Pre-Annual General Meeting Information • Mar 29, 2023
Pre-Annual General Meeting Information
Open in ViewerOpens in native device viewer
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.
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.
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.
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.
You can alternatively vote by proxy on the resolutions put to shareholders in advance either online or by post as follows:
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.
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.
Please see the map on page 14 of this document.
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.
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.
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.
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.
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.
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.
THAT Nicholas Anderson be and is hereby re-elected a Director of the Company.
THAT Thomas Arseneault be and is hereby re-elected a Director of the Company.
THAT Crystal E Ashby be and is hereby re-elected a Director of the Company.
THAT Dame Elizabeth Corley be and is hereby re-elected a Director of the Company.
THAT Bradley Greve be and is hereby re-elected a Director of the Company.
THAT Jane Griffiths be and is hereby re-elected a Director of the Company.
THAT Christopher Grigg be and is hereby re-elected a Director of the Company.
THAT Ewan Kirk be and is hereby re-elected a Director of the Company
THAT Stephen Pearce be and is hereby re-elected a Director of the Company.
THAT Nicole Piasecki be and is hereby re-elected a Director of the Company.
THAT Charles Woodburn be and is hereby re-elected a Director of the Company.
THAT Cressida Hogg be and is hereby elected a Director of the Company.
THAT Lord Sedwill be and is hereby elected a Director of the Company.
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.
THAT the Audit Committee of the Board of Directors be and is hereby authorised to agree the remuneration of the Auditors.
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
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:
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:
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.
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:
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.
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
Company Secretary 29 March 2023 6 Carlton Gardens London SW1Y 5AD
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.
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.
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.
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.
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.
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.
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.
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.
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.
Appointed to the Board: 2016
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.
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
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.
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
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.
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.
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.
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.
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.
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:
Appointed to the Board: 2022
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.
Appointed to the Board: 2022
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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:
There is no current intention to grant awards in the form of Market Value Options.
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).
11
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.
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.
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.
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.
A malus and clawback mechanism may be applied after vesting on the occurrence of certain corporate events where:
Clawback is typically applied until two years after the vesting date set at grant.
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.
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).
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.
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.
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.
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.
Visit https://web.lumiagm.com/104-892-396 on your smartphone, tablet or computer.
You will then be required to enter your:
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.
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.
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.
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'.
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.
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.
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).
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.
'F' GATE
Aerospace Boulevard
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.
QUEEN'S
Government House Road
HALL 5
to Aldershot
ROUNDABOUT A3011 Lynchford Road
A325 Farnborough Road
to A331 / M3
[THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK]
[THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK]
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.