Notice of AGM 2023

This year’s Annual General

Meeting will be held at 11.30am

on Thursday 4 May 2023.

This notice of meeting sets out the

resolutions that shareholders are being

asked to consider and vote on. These

resolutions are an important part of the

governance of the Company and all

shareholders are urged to vote, whether

they are able to attend the meeting or not.

Arrangements for the 2023 AGM

There are two options for attending and

participating at the AGM which are as

follows:

– Attend electronically – Access to the

meeting electronically will be available at:

https://web.lumiagm.com/104-892-396.

This will enable you to watch a live

broadcast of the proceedings. You will

be able to submit questions up to an

hour before the meeting starts as well

as during the meeting; and vote on the

resolutions once the poll is open.

Please see the step-by-step guide on

page 13 on how to join the meeting

remotely, ask questions and submit

your votes at the meeting.

– Attend physically at the AGM

venue – The physical meeting will be

held at Hall 5, Farnborough International

Exhibition and Conference Centre,

Farnborough, Hampshire GU14 6TQ.

A road map and instructions on how to

reach the venue are set out on page 14.

Light refreshments – but not lunch – will

be provided for attendees on arrival.

Voting by proxy

You can alternatively vote by proxy on the

resolutions put to shareholders in advance

either online or by post as follows:

– Online – if you have accessed this

notice electronically, you simply need to

click on the electronic voting icon on

the Company’s AGM website page at

www.baesystems.com/reporting.

– By post – if you received the 2022

Report & Accounts you will also have

Notice of Annual

GeneralMeeting 2023

Important

This document is important and

requires your immediate attention. If

you are in any doubt as to the action

you should take, you should consult

your stockbroker, bank manager,

solicitor, accountant or other

professional adviser authorised under

the Financial Services and Markets Act

2000 immediately.

If you have sold or otherwise transferred

all of your shares, please send this

document, together with the

accompanying Form of Proxy, as soon as

possible to the purchaser or transferee,

or to the stockbroker, bank or other agent

through whom the sale or transfer was

effected for transmission to the purchaser

or transferee.

Recommendation

Your Directors consider that each of the

proposals detailed in the 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.

received a proxy card. Instructions on

voting can be found on the proxy card.

It is good practice for companies to take a

poll on all resolutions put to shareholders

and the Company has used such polls for

a number of years. This allows all

shareholders to have their votes recognised

whether or not they are able to attend the

meeting, physically or electronically. The

results of the voting on the resolutions will

be posted on the Company’s website after

the meeting.

How to get to the AGM

Please see the map on page 14 of this document.

By Road

Hall 5 is situated in Farnborough, Hampshire, to the south west of London, close to

Junction 4 of the M3. Follow the Farnborough/Exhibition Centre signs on all major

routes. SatNav users should enter ‘GU14 6AZ’ for directions to the Queen’s

Roundabout. From the roundabout, take Government House Road (Aerospace

Boulevard) and follow the signs to Hall 5/Exhibition Centre via Gate F. Please note that

there is currently a diversion in place for westbound trafﬁc accessing Lynchford Road,

Farnborough (ie going towards Hall 5). Free parking is available at Hall 5 in the

designated car park.

By Rail

The main train station in Farnborough is Farnborough Main. Other train stations in the

vicinity of Hall 5 include North Camp and Aldershot. Please visit www.nationalrail.co.uk

or telephone 03457 484950 for rail travel information. A complimentary shuttle bus

service will be provided between Farnborough Main train station and Hall 5. A return

service to Farnborough Main will be provided after the meeting.

To BAE Systems plc Ordinary Shareholders

NOTICE IS HEREBY GIVEN that the Annual General Meeting

of BAE Systems plc will be held on Thursday 4 May 2023 at

11.30 am.

The physical meeting will be held at Hall 5, Farnborough

International Exhibition and Conference Centre, Farnborough,

Hampshire GU14 6TQ and electronic access will be via:

https://web.lumiagm.com/104-892-396

The meeting has been convened for the purpose of transacting the

following business:

To consider, and if thought ﬁt, to pass the following Resolutions

1-22, which will be proposed as ORDINARY RESOLUTIONS:

RESOLUTION 1 – Receipt of the Report and Accounts

THAT the Annual Report and Accounts for the year ended

31 December 2022 now laid before this meeting be and are

hereby received.

RESOLUTION 2 – Approval of the Remuneration Policy

THAT the Remuneration Policy section of the Remuneration

Report (as set out on pages 190 to 205 of the Annual Report and

Accounts for the ﬁnancial year ended 31 December 2022) be and

is hereby approved.

RESOLUTION 3 – Approval of the Directors’ Remuneration

Report

THAT the Annual Statement by the Chair of the Remuneration

Committee and the Annual Report on Remuneration (as set out

on pages 160 to 189 of the Annual Report and Accounts for the

ﬁnancial year ended 31 December 2022) be and are hereby

approved.

RESOLUTION 4 – Authorisation of the payment of the ﬁnal

dividend

THAT the ﬁnal dividend for the year ended 31 December 2022 of

16.6 pence per ordinary share be and is hereby declared payable

on 1 June 2023 to Ordinary Shareholders whose names appeared

on the Register of Members at the close of business on 21 April

2023.

RESOLUTION 5 – Re-election of director

THAT Nicholas Anderson be and is hereby re-elected a Director of

the Company.

RESOLUTION 6 – Re-election of director

THAT Thomas Arseneault be and is hereby re-elected a Director of

the Company.

RESOLUTION 7 – Re-election of director

THAT Crystal E Ashby be and is hereby re-elected a Director of the

Company.

RESOLUTION 8 – Re-election of director

THAT Dame Elizabeth Corley be and is hereby re-elected a

Director of the Company.

RESOLUTION 9 – Re-election of director

THAT Bradley Greve be and is hereby re-elected a Director of the

Company.

RESOLUTION 10 – Re-election of director

THAT Jane Grifﬁths be and is hereby re-elected a Director of the

Company.

RESOLUTION 11 – Re-election of director

THAT Christopher Grigg be and is hereby re-elected a Director of

the Company.

RESOLUTION 12 – Re-election of director

THAT Ewan Kirk be and is hereby re-elected a Director of the

Company

RESOLUTION 13 – Re-election of director

THAT Stephen Pearce be and is hereby re-elected a Director of

the Company.

RESOLUTION 14 – Re-election of director

THAT Nicole Piasecki be and is hereby re-elected a Director of the

Company.

RESOLUTION 15 – Re-election of director

THAT Charles Woodburn be and is hereby re-elected a Director of

the Company.

RESOLUTION 16 – Election of director

THAT Cressida Hogg be and is hereby elected a Director of the

Company.

RESOLUTION 17 – Election of director

THAT Lord Sedwill be and is hereby elected a Director of the

Company.

RESOLUTION 18 – Re-appointment of the Auditors

THAT Deloitte LLP be and are hereby re-appointed Auditors of the

Company to hold ofﬁce until the next General Meeting at which

accounts are laid before the Company.

RESOLUTION 19 – Authority to agree Auditors’ remuneration

THAT the Audit Committee of the Board of Directors be and is

hereby authorised to agree the remuneration of the Auditors.

