Committee) equal in value (so far as possible) to any dividends paid or payable on the shares acquired between the date of grant of the Award and the vesting date (assuming reinvestment into further shares). Payments will be made net of any income tax and social security contributions due in respect of the exercise of the Award.

Appendix

Leavers

As a general rule, if a participant leaves employment with the WH Smith Group they will retain their Award, which will vest on the normal vesting date with no acceleration of vesting. However, in exceptional cases, the Remuneration Committee may, at its discretion, permit or require Awards to vest at the time of cessation of employment. In the case of death, Awards will vest immediately. If the reason for such cessation is the individual's misconduct, the Award will lapse. As is normal for deferred bonus plans, Awards held by a leaver are not subject to pro-rata reductions (the rationale being that the awards have already been subject to performance vesting requirements in the annual bonus year, and the DBP is accordingly a mechanism for the deferral of part of the achieved annual bonus outcomes).

Corporate events

If there is a change of control of the Company (other than in the case of an internal reorganisation), Awards will be exercisable for a period of six months after the relevant event, following which the Awards will lapse, unless (other than in the case of a scheme of arrangement) the Company determines otherwise. Alternatively, in the event of a change of control occurring as a result of consequence of a demerger, reconstruction, reorganisation or amalgamation, the Remuneration Committee may determine the treatment of Awards and may decide that Awards will not vest but will continue unaffected (save that they may be exchanged for equivalent awards over shares in an acquiring company). If a person becomes bound or entitled to acquire shares under Sections 979 to 982 of the Companies Act 2006 (or would be so entitled but for the fact that there were no dissenting shareholders), an Award may be exercised at any time when that person remains so bound or entitled and will lapse at the end of the period during which the person is bound and entitled. On a winding-up of the Company, the Remuneration Committee may make provision for the exercise of Awards as it determines before the commencement of the winding-up.

Variation of share capital

If there is a variation of share capital including a capitalisation or rights issue, sub-division, consolidation or reduction, the number and/or type of Award Shares over which an Award is granted may be adjusted in the manner determined by the Remuneration Committee.

Rights attaching to shares

Shares issued to satisfy Awards under the DBP will rank equally in all respects with the shares in issue on the date of allotment. They will not rank for any rights attaching to shares by reference to a record date preceding the date of allotment. Where shares are transferred on the exercise of a Share Award under the DBP, participants are entitled to all rights attaching to the shares by reference to a record date after the transfer date, but will not be entitled to rights before that date.

Amendment

The Board may amend the rules of the DBP, provided that no amendment to the advantage of participants may be made to the provisions relating to: (A) who is eligible to be a participant under the DBP; (B) the limits on the number of shares which can be allocated under the DBP; (C) the basis for determining a participant's right to acquire shares; (D) the maximum entitlement for any one participant; (E) rights attaching to Awards and shares; and (F) rights of participants in the event of a variation of capital, without the prior approval of shareholders in general meeting, unless the amendment is minor and made to benefit the administration of the DBP, or is made to take account of a change in legislation or to obtain or maintain favourable taxation, exchange control or regulatory treatment.

Overseas DBP

The Board may establish further plans for the benefit of overseas employees based on the DBP but modified as necessary or desirable to take account of overseas tax, exchange control or securities laws. Any new shares issued under such plans would count towards the individual or overall DBP limits outlined above.

