Remuneration report

The long-standing policy of allowing executive directors to hold external non-BAE Systems related non-executive directorships with the prior approval of the Committee will continue. The Committee considers that external directorships provide the Company’s senior executives with valuable experience that is of benefit to BAE Systems. It is also considered appropriate for BAE Systems to contribute to the pool of non-executive expertise available for the benefit of the wider business community, thereby reciprocating the benefit that it in turn has received from other organisations which have permitted members of their senior management teams to serve on the BAE Systems Board. The Committee believes that it is reasonable for the individual executive director to retain any fees received from such appointments given the additional personal responsibility that this entails. Such fees retained by the executive directors in 2007 for the period in which they served on the BAE Systems Board were as follows: Chris Geoghegan £14,542; Ian King £27,000; Steve Mogford £14,027; George Rose £79,000; and Mike Turner £38,722 plus grants of Deferred Stock Units to the value of £49,460.