RESOLUTION 20 – Political Donations

THAT

(i) the Company and those companies which are subsidiaries of

the Company at any time during the period for which this

resolution has effect be authorised for the purposes of Part 14

of the Companies Act 2006 (the “2006 Act”) during the period

from the date of the passing of this resolution to the earlier of

the conclusion of the Company’s Annual General Meeting in

2024 or close of business on 30 June 2024:

(a) to make political donations to political parties, and/or

independent election candidates;

(b) to make political donations to political organisations other

than political parties; and

up to an aggregate amount of £100,000, and the amount

authorised under each of paragraphs (a) to (c) shall also be

limited to such amount; and

Notice of Annual General Meeting 2023

www.baesystems.com

(ii) all existing authorisations and approvals relating to political

donations or expenditure under Part 14 of the 2006 Act are

hereby revoked without prejudice to any donation made or

expenditure incurred prior to the date hereof pursuant to such

authorisation or approval; and

(iii) words and expressions deﬁned for the purpose of the 2006

Act shall have same meaning in this resolution.

RESOLUTION 21 – Approval of the BAE Systems Long-term

Incentive Plan 2023

THAT the rules of the BAE Systems Long-term Incentive Plan 2023

(the “LTIP”), the principal features of which are summarised in the

Appendix to this Notice of Annual General Meeting, and a copy of

which is produced to the Annual General Meeting and initialled by

the Chairman for the purposes of identiﬁcation, be approved and

the Directors be authorised to:

(i) adopt the LTIP and do all things appropriate to operate the

LTIP, including making such modiﬁcations as the Directors

consider appropriate to take account of best practice; and

(ii) establish further plans based on the LTIP but modiﬁed to: (a)

permit participation by employees of any joint ventures of the

Company who are not eligible to participate in the LTIP; and/or

(b) take account of local tax, exchange controls or securities

laws in overseas territories, provided that any new issue or

treasury shares made available under such further plans are

treated as counting against the limits on individual or overall

participation in the LTIP.

RESOLUTION 22 – Authority to allot new shares

THAT the authority conferred on the Directors by Article 8(B)(i) of

the Company’s Articles of Association be renewed for the period

ending at the conclusion of the Company’s Annual General

Meeting in 2024 or at the close of business on 30 June 2024,

whichever is the earlier, and for such period the Section 551

Amount shall be £25,461,446.

The authorities in this Resolution apply in substitution for all

previous authorities pursuant to Section 551 of the 2006 Act.

To consider, and if thought ﬁt, to pass the following Resolutions 23

to 25 which will be proposed as SPECIAL RESOLUTIONS:

RESOLUTION 23 – Disapplication of pre-emption rights

THAT, subject to the passing of Resolution 22 above, the power

conferred on the Directors by Article 8(B)(ii) of the Company’s

Articles of Association be renewed for the period referred to in

such Resolution and for such period the Section 561 Amount shall

be £3,819,598.

Such authority shall be in substitution for all previous powers

pursuant to Section 561 of the 2006 Act.

RESOLUTION 24 – Authority to purchase own shares

THAT the Company be and is hereby unconditionally and generally

authorised for the purposes of Section 701 of the 2006 Act to

make market purchases (as deﬁned in Section 693 of the 2006

Act) of its ordinary shares of 2.5p each in the capital of the

Company provided that:

(a) the maximum number of shares that may be purchased is

3 0 5, 5 6 7,916 ;

(b) the minimum price which may be paid for each share is 2.5p;

higher of (i) 105 per cent of the average of the middle market

quotations of the Company’s ordinary shares as derived from

the London Stock Exchange Daily Ofﬁcial List for the ﬁve

business days immediately preceding the day on which such

share is contracted to be purchased, and (ii) the higher of the

price of the last independent trade and the highest current

independent bid on the London Stock Exchange;

(d) this authority shall expire at the conclusion of the Annual

General Meeting of the Company held in 2024 or, if earlier, at

the close of business on 30 June 2024 (except in relation to the

purchase of shares the contract for which was concluded

before the expiry of such authority and which may be executed

wholly or partly after such expiry) unless such authority is

renewed prior to such time.

RESOLUTION 25 – Notice of general meetings

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

David Parkes

Company Secretary

29 March 2023

6 Carlton Gardens

London SW1Y 5AD

Notes

1. Shareholders are entitled to appoint a proxy to exercise all or any of

their rights to attend and to speak and vote on their behalf at the

meeting. A proxy need not be a member of the Company.

2. A proxy form which may be used to make such appointment and

give proxy instructions has been sent to all shareholders (except

those who have elected to receive notice via email who should refer

to paragraph 7 below, or those shareholders who are deemed to

have consented to receive communications via the Company’s

website and who will have received a shareholder voting instruction

card).

If a shareholder wishes to appoint someone other than the

Chairman of the meeting to act as the shareholder’s proxy, the

shareholder should delete the reference to the Chairman in the proxy

form, and insert in block letters the name of the person that the

shareholder wishes to appoint in the space provided, and initial the

alteration.

Shareholders who have received a shareholder voting instruction

card or a proxy card may appoint a proxy or proxies electronically

via the Company’s website at www.baesystems.com/reporting

using the Voting ID, Task ID, and Shareholder Reference Number on

the proxy card or shareholder voting instruction card. Electronic

proxy appointments must be received no later than 11.30 am UK

time on 2 May 2023. CREST members who wish to appoint proxies

through the CREST electronic appointment service should refer to

paragraphs 12-15 below.

3. A shareholder may appoint more than one proxy, who may be the

same person, in relation to the Annual General Meeting provided

that each proxy is appointed to exercise the rights attached to a

different share or shares held by that shareholder. If in such case a

shareholder wishes to appoint more than one proxy, the shareholder

should photocopy the proxy form and indicate in the relevant box

the number of shares in relation to which the shareholder authorises

them to act as the shareholder’s proxy. The shareholder should

indicate by marking the relevant box on the proxy card if more than

one proxy is being appointed.

4. In the case of joint holders the signature of any one of them will

sufﬁce. The vote of the senior party tendering the vote (whether in

person or by proxy) shall be accepted to the exclusion of the votes of

the other joint holders and, for this purpose, seniority shall be

determined by the order in which the names stand in the Register of

Members in respect of the joint holding.

Notice of Annual General Meeting 2023 continued

5. To be valid any proxy form or other instrument appointing a proxy

must be completed, signed and returned, together with the power of

attorney or other authority (if any) under which it is signed, or a duly

certiﬁed copy thereof, so as to be received by post or (during normal

business hours only) by hand at the ofﬁce of the Company’s

Registrar, Equiniti, Aspect House, Spencer Road, Lancing, West

Sussex BN99 6DA not later than 11.30 am UK time on 2 May 2023,

being not less than 48 hours before the time for which the meeting is

convened.

6. The return of a completed proxy form, other such instrument or any

CREST Proxy Instruction (as described in paragraph 13 below) will

not prevent a shareholder attending the Annual General Meeting and

voting in person if he/she wishes to do so.

7. Shareholders who have elected to receive notice via email, and who

have therefore not received a proxy card, may appoint a proxy or

proxies electronically via the Company’s website at www.

baesystems.com/reporting using their usual Shareview portfolio

identiﬁcation particulars. Electronic proxy appointments must be

received no later than 11.30 am UK time on 2 May 2023.

8. Any person to whom this notice is sent who is a person nominated

under section 146 of the Companies Act 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 Annual General Meeting. If a Nominated Person has no

such 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.

