BAE Systems Annual Report 2008
Annual Report 2008

Non-Executive Directors' appointment, term and fees

The non-executive directors do not have service contracts but do have letters of appointment detailing the basis of their appointment. The dates of their original appointment were as follows:

Non-executive director Date of appointment Expiry of current term*
Phil Carroll 07.09.2005 06.09.2009
Michael Hartnall 10.06.2003 09.06.2009
Andy Inglis 13.06.2007 12.06.2010
Sir Peter Mason 22.01.2003 21.01.2012
Roberto Quarta 07.09.2005 06.09.2011
Sir Nigel Rudd 10.09.2006 09.09.2009
Carl Symon 11.06.2008 10.06.2011
Ravi Uppal 02.04.2008 01.04.2011

* Subject to re-election at the AGM following their appointment and subsequently at intervals of no more than three years in accordance with the Company's Articles of Association.

The non-executive directors are normally appointed for two consecutive three-year terms subject to review after the end of the first three-year period and with any third term of three years being subject to rigorous review and taking into account the need progressively to refresh the Board. They do not have periods of notice and the Company has no obligation to pay compensation when their appointment terminates. They are subject to re-election at the Annual General Meeting (AGM) following their appointment and subsequently at intervals of no more than three years. Peter Weinberg retired from the Board on 7 May 2008 at the conclusion of the 2008 AGM having originally been appointed to the Board on 16 June 2005.

Non-executive directors are proposed by the Nominations Committee and are appointed by the Board on the basis of their experience to provide independent judgement on issues of strategy, performance, resources and standards of conduct. The letters of appointment for non-executive directors detail the amount of time it is anticipated that the individual will need to devote to his or her duties as a director, being 15 days per year plus additional commitment for chairing a committee or undertaking the role of Senior Independent Director. The level of their fees is set by the Non-Executive Directors' Fees Committee to reflect this time commitment and responsibility, and after reviewing practice in other comparable companies.

Having reviewed the time commitments required and the market competitive positioning, a number of changes have been made to the structure of fees payable to non-executive directors for 2009.

  • The base fee has been increased by 4.8% from £63,000 to £66,000.
  • The total time commitment and additional fee for chairing the Audit, Corporate Responsibility and Remuneration committees have been aligned at around 25 days and at £20,000, respectively.
Committee 2008 fee* 2009 fee*
Audit Committee £20,000 £20,000
Corporate Responsibility Committee £15,000 £20,000
Remuneration Committee £15,000 £20,000
  • The time commitment and additional fee for the responsibilities of being Senior Independent Director have been aligned to those for the committee chairmen. The Senior Independent Director is not a chairman of one of the above three committees.
  • The previous transatlantic meeting allowance of £4,000 has been replaced by a travel allowance of £4,000 per meeting on each occasion that a non-executive director's attendance at a Board meeting necessitates air travel of more than five hours (one-way) to the meeting location. For 2009, a maximum of six travel allowances will be payable.

The table below summarises the fee structure for 2008 and 2009.

Non-executive director 2008 fee* 2009 fee*
Chairman Audit Committee £83,000 £86,000
Chairman Corporate Responsibility Committee £78,000 £86,000
Chairman Remuneration Committee £78,000 £86,000
Senior Independent Director £78,000 £86,000
Other non-executive directors £63,000 £66,000

* Excludes the travel allowance (and in 2008 the transatlantic allowance) of £4,000 per meeting referred to above.

By order of the Board

Dick Olver Chairman
18 February 2009