Notes

• 1. Shareholders are entitled to appoint one or more proxies (who need not be shareholders) to exercise all or any of their rights to attend and to speak and vote on their behalf at the meeting provided that if more than one proxy is appointed, each proxy is appointed to exercise the rights attached to a different share or shares.
• 1. Shareholders should use the Form of Proxy to make the appointment referred to in Note 1 above. Before completing the Form shareholders should read the guidance notes on the Form.
• 1. As an alternative to completing and returning the printed Form of Proxy, you may submit your proxy electronically by accessing www.investorcentre.co.uk/eproxy. For security purposes, you will be asked to enter the control number, your shareholder reference number (SRN) and personal identification number (PIN) to validate the submission of your proxy online. The control number and members' individual SRN and PIN numbers are shown on the printed Form of Proxy or email notification. For further information, see the instructions printed on the Form of Proxy.
• 1. To be valid any Form of Proxy and power of attorney or other authority, if any, under which it is signed or a notarially certified copy of such power or authority or other instrument appointing a proxy must be received by post or (during normal business hours only) by hand at Computershare Investor Services PLC (at the address shown on the Form of Proxy) or at the electronic address provided on the Form of Proxy, in each case no later than 11.30am on 21 January 2019. Completion and return of a Form of Proxy, or electronic proxy appointment, or any CREST Proxy Instruction (as described in Note 5) will not prevent you attending and voting at the meeting, if you wish. A member must inform the Company in writing of any termination of the authority of a proxy.
• 1. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the procedures described in the CREST Manual (available to CREST members via www.euroclear.com). CREST personal members or other CREST sponsored members, and those CREST members who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.
• 1. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a 'CREST Proxy Instruction') must be properly authenticated in accordance with Euroclear UK & Ireland Limited's specifications, and must contain the information required for such instruction, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by Computershare (CREST participant ID 3RA50) by 11.30am on 21 January 2019. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Application Host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.
• 1. CREST members and, where applicable, their CREST sponsors, or voting service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed a voting service provider, to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
• 1. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
• 1. The Company specifies that only those ordinary shareholders registered in the register of members of the Company as at 8.00pm on 21 January 2019 (or 8.00pm on the day that is two days before any adjourned meeting) shall be entitled to attend (either in person or by proxy) and vote at the meeting, or any adjourned meeting, in respect of the number of shares registered in their names at that time. Changes to the register of members after 8.00pm on 21 January 2019 (or 8.00pm on the day that is two days before any adjourned meeting) shall be disregarded in determining the right of any person to attend and vote at the AGM.
• 1. Copies of directors' service contracts and non-executive directors' letters of appointment with the Company and any of its subsidiaries are available for inspection at the registered office of the Company during normal business hours on any day, except Saturdays, Sundays and public holidays, and at the offices of Herbert Smith Freehills LLP, Exchange House, Primrose Street, London EC2A 2EG on the date of the meeting for at least 15 minutes prior to and during the meeting.
• 1. Any person to whom this Notice is sent who is a person nominated under Section 146 of the Companies Act 2006 ('CA 2006') to enjoy information rights (a 'Nominated Person') may, under an agreement between him/her and the shareholder by whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the AGM. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights.
• 1. The statement of the rights of shareholders in relation to the appointment of proxies in Notes 1 to 3 above does not apply to Nominated Persons. The rights described in these paragraphs can only be exercised by shareholders of the Company.
• 1. Nominated Persons are reminded that they should contact the registered holder of their shares (and not the Company) on matters relating to their investments in the Company.
• 1. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided that they do not do so in relation to the same shares.

Notes

• 1. Under Section 527 of the CA 2006 members meeting the threshold requirements set out in that section have the right to require the Company to publish on a website a statement setting out any matter relating to: (i) the audit of the Company's accounts (including the auditors' report and the conduct of the audit) that are to be laid before the AGM; or (ii) any circumstance connected with an auditor of the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in accordance with Section 437 of the CA 2006. The Company may not require the shareholders requesting any such website publication to pay its expenses in complying with Sections 527 or 528 of the CA 2006. Where the Company is required to place a statement on a website under Section 527 of the CA 2006, it must forward the statement to the Company's auditors not later than the time when it makes the statement available on the website. The business which may be dealt with at the AGM includes any statement that the Company has been required under Section 527 of the CA 2006 to publish on a website.
• 1. As at 12 November 2018 (being the latest practicable date prior to the publication of this Notice) the Company's issued share capital consists of 108,789,486 ordinary shares, carrying one vote each and no shares are held in treasury. Therefore, the total voting rights in the Company as at 12 November 2018 are 108,789,486.
• 1. You may not use any electronic address provided either in this Notice of Meeting or any related documents (including the Form of Proxy) to communicate with the Company for any purposes other than those expressly stated.
• 1. Any member attending the meeting has the right to ask questions. The Company must cause to be answered any such question relating to the business being dealt with at the meeting but no such answer need be given if (a) to do so would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information, (b) the answer has already been given on a website in the form of an answer to a question, or (c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.
• 1. A copy of this Notice, and other information required by Section 311A of the CA 2006, can be found at www.whsmithplc.co.uk.
• 1. Under Section 338 and Section 338A of the CA 2006, members meeting the threshold requirements in those sections have the right to require the Company (i) to give, to members of the Company entitled to receive notice of the meeting, notice of a resolution which may properly be moved and is intended to be moved at the meeting and/or (ii) to include in the business to be dealt with at the meeting any matter (other than a proposed resolution) which may be properly included in the business. A resolution may properly be moved or a matter may properly be included in the business unless (a) (in the case of a resolution only) it would, if passed, be ineffective (whether by reason of inconsistency with any enactment or the Company's constitution or otherwise), (b) it is defamatory of any person, or (c) it is frivolous or vexatious. Such a request may be in hard copy form or in electronic form, must identify the resolution of which notice is to be given or the matter to be included in the business, must be authenticated by the person or persons making it, must be received by the Company not later than 12 December 2018, being the date six clear weeks before the meeting, and (in the case of a matter to be included in the business only) must be accompanied by a statement setting out the grounds for the request.
• 1. A copy of the draft rules of the DBP will be available for inspection at the offices of Herbert Smith Freehills LLP, Exchange House, Primrose Street, London EC2A 2EG during normal business hours on any weekday (Saturdays, Sundays and public holidays are excluded) from the date of this Notice until the time of the AGM, and will be available at the place of the AGM from at least 15 minutes prior to the meeting and until the conclusion of the meeting.
• 1. Resolutions 1 to 19 at the 2019 AGM will be taken on a poll vote. This will result in a more accurate reflection of the views of shareholders by ensuring that every vote is recognised, including the votes of all shareholders who are unable to attend the meeting but who appoint a proxy for the meeting. On a poll, each shareholder has one vote for every share held.