9. The statement of rights of shareholders in relation to the

appointment of proxies in paragraphs 1 to 7 above does not apply to

Nominated Persons. The rights described in these paragraphs can

only be exercised by shareholders of the Company.

10. Entitlement to attend and vote at the meeting, and the number of

votes which may be cast at the meeting, will be determined by

reference to the Company’s Register of Members at 6.30pm UK

time on 2 May 2023 or, if the meeting is adjourned, 6.30pm UK time

two days before the time ﬁxed for the adjourned meeting (as the

case may be). Changes to the Register of Members after the

relevant deadline shall be disregarded in determining the rights of

any person to attend and vote at the meeting.

11. As at 15 March 2023 (being the latest practicable business day prior

to the publication of this Notice) the Company’s issued share capital

consisted of 3,274,530,020 ordinary shares and one special share.

Holders of ordinary shares are entitled to attend and vote at general

meetings of the Company. The voting rights of treasury shares (of

which there were 218,850,860 as of 15 March 2023) are suspended.

The holder of the special share is entitled to attend general meetings

of the Company, but is not entitled to vote. Accordingly the total

number of voting rights as of 15 March 2023 is 3,055,679,160. The

consent of the holder of the special share is required in certain

limited circumstances, as set out in the Company’s Articles of

Association. At the Company’s 2023 AGM, all resolutions will be

voted on by way of a poll. On a vote by poll, every ordinary

shareholder who is present in person or by proxy has one vote for

every ordinary share of which he/she is the holder.

12. 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 via

www.euroclear.com). CREST Personal Members or other CREST

sponsored members, and those CREST members who have

appointed a voting service provider, should refer to their CREST

sponsor or voting service provider, who will be able to take the

appropriate action on their behalf.

13. 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 the

issuer’s agent, Equiniti (ID RA19), no later than 11.30 am UK time on

2 May 2023, being not less than 48 hours before the time for which

the meeting is convened. For this purpose, the time of receipt will be

taken to be the time (as determined by the timestamp applied to the

message by the CREST Applications 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.

14. CREST members and, where applicable, their CREST sponsors, or

voting service providers, should note that Euroclear UK and 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/her CREST sponsor or voting service provider takes) 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 system providers) are referred, in particular, to

those sections of the CREST manual concerning practical limitations

of the CREST systems and timings.

15. 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.

16. 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.

17. Under section 527 of the Companies Act 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 auditor’s report and the conduct of the audit) that are

to be laid before the Annual General Meeting; 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 Companies

Act 2006. The Company may not require the shareholders

requesting any such website publication to pay its expenses in

complying with section 527 or 528 of the Companies Act 2006.

Where the Company is required to place a statement on a website

under section 527 of the Companies Act 2006, it must forward the

statement to the Company’s auditor not later than the time when it

makes the statement available on the website. The business which

may be dealt with at the Annual General Meeting includes any

statement that the Company has been required under section 527 of

the Companies Act 2006 to publish on a website.

18. Any member attending the meeting in person or electronically 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 of 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

of the meeting that the question be answered.

19. A copy of this notice, and other information required by s311A of the

Companies Act 2006, can be found at www.baesystems.com/

reporting.

20. Shareholders may not use any electronic address provided in this

Notice or any related documents (including the proxy form) to

communicate with the Company for any purposes other than those

expressly stated.

www.baesystems.com

Notice of Annual General Meeting 2023 continued

1. NOTES ON THE RESOLUTIONS

1.1 Resolution 2 – Approval of Directors’ Remuneration Policy

The policy section of the Directors’ Remuneration Report, which

sets out the Company’s forward looking policy on Directors’

remuneration, is subject to a binding shareholder vote by ordinary

resolution at least every three years. The Company’s existing

remuneration policy was approved by shareholders at the Annual

General Meeting in 2020 (the “2020 Policy”). The remuneration

policy on which shareholders are being asked to vote at the

Annual General Meeting in 2023 (the “2023 Policy”) is set out in full

on pages 190 to 205 of the 2022 Annual Report and, subject to

shareholder approval, will replace the 2020 Policy with effect from

the end of the 2023 Annual General Meeting. The statement by

Nicole Piasecki, Chair of the Remuneration Committee, on

pages 160 to 164 of the 2022 Annual Report gives further context

to and rationale for the changes to the policy since that approved

in 2020.

1.2 Resolution 3 – Approval of Directors’ Remuneration Report

The statement by the Remuneration Committee Chair and the

Annual Remuneration Report (on pages 160 to 189 of the 2022

Annual Report) is being put to the shareholders as an annual

advisory vote.

As required by regulation, the statement by the Chair of the

Remuneration Committee covers major decisions on directors’

remuneration during the year, changes during the year, and the

context in which the changes occurred and the decisions have

been taken.

The Annual Remuneration Report reports on how the 2020 Policy

has been implemented and sets out payments made in the

ﬁnancial year ended 31 December 2022.

1.3 Resolutions 5-15 – Directors Standing For Re-election

In line with the provisions of the UK Corporate Governance Code

(the “Code”) and the Company’s Articles of Association, all

directors are standing for election or re-election to the Board

except Sir Roger Carr who is standing down from the Board with

effect from the close of the AGM, having served as Chairman for

nine years.

The Chairman has conﬁrmed that, based on the formal

performance evaluations undertaken at the end of 2022 and the

beginning of 2023, all of the Directors remain committed to the role

and the individual performance and contribution of all Directors

continues to be effective. Also, in compliance with the Code, the

Company ensures that non-executive directors have sufﬁcient time

to fulﬁl their obligations. This is assessed when a Director is

appointed and also in the event of there being a material change to

an individual’s circumstances. The biographies set out opposite

summarise the skills, competence and experience of each of the

Directors which highlight their individual contributions to the Board

and their composite expertise.

Directors’ Biographies

Nick Anderson – Non-executive director

Appointed to the Board: 2020

Nationality: UK

Key contribution: Deep knowledge and experience of leading

international engineering and manufacturing operations.

Skills, competence and experience: As Group Chief Executive of a

FTSE 100 industrial engineering company, Nick has a strong

record of leading and growing global businesses.

Since being appointed Group Chief Executive of Spirax-Sarco

Engineering plc in January 2014, Nick has overseen the successful

global growth of Spirax-Sarco Engineering, which serves

customers in 130 countries worldwide. Prior to his roles at

Spirax-Sarco Engineering, he was Vice-President of John Crane

Asia Paciﬁc and President of John Crane Latin America.

Other non-executive appointments: None

Committee membership: Environmental, Social and Governance

Committee, Innovation and Technology Committee and

Nominations Committee.

Tom Arseneault – President and Chief Executive Ofﬁcer of

BAE Systems, Inc.

Appointed to the Board: 2020

Nationality: US

Key contribution: Business leadership and wide-ranging

operational experience in US defence and commercial aerospace

markets.

Skills, competence and experience: Tom was appointed to the

Board on 1 April 2020, serving as President and Chief Executive

Ofﬁcer of BAE Systems, Inc. Throughout his career, Tom has led

complex organisations responsible for fulﬁlling critical and

technologically challenging missions. Most recently he served as

President and Chief Operating Ofﬁcer of BAE Systems Inc., having

spent over 20 years in various senior roles within BAE Systems,

Inc.

Prior to his senior leadership appointments, Tom managed various

organisations and programmes for Sanders, a Lockheed Martin

Company, until it was acquired by BAE Systems in 2000. Earlier in

his career, he held a variety of engineering and programme

management positions with General Electric and TASC.

Tom is a member of the Executive committee of the Aerospace

Industries Association.

Non-executive appointments: None.

Crystal E. Ashby – Non-executive director

Appointed to the Board: 2021

Nationality: US

Key contribution: Business leadership and expertise in human

resources, government affairs, legal, corporate communications

and regulatory matters.

Skills, competence and experience: Crystal has held various senior

leadership roles within the energy and healthcare sectors and has

considerable expertise in government affairs, legal and regulatory

matters. She is currently the Executive Vice President and Chief

People, DEI and Communications Ofﬁcer of the US health

insurance company, Independence Health Group.

www.baesystems.com

Notes on the Resolutions

www.baesystems.com

In her executive career, Crystal held various senior leadership roles

during a long career with BP America Inc., culminating with her

appointment as Executive Vice President of Government and

Public Affairs and Strategic University Partnerships and

membership of its Americas Leadership Team. She is an

Independent Director on the Board of Texas Reliability Entity, Inc.

and serves on the Engineering Dean’s Leadership Advisory Board

at the University of Michigan. She is a National Association of

Corporate Directors Fellow and a member of the International

Women’s Forum and American Bar Association.

Other non-executive appointments: Independent Director on the

Board of Texas Reliability Entity, Inc.

Committee membership: Environmental, Social and Governance

Committee and Nominations Committee.

Dame Elizabeth Corley CBE – Non-executive director

Appointed to the Board: 2016

Nationality: UK

Key contribution: Investor, board and governance experience

gained through her career in the investment industry and

leadership roles on company boards and other entities.

Skills, competence and experience: Dame Elizabeth is the Chair of

Schroders plc and a former non-executive director of Pearson plc

and Morgan Stanley Inc. She chairs the board of the Impact

Investment Institute, having previously chaired the industry

Taskforce on Social Impact Investing for the UK government. She

served as Chief Executive Ofﬁcer of Allianz Global Investors, initially

for Europe then globally, from 2005 to 2016. Prior to that, she

worked for Merrill Lynch Investment Managers.

Elizabeth is active in representing the investment industry and

developing standards within it. She is a member of the CFA Future

of Finance Advisory Council, the AQR Institute of Asset

Management at the London Business School, the Committee of

200 and the 300 Club.

Elizabeth is also an acclaimed writer, a Fellow of the Royal Society

for the encouragement of Arts, Manufactures and Commerce and

a trustee of the British Museum.

Other non-executive appointments: Chair of Schroders plc.

Committee membership: Audit Committee, Innovation and

Technology Committee, Nominations Committee and

Remuneration Committee.

Brad Greve – Group Finance Director

Appointed to the Board: 2020

Nationality: US

Key contribution: Considerable international business and ﬁnancial

management experience, particularly concerning large capital

projects and programmes.

Skills, competence and experience: Brad joined BAE Systems in

2019 as Group Finance Director Designate and joined the Board

on 1 April 2020.

He is a highly experienced executive with deep ﬁnancial and

operational management experience, gained during a 30 year

career in international engineering and technology businesses.

Prior to joining the Company he held a number of senior executive

roles in Schlumberger, undertaking roles in Europe, Africa, South

America and the United States.

Non-executive appointments: None

Dr Jane Grifﬁths – Non-executive director

Appointed to the Board: 2020

Nationality: UK

Key contribution: Signiﬁcant international business and industry

leadership experience across a range of roles. With her extensive

board and industry experience Jane is well-placed to chair the

Environmental, Social and Governance Committee.

Skills, competence and experience: Jane has experience in

leading high technology businesses and international corporate

leadership. She is Chair of Redx Pharma Plc, an AIM listed

company, Chair of Theramex and non-executive director of

Johnson Matthey. In her executive career with Johnson &

Johnson, she held various executive positions and led its

Corporate Citizen Trust in EMEA and sponsored its Women’s

Leadership Initiative.

Jane previously had been Company Group Chair of Janssen

EMEA, Johnson & Johnson’s research based pharmaceutical arm,

where she was sponsor of Janssen’s Global Pharmaceuticals

Sustainability Council. She is a former Chair of the European

Federation of Pharmaceutical Industries and Associations, past

Chair of the PhRMA Europe Committee and former member of the

Corporate Advisory Board of the UK government-backed ‘Your

Life’ campaign, aimed at encouraging more people to study STEM

subjects.

Other non-executive appointments: Chair of Redx Pharma Plc,

Chair of Theramex and Non-executive director of Johnson Matthey

Plc.

Committee membership: Chair of the Environmental, Social and

Governance Committee and member of the Nominations

Committee.

Chris Grigg CBE – Non-executive director and Senior

Independent Director

Appointed to the Board: 2013

Nationality: UK

Key contribution: Boardroom and major company knowledge,

skills and experience gained from a business career that includes

serving as chief executive of a FTSE 100 company for over

11 years.

Skills, competence and experience: Chris is Chair of the UK

Infrastructure Bank and Chair of Evelyn Partners. He has held a

range of leadership roles including Chief Executive of Barclays

Commercial Bank and, most recently, Chief Executive of The

British Land Company PLC, a position he held for over 11 years.

He brings extensive public company and business leadership

experience to the Board.

He has more than 30 years’ experience in the banking and real

estate industries. Prior to joining British Land, he was Chief

Executive of Barclays Commercial Bank. Before that, he was a

partner at Goldman Sachs. Chris is a former member of the

executive board of the European Public Real Estate Association

and the board of the British Property Federation.

From 2021 Chris Grigg led the search activity to identify suitable

candidates for the role of Chair on the forthcoming retirement from

the Board of the current Chairman, Sir Roger Carr, at the 2023

AGM following Sir Roger’s nine years in ofﬁce as Chairman. The

search culminated in the appointment of Cressida Hogg as

Non-executive director and Chair Designate on 1 November 2022

who will succeed Sir Roger as Chair at the close of the 2023 AGM

(subject to her election as Director at the AGM). In order to provide

continuity of experience and knowledge on the Board, given the

Notes on the Resolutions continued

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transition in Chair in May 2023, it is intended that Chris Grigg

remains a non-executive Director until no later than 31 December

2023 when he will step down from the Board.

Other non-executive appointments: Chair of UK Infrastructure Bank

and Evelyn Partners.

Committee membership: Audit Committee, Nominations

Committee and Remuneration Committee.

Dr Ewan Kirk – Non-executive director

Appointed to the Board: 2021

Nationality: UK

Key contribution: Experience in the application, identiﬁcation and

leveraging of technology which also gives him excellent credentials

as Chair of the Innovation and Technology Committee.

Skills, competence and experience: Ewan has extensive experience

in commercialising data science and quantitative analysis. He has

led multiple ventures to identify, apply and leverage technology

and mathematics research in both business and philanthropy.

In 2006, he founded Cantab Capital Partners, a science-driven

investment management ﬁrm, which was acquired by GAM

Investments in 2016 and one of the top-performing quantitative

investment companies in the UK. Prior to founding Cantab, Ewan

was Partner and Head of Quantitative Strategies Group at

Goldman Sachs.

He is Chair of the Isaac Newton Institute for Mathematical

Sciences, Chairman of DeepTech Labs, a UK-based venture

capital fund that invests in deep technology businesses, and

Co-Chair of the Turner Kirk Trust. Ewan holds a PhD in General

Relativity from the University of Southampton, a MASt in

Mathematics from Queen’s College, Cambridge, and a BSc in

Natural Philosophy and Astronomy from the University of Glasgow.

Other non-executive appointments: None.

Committee membership: Chair of the Innovation and Technology

Committee and member of Nominations Committee.

Stephen Pearce – Non-executive director

Appointed to the Board: 2019

Nationality: Australian

Key contribution: Financial, international and boardroom

experience. As Finance Director of another FTSE 100 company,

Stephen has a well-developed understanding of the role and remit

of the Audit Committee, which he chairs, and the discharge of its

duties.

Skills, competence and experience: Stephen has more than

20 years’ experience as a director of public companies and over

30 years of ﬁnancial and commercial experience in the mining, oil

and gas, and utilities industries. He is currently Finance Director of

Anglo American plc, a role he has held since April 2017, and a

non-executive director of its majority-owned subsidiary, De Beers.

He previously served as Chief Financial Ofﬁcer and an executive

director of Fortescue Metals Group Limited from 2010 to 2016. He

is a Fellow of the Institute of Chartered Accountants, a Fellow of

the Governance Institute of Australia and a Member of the

Australian Institute of Company Directors.

Other non-executive appointments: None.

Committee membership: Chair of the Audit Committee and

member of the Nominations Committee.

Nicole Piasecki – Non-executive director

Appointed to the Board: 2019

Nationality: US

Key contribution: Business leadership, experience and knowledge

gained from a long career encompassing a number of senior roles

in the aerospace industry. Nicole’s industry leadership background

and international experience provide context and expertise in her

role as Chair of the Remuneration Committee.

Skills, competence and experience: Nicole has extensive experience

gained from executive positions within the aerospace industry and

leadership of multi-functional teams. She previously held a number

of engineering, sales, marketing and business strategy roles during

her 25-year career with the Boeing Company, including Vice

President and General Manager of the Propulsion Systems

Division and Vice President of Business Development and

Strategic Integration for Boeing’s commercial aircraft business,

and President of Boeing Japan.

She is Executive Chairman of VEA Aviation Inc., Chair of the Board

of Trustees of Seattle University, a director of Howmet Aerospace

Inc. and Weyerhaeuser Company, and an advisor to Mitsubishi

Heavy Industries in Tokyo. Nicole formerly served on the Federal

Aviation Authority’s Management Advisory Board, the US

Department of Transportation’s Future of Aviation Advisory

Committee and the Federal Reserve Bank of San Francisco’s

Seattle branch.

Other non-executive appointments: Non-executive director of

Howmet Aerospace Inc. and Weyerhaeuser Company.

Committee membership: Chair of the Remuneration Committee

and member of the Environmental, Social and Governance

Committee, Innovation and Technology Committee and

Nominations Committee.

Dr Charles Woodburn – Chief Executive

Appointed to the Board: 2016

Nationality: UK

Key contribution: Provides leadership through his role as Chief

Executive, based on a strong performance record with the

Company and, prior to that, with companies in the oil and gas

sector.

Skills, competence and experience: Charles joined BAE Systems in

May 2016 as Chief Operating Ofﬁcer and became Chief Executive

on 1 July 2017.

He is an experienced business leader with over 26 years’

experience in the defence and aerospace and oil and gas

industries. Prior to joining the Company in 2016, he was Chief

Executive Ofﬁcer of Expro Group, before which he spent 15 years

with Schlumberger Limited holding a number of senior

management positions in Asia, Australia, Europe and the United

States. Charles is a trustee and Chair of the charity Movement to

Work. He is a Fellow of the Royal Academy of Engineering.

Non-executive appointments: None.

Notes on the Resolutions continued

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Notes on the Resolutions continued

1.4 Resolutions 16 and 17 – Directors standing for Election

All directors appointed to the Board are required to seek election

at the AGM immediately following their appointment. Cressida

Hogg and Lord Sedwill were both appointed to the Board on

1 November 2022 and are required to seek election at this year’s

meeting.

The Board recommends that shareholders vote in favour of

Cressida Hogg and Lord Sedwill’s election to the Board. Their

biographical details are as follows:

Cressida Hogg CBE – Non-executive director and Chair

Designate

Appointed to the Board: 2022

Nationality: UK

Skills, competence and experience: Cressida was appointed as

Non-executive director and Chair Designate on 1 November 2022

and, subject to her election as a Director at the AGM, will succeed

Sir Roger Carr, the Company’s present Chairman, as Chair at the

close of the 2023 AGM.

Cressida is currently Chairman of the Board of Land Securities

Group PLC (Landsec), a position she has held since 2018, having

served as a non-executive of the company since 2014. She will

retire from the Landsec board on 16 May 2023.

Cressida is also a non-executive director of London Stock

Exchange Group plc, where she is the Senior Independent Director

and chairs its Remuneration Committee. She has previously

enjoyed a long executive career, spent largely with 3i Group, during

which she developed a deep understanding of large, long-term

infrastructure projects and businesses, gaining international

experience whilst working in various countries including the United

States, Canada, India, Australia and the Middle East.

Other non-executive appointments: As stated above, Chair of

Land Securities Group PLC from which she will retire on 16 May

2023 and Non-executive director of London Stock Exchange

Group plc.

Committee membership: Nominations Committee.

Mark Sedwill, The Lord Sedwill KCMG, FRGS – Non-executive

director

Appointed to the Board: 2022

Nationality: UK

Skills, competence and experience: During a long career serving

the UK government, Lord Sedwill held a wide range of national

security and diplomatic roles in the UK and overseas. In his ﬁnal

decade in public service, he was British Ambassador and NATO

Representative in Afghanistan, Foreign Ofﬁce Political Director and

Home Ofﬁce Permanent Secretary, culminating in his

appointments as National Security Adviser (2017-20) and Cabinet

Secretary (2018-20). Earlier in his career, he held diplomatic and

security posts, serving in Egypt, Syria, Jordan, Cyprus and

Pakistan.

He is a senior adviser and Supervisory Board member of

Rothschild & Co, and the Senior Independent Director and Senior

Deputy Chair of Lloyd’s of London. He is also the Chairman of the

Atlantic Future Forum and a member of the UK Parliament’s

House of Lords. Lord Sedwill is a Fellow of the Royal Geographical

Society and of the Institute of Directors. He is President of the

Special Forces Club.

Other non-executive appointments: Supervisory Board member of

Rothschild & Co and the Senior Independent Director and Senior

Deputy Chair of Lloyd’s of London.

Committee membership: Environmental, Social and Governance

Committee and Nominations Committee.

1.5 Resolution 20 – Authority to incur political expenditure

Part 14 of the Companies Act 2006 requires companies to obtain

shareholders’ authority for donations to registered political parties

and other political organisations totalling more than £5,000 in any

twelve month period, and for any political expenditure, subject to

limited exceptions. The deﬁnition of donation in this context is very

wide and extends to bodies such as those concerned with policy

review, law reform and the representation of the business

community. It could also include special interest groups, such as

those involved with the environment, which the Company and its

subsidiaries might wish to support, even though these activities

are not designed to support or inﬂuence support for a particular

political party.

It remains the policy of the Company not to make political

donations or incur political expenditure as those expressions are

normally understood. However, the Directors consider that it is in

the best interests of shareholders for the Company to participate

in public debate and opinion-forming on matters which affect its

business. To avoid inadvertent infringement of the Companies Act

2006, the Directors are seeking shareholders’ authority for the

Company and its subsidiaries to make political donations and to

incur political expenditure during the period from the date of the

Annual General Meeting to the conclusion of next year’s Annual

General Meeting or close of business on 30 June 2024, whichever

is earlier, up to a maximum aggregate amount of £100,000.

1.6 Resolution 21 – Approval of the BAE Systems Long-term

Incentive Plan 2023

The Directors propose that shareholders approve the

BAE Systems Long-term Incentive Plan 2023 (the “LTIP”). The LTIP

replaces the existing BAE Systems Long-Term Incentive Plan 2014

that has been operated by the Company since it was approved by

shareholders in 2014 (the “2014 LTIP”). The terms of the LTIP

remain substantially the same as the 2014 LTIP, save for updates

to reﬂect our proposed directors’ remuneration policy that is also

being submitted for shareholder approval at the AGM.

A copy of the rules of the LTIP will be available for inspection

electronically on the National Storage Mechanism at https://data.

fca.org.uk/#/nsm/nationalstoragemechanism from the date of this

Notice. Copies of the rules of the LTIP will also be available for

inspection at the place of AGM for at least 15 minutes prior to, and

during, the meeting.

The principal terms of the LTIP are summarised in the Appendix

on pages 11 and 12.

1.7 Resolutions 22 and 23 – Authority to allot shares and

disapplication of pre-emption rights

Resolution 22 – Authority to allot shares

The purpose of Resolution 22 is to renew the Directors’ power to

allot shares as described below.

The authority will allow the Directors to allot new shares and grant

rights to subscribe for or convert any securities into shares up to a

nominal value of £25,461,446 which is equivalent to approximately

33 per cent of the total issued ordinary share capital of the

Company, exclusive of treasury shares, as at 15 March 2023, the

latest practicable date prior to publication of this Notice.

At 15 March 2023, the Company held 218,850,860 treasury

shares which represents approximately 7.16 per cent of the total

number of ordinary shares in issue, excluding treasury shares, at

that date.

Notes on the Resolutions continued

There are no present plans to allot new shares (other than in

connection with employee share and incentive plans), however the

Directors consider it desirable to have the ﬂexibility permitted by

corporate governance guidelines to respond to market

developments and to enable allotments to take place to support

the Company as may be required.

If the resolution is passed the authority will expire on the earlier of

the end of the Annual General Meeting in 2024 and the close of

business on 30 June 2024.

Resolution 23 – Disapplication of pre-emption rights

If the Directors wish to allot new ordinary shares and other equity

securities, or sell treasury shares, for cash (other than in

connection with an employee share scheme) company law

requires that these shares are offered ﬁrst to shareholders in

proportion to their existing holdings.

The purpose of Resolution 23 is to authorise the Directors to allot

new ordinary shares and other equity securities pursuant to the

authority given by Resolution 22 or sell treasury shares, for cash (a)

in connection with a pre-emptive offer and (b) otherwise up to a

nominal value of £3,819,598 equivalent to approximately ﬁve per

cent of the total issued ordinary share capital of the Company

exclusive of treasury shares, and 4.67 per cent of the total issued

ordinary share capital of the Company inclusive of treasury shares,

as at 15 March 2023, without the shares ﬁrst being offered to

existing shareholders in proportion to their existing holdings.

The Board considers the authority in Resolution 23 to be

appropriate in order to allow the Company ﬂexibility to ﬁnance

business opportunities or to conduct a pre-emptive offer or rights

issue without the need to comply with the strict guidelines of the

statutory pre-emption provisions.

If the resolution is passed, the authority will expire on the earlier of

the conclusion of the Company’s Annual General Meeting in 2024

and the close of business on 30 June 2024.

1.8 Resolution 24 – Purchase of shares

The Directors are committed to managing the Company’s capital

effectively and consider that the purchase by the Company of its

ordinary shares may in certain circumstances be advantageous to

shareholders. They believe that, in common with many other listed

companies, the Company should obtain from shareholders a

general authority to make market purchases on the London Stock

Exchange.

Authority is sought for the Company to purchase up to 10 per cent

of its issued ordinary shares (excluding treasury shares), renewing

the authority granted by the shareholders at previous annual

general meetings.

Ordinary shares purchased by the Company pursuant to this

authority may be held in treasury or may be cancelled. The

minimum price, exclusive of expenses, which may be paid for an

ordinary share is 2.5p, being the par value of an ordinary share.

The maximum price, exclusive of expenses, which may be paid for

each share purchased in the market is the higher of (i) an amount

equal to 105 per cent of the average market value for an ordinary

share for the ﬁve business days immediately preceding the

purchase and (ii) the higher of the price of the last independent

trade and the highest current independent bid on the London

Stock Exchange.

The number of ordinary shares which may be acquired pursuant to

the authority is up to an aggregate of 305,567,916 ordinary shares,

this being approximately 10 per cent of the issued ordinary share

capital of the Company (exclusive of treasury shares) as at

15 March 2023, the latest practicable date prior to the publication

of this Notice. As at 15 March 2023 there were 65,686,722 options

to subscribe for ordinary shares outstanding, representing 2.15 per

cent of the Company’s issued share capital (excluding treasury

shares) at that date. If the authority was exercised in full, the

options would represent 2.39 per cent of the Company’s issued

ordinary share capital (excluding treasury shares).

This authority will last until the earlier of the Company’s Annual

General Meeting in 2024 and 30 June 2024.

Pursuant to the Companies Act 2006, the Company can hold the

shares which have been repurchased as treasury shares and

either re-sell them for cash, cancel them, either immediately or at a

point in the future, or use them for the purposes of its employee

share schemes. This provides the Company with additional

ﬂexibility in the management of its capital base. No dividends will

be paid on, and no voting rights will be exercised in respect of,

treasury shares.

Consistent with this approach, the Company announced on

28 July 2022 an on-market share repurchase programme of up to

£1.5 billon. Share repurchases under this programme, which

commenced on 28 July 2022 and is ongoing, are being made

pursuant to the share buy-back authority granted by the

shareholders at the 2022 AGM. The shares bought back under

this authority have been cancelled. In line with previous years, the

Company wishes to renew this authority at the 2023 AGM. Subject

to renewal of the share buyback authority at the 2023 AGM, it is

intended that the current £1.5 billion share buyback programme

will continue and that shares repurchased will continue to be

cancelled.

The Company will only purchase ordinary shares if the Directors

believe that it is in the shareholders’ best interests and will increase

earnings per share. In its Annual Report for the ﬁnancial year

ended 31 December 2022, the Company has stated that, as part

of the allocation of capital, its policy is to make accelerated returns

of capital to shareholders when the balance sheet allows and

when the return from doing so is in excess of the Group’s

Weighted Average Cost of Capital.

It is the Directors’ current intention that any shares bought back

under this authority be cancelled.

1.9 Resolution 25 – Notice of general meetings

Changes made to the current Companies Act by the Shareholders’

Rights Regulations increased the notice period required for general

meetings of the Company to 21 days unless shareholders approve

a shorter notice period, which cannot however be less than 14 clear

days. AGMs will continue to be held on at least 21 clear days’

notice.

Prior to this, the Company was able to call general meetings other

than an AGM on 14 clear days’ notice without obtaining such

shareholder approval. The Company has previously obtained

shareholder approval to preserve the ability to call general

meetings other than an AGM on 14 clear days’ notice.

Resolution 25 seeks approval of the renewal of this authority which

will be effective until the Company’s next Annual General Meeting

in 2024, when it is intended that a similar resolution will be

proposed.

The shorter notice period would not be used as a matter of routine

for such meetings. However the ﬂexibility offered by this resolution

will be used where, taking into account all the circumstances, the

Directors consider this appropriate in relation to the particular

issues to be considered at the general meeting in question.

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2. DOCUMENTS FOR INSPECTION

Copies of the executive Directors’ service contracts, the Chairman

and non-executive Directors’ letters of appointment, and the

Directors’ Indemnities, will be available for inspection during

normal business hours on Monday to Friday each week (public

holidays excepted) at the Company’s registered ofﬁce from the

date of this Notice of Meeting to the close of the meeting and at

the place of the meeting from 15 minutes prior to its

commencement until its conclusion.

A copy of the rules of the BAE Systems Long-term Incentive Plan

2023 will be available for inspection at the place of the meeting from

15 minutes prior to its commencement until its conclusion and will

be available for inspection electronically on the National Storage

Mechanism at https://data.fca.org.uk/#/nsm/

nationalstoragemechanism from the date of the Notice of Meeting.

Notes on the Resolutions continued

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Appendix

(Long-Term Incentive Plan 2023)

Summary of the principal features of the BAE Systems

Long-term Incentive Plan 2023

1 Introduction

The Remuneration Committee of the Board (the “Committee”)

wishes to propose that shareholders approve the BAE Systems

Long Term Incentive Plan 2023 (the “LTIP”). The terms of the LTIP

remain substantially the same as the BAE Systems Long Term

Incentive Plan 2014 (the “2014 LTIP”) which was approved by

shareholders in 2014 and expires next year, save for updates to

reﬂect our proposed new Directors’ Remuneration Policy that is

also being submitted for shareholder approval at the AGM.

We have described how we intend to use the LTIP for executive

directors and other employees in more detail in the proposed new

Directors’ Remuneration Policy. A summary of the principal terms

of the LTIP is set out below.

Awards granted prior to the approval of the LTIP will continue to be

governed by the 2014 LTIP.

2 Eligibility

Employees and executive directors of the Company, any of its

subsidiaries or designated associated companies are eligible to

participate in the LTIP. The LTIP will be administered by the

Committee or other authorised person(s), as appropriate (the

“Directors”). In practice it is intended that executive directors and

senior managers in the business will be granted awards.

3 Types of awards

The LTIP enables participants to be granted awards over the

Company’s shares subject to performance and/or continued

employment.

Awards under the LTIP can take the form of:

• Performance Awards – awards granted in the form of

nil-cost options or conditional awards which vest on such

date(s) as determined by the Directors on grant, subject to

continued employment and the satisfaction of a performance

condition.

• Market Value Options – options with an option price set by

reference to the market value of a share on grant. Market Value

Options vest on such date(s) as determined by the Directors on

grant, subject to continued employment. Market Value Options

are generally exercisable until the tenth anniversary of grant or

such earlier date(s) as set by the Directors. Market Value

Options may be granted as HMRC-approved options as

described below.

• Restricted Awards – nil-cost options or conditional awards

which vest on such date(s) as determined by the Directors on

grant subject to continued employment. The LTIP allows for

Restricted Awards to be subject to a performance condition,

but it is not currently intended that vesting will be subject to

performance.

There is no current intention to grant awards in the form of Market

Value Options.

4 Performance conditions

An award may be granted on the basis that it will normally only

vest to the extent that a performance condition, set at the time of

grant, is satisﬁed. Performance conditions will be assessed over

such period as determined by the Directors (currently expected to

be three years). The Directors may waive or change a performance

condition, without shareholder approval, in accordance with its

terms or if anything happens which causes the Directors

reasonably to consider it appropriate to do so (and subject to the

prevailing Directors’ Remuneration Policy, where applicable).

5 Dividend equivalent

Awards may be granted on the basis that the participant will

receive dividend equivalents (in cash or additional shares) when

and to the extent that the award vests or is exercised.

6 Individual limits

Awards granted to executive directors will be subject to the limits

set out in the Directors’ Remuneration Policy prevailing at the time

of grant.

The market value of shares comprised in an award granted in

respect of any ﬁnancial year may not exceed the following

percentages of the participant’s annual basic salary: Performance

Awards 440%; Market Value Options 400%; and Restricted

Awards 200%.

However, these limits may be exceeded (subject, in the case of

awards granted to executive directors, to the prevailing Directors’

Remuneration Policy) if: the Directors determine that exceptional

circumstances make it appropriate that an award should be

granted in excess of that limit; or the Directors determine in

exceptional circumstances to make recruitment awards that may

only be satisﬁed with market purchase shares.

7 Dilution limits

In any ten year period, not more than 10% of the issued ordinary

share capital of the Company may be issued or be issuable under

the LTIP and all other employees’ share plans operated by the

Company. In addition, in any ten year period, not more than 5% of

the issued ordinary share capital of the Company may be issued

or issuable under the LTIP and all other discretionary share plans

adopted by the Company (such as the 2014 LTIP).

These limits do not include awards which have lapsed or been

surrendered. Awards may also be satisﬁed using treasury shares.

If such shares are used, the Company will, so long as it is

considered best practice to do so, count them towards the dilution

limits set out above.

8 Vesting of awards

Conditional awards and options will normally vest on the vesting

date(s) set by Directors, subject to any applicable performance

conditions being satisﬁed and continued employment. An award

may be granted on the basis that the participant is required to hold

any shares received for a period following vesting. Subject to this,

shares will be issued or transferred to the participant (or an option

may be exercised) from vesting.

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9 Malus and clawback

A malus and clawback mechanism may be applied after vesting

on the occurrence of certain corporate events where:

– the Company is entitled to terminate employment for cause or

the participant has engaged in misconduct (including breach

of policy) which gives rise to other disciplinary sanction;

– the results of the Company and/or relevant business or

businesses for any period have been restated or subsequently

appear materially inaccurate or misleading;

– any group company or business unit has made a material

ﬁnancial loss; and/or

– the measurement of any performance condition does not

reﬂect the actual performance of the Company over the

performance period.

Clawback is typically applied until two years after the vesting date

set at grant.

10 Leaving employment

An award will normally lapse to the extent it is not vested if the

participant leaves the Company. However, if the participant leaves

employment due to ill-health, injury, disability, retirement with the

agreement of the Company (other than in the case of Restricted

Shares held by US employees), sale of a business or employing

company, redundancy or leaving in other circumstances if the

Directors allow, then unvested awards and options will generally

continue and vest on the normal vesting date, unless the Directors

determine that the awards should vest on cessation.

Where awards do not lapse, for US taxpayers, awards will vest on

cessation or as soon as any performance condition may be

determined, if later. Options which vest in such circumstances will

normally be exercisable for six months and then lapse.

Performance conditions will be tested at the time of vesting.

Unless the Directors decide otherwise, all awards will be pro-rated

to reﬂect the proportion of the performance period or the vesting

period (as applicable) during which the participant was in

employment.

If a participant dies, awards will generally vest on the date of death,

subject to the satisfaction of any performance conditions at that

time. Awards are then pro-rated as set out above.

11 Takeovers and other corporate events

In the event of a takeover, scheme of arrangement, merger or

other corporate reorganisation, awards will generally vest at the

time of the relevant event, and any holding period will normally

cease to apply. Awards will vest to the extent that any performance

condition has been satisﬁed as at the relevant event and will be

pro-rated to reﬂect the acceleration of vesting, unless the Directors

decide otherwise. Options will be exercisable for three months, or

such other period determined by the Directors, after the relevant

event. Alternatively, participants may be required or allowed to

exchange their awards for equivalent awards over shares in the

acquiring company.

If there is a variation in the share capital of the Company, a

demerger or a special dividend, the Directors may adjust the

awards (and, in the case of options, the option price).

12 HMRC-approved options

The LTIP contains a schedule under which HMRC-approved

options may be granted to a participant over shares having a value

up to £60,000 (or such higher limit as is set out in the relevant

legislation from time to time). HMRC-approved options are granted

on similar terms as market value options described above except

for minor changes necessary to comply with UK tax legislation.

13 Recruitment Awards

The LTIP also contains a schedule under which the Company may

grant awards to employees and executive directors (subject to the

prevailing Directors’ Remuneration Policy, where applicable) for

recruitment purposes from time to time (“Recruitment Awards”).

Recruitment Awards are granted on similar terms as Restricted

Awards or Performance Awards except for minor changes to allow

for more bespoke malus and clawback events and leaver

treatment.

14 General

Awards may be satisﬁed by the issue of new shares or the transfer

of existing shares from treasury or otherwise. Alternatively, the

Company can decide to satisfy any award in cash instead of

shares (and, in the case of options, less the option price).

Any shares issued will rank equally with shares of the same class

in issue on the date of allotment except in respect of rights arising

by reference to a prior record date.

Awards are granted for no consideration and are not pensionable,

are personal to the participant and not transferable, except on

death or with the prior consent of the Directors.

Awards will normally be granted within 42 days after the

announcement of the Company’s results for any period. No

awards can be granted more than ten years after the Plan’s

approval by shareholders.

15 Amendments and termination

The Directors can amend the LTIP and awards in any way but

shareholder approval will be required to amend certain provisions

to the advantage of participants. These provisions relate to

eligibility; individual and dilution limits; the rights attaching to

awards and shares, the basis for determining a participant’s

entitlement to shares; the adjustment of awards in the event of a

variation of capital; and the amendment of the LTIP itself.

Minor amendments can be made without shareholder approval to

beneﬁt the administration of the Plan, to take account of a change

in legislation or to obtain or maintain favourable tax, exchange

control or regulatory treatment. The LTIP may be terminated by the

Directors at any time.

Appendix continued

www.baesystems.com

Notice of Annual General Meeting 2023

Online Meeting Guide

Accessing the 2023 AGM virtually

Visit https://web.lumiagm.com/104-892-396 on your smartphone, tablet or computer.

You will then be required to enter your:

• Shareholder Reference Number (SRN)*

• PIN – (the ﬁrst two and the last two digits of your SRN)

* Your SRN is shown on your proxy card, shareholder voting instruction card or email AGM notiﬁcation, depending on how you

received notiﬁcation of the AGM.

Access will be available one hour prior to the start of the meeting. The meeting commences at 11.30am on 4 May 2023. If you

experience any difﬁculties, please contact Equiniti by emailing [email protected] stating your full name and postcode.

You will need the latest version of Chrome, Safari, Edge or Firefox. Please ensure your browser is compatible. An active internet

connection is required at all times to participate in the meeting.

Home page and broadcast

Once logged in, you will see the home page which contains instructions for using the platform.

At the commencement of the meeting, the live broadcast of the proceedings will be available on the right-hand side of your device.

Click play on the broadcast, ensure that your device is unmuted and the volume is turned up.

Voting

Once the Chair has formally opened voting, the list of resolutions will automatically appear on your screen. Select the option that

corresponds with how you wish to vote.

Once you have selected your vote, the option will change colour and a conﬁrmation message will appear to indicate your vote has

been cast and received, there is no submit button.

To vote on all resolutions displayed select the “vote all” option at the top of the screen.

To change your vote, reselect your choice. To cancel your vote, select the “cancel” button. You will be able to do this at any time

whilst the poll remains open and before the Chair announces its closure.

Questions

Written questions can be submitted by selecting the messaging icon from the navigation bar and typing your question into the ‘Ask

a question’ box. Click the arrow icon to submit the question.

Copies of questions you have submitted can be viewed by selecting ‘My Messages’.

Virtual microphone

If you would like to ask your question verbally, press the ‘Request to speak’ button at the bottom of the broadcast window. If you

are watching the broadcast in full screen mode, this button is found at the top of the window.

Follow the on-screen instructions to join the queue.

Documents

Meeting documentation can be found within the documents tab in the navigation bar.

Documents can be read within the platform or downloaded to your device in pdf format.

Appointed proxies and corporate representatives

If you plan to participate in the meeting as a proxy or corporate representative, please contact our registrar Equiniti by emailing

[email protected]. Your unique SRN and PIN, which is required to access the meeting, will be provided once a valid proxy

appointment or letter of representation has been received.

To avoid delay accessing the meeting, contact should be made at least 24 hours prior to the meeting date and time.

Mailboxes are monitored 9.00am to 5.00pm Monday to Friday (excluding public holidays in England & Wales).

www.baesystems.com

Getting to Hall 5

By Road

Hall 5 is situated in Farnborough, Hampshire, to the south west

of London, close to Junction 4 of the M3. From the A331, take

the junction to Farnborough A3011 and follow the signposts for

Farnborough A3011. At the Queen’s Roundabout (junction of

A3011/A325) take Government House Road, signposted for both

the Farnborough Aerospace Centre and Exhibition Centre.

Continue straight through the Aerospace Centre – Hall 5 is

accessed through Gate F at the end of Aerospace Boulevard.

Note: Lynchﬁeld Road is currently closed to westbound trafﬁc

(ie towards Hall 5) and a diversion is in place.

If you approach Hall 5 from this direction, please follow the

designated diversion.

SatNav users should enter ‘GU14 6TQ’ for directions to

Government House Road (Aerospace Boulevard) and follow the

signs to Hall 5 via Gate F.

Free parking is available at Hall 5 in the designated car park.

By Rail

The main railway station in Farnborough is Farnborough Main.

Other railway stations in the vicinity of Hall 5 include North Camp

and Aldershot. Please visit www.nationalrail.co.uk or phone

03457 484950 for rail travel information.

A complimentary shuttle bus service will be provided between

Farnborough Main train station and Hall 5. A return service to

Farnborough Main will be provided after the meeting.

Notice of Annual General Meeting 2023 continued

A325 Farnborough Road

to Farnborough

QUEEN'S

ROUNDABOUT

A3011 Lynchford Road

to A331 / M3

A325 Farnborough Road

to Aldershot

'F' GATE

Government House Road

Aerospace Boulevard

CAR

PARK

QUEEN’S

ROUNDABOUT

A3 3 1

M3 TO

M25 JCT 12,

LONDON

M3 TO

BASINGSTOKE

WINCHESTER

HOLIDAY

INN

A327

LY N C H FO R D RD

NORTH CAMP

STATION

FARNBOROUGH

MAIN STATION

CAMBERLEY

FARNBOROUGH

HALL 5

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