I am delighted to confirm your appointment as a Non-Executive Director of BG Group plc with effect from 2 May 2006.
The purpose of this letter is to set out the terms of your appointment.
You agree that you are not an employee of the Company and that this letter will constitute a contract for services and not a contract of employment. In view of the non-executive nature of this appointment, you will not participate in any of BG’s executive remuneration programmes or pension arrangements.
In future, I expect that most BG Group Non-Executive Directors will serve two three-year terms following their initial election by shareholders but, because of the long-term nature of the business, it is likely to be appropriate for a minority to serve for three terms.
| STRICTLY PRIVATE AND CONFIDENTIAL | |
| Mr Philippe Varin | 27 April 2006 |
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Time commitment
You agree that you will undertake such duties consistent with your being a Non-Executive Director as may reasonably be required from time to time by the Board of Directors.
You will use your best endeavours to attend all Board and shareholder meetings of the Company and of such Board committees of which you are from time to time a member. I anticipate that, normally, there will be eight scheduled Board meetings annually with such other meetings as may be required from time to time, including awaydays and asset visits. In addition, you will be expected to devote appropriate preparation time ahead of each meeting.
By accepting this appointment, you have confirmed that you are able to allocate sufficient time to meet these expectations. You should consult with me before you accept any additional commitments which may conflict with, or impact on, the time you are able to devote to your role.
Fees
You will be paid a fee during your appointment as a Non-Executive Director. At present the annual basic rate is £57,500 payable in arrears at monthly intervals in accordance with the Company’s normal accounting periods. The fees will be reviewed from time to time by the Board, the next scheduled review being due on 1 July 2006. The fees will be paid less any tax and national insurance contributions the Company is required to deduct.
You will see in the Appendix that special pay will be awarded to you should you serve on or act as chairman to any committee or should you perform any other services which the Board considers to extend beyond the ordinary duties of a director. Upon your appointment to the Audit Committee on 17 July 2006, you will be paid an additional annual fee of £5,000 payable in arrears at monthly intervals in accordance with the Company’s normal accounting periods. Again, these fees will be paid less any tax and national insurance contributions the Company is required to deduct. The Company will also reimburse you for all reasonable expenses you may incur on Company business.
In the event that you cease to be a Director for any reason (including resignation), you would be entitled to any accrued but unpaid Director’s fees, calculated on a daily basis according to the number of days that you have served during the monthly payment period. No other compensation would be payable.
Cont/...3
| STRICTLY PRIVATE AND CONFIDENTIAL | |
| Mr Philippe Varin | 27 April 2006 |
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Officers’ liability insurance
The Company has Director and Officer liability insurance and it is intended to maintain such cover for the full term of your appointment. The current indemnity limit is $250 million for any one claim or series of claims in any single year; a copy of the policy document is available on request from the Company Secretary. In addition, you will also be covered by the Company’s Deed of Indemnity for Directors, a copy of which will be provided to you.
Outside interests
You have confirmed that no apparent conflicts of interest exist at present. The Company Secretary will contact you regarding your existing directorships and related interests and, any possible conflict between your interests and those of the Company.
Whilst a Director of the Company, you must not accept a directorship, or other significant position, or make a significant investment in, any business competing with the Company without the Board’s prior permission.
You should advise me of any intention to accept any other directorships or appointments with a view to receiving my prior approval before formally accepting the appointment in accordance with the policy on external appointments. You will also inform the Company Secretary of any changes. You have an obligation to disclose any circumstances in which you have an interest in a particular contract or other transaction in which the Company has an interest.
Training and briefing
Appropriate training and briefing will be provided to you upon taking up your appointment, having regard to your experience. The Company Secretary will contact you to make appropriate arrangements.
Confidentiality
You shall not, whether during or after the termination of your appointment (howsoever terminated), except in the proper course of your duties or as required by law or by the requirements of any stock exchange or other regulatory body, use or divulge to any person, firm or company, and shall use your best endeavours to prevent the disclosure of any trade or business secrets or any information concerning the business or finances of the Company or of any dealings, transactions or affairs of the Company which has or may come to your knowledge in the course of your appointment.
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| STRICTLY PRIVATE AND CONFIDENTIAL | |
| Mr Philippe Varin | 27 April 2006 |
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Review process
The performance of individual Directors and that of the Board and its committees is evaluated annually.
In this regard the Company expects you to participate in:
| | • | training programmes from time to time determined by the Board as being appropriate for Non-Executive Directors; |
| | | |
| | • | processes of internal and external review of Director, Board and Committee performance as may be determined to be appropriate by the Board from time to time. |
If there are any issues which cause you concern about the Board or your individual performance, or the performance of any committee, you should feel free to raise it with me at any time.
Independent professional advice
You may on occasion consider that you need professional advice in the furtherance of your duties as a Director. In exceptional circumstances, it may be appropriate for you to seek advice from independent advisers at the Company’s expense. Should this arise, please would you contact the Company Secretary in the first instance who will be able to explain to you the procedure under which Directors may obtain such independent advice.
Please sign and return the attached copy of this letter to signify your willingness to act and your acceptance of the terms set out above.
The Board and I are greatly looking forward to you taking up this appointment.
Sir Robert Wilson
Acknowledgement
I, Philippe Varin, hereby accept the appointment as Non-Executive Director on the terms set out in this letter.
| /s/ Philippe Varin | | 2 May 2006 |
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| Signature | | Date |
SCHEDULE OF FEES FOR NON — EXECUTIVE DIRECTORS
Effective from 1st July 2005
| | | Per annum |
| Basic fee | | £57,500 |
| Additional fees | | |
| Membership fees*: | Audit Committee | £5,000 |
| | Corporate Responsibility Committee | £5,000 |
| | Remuneration Committee | £5,000 |
| Fee for Chairing: | Audit Committee | £15,000 |
| | Remuneration Committee | £10,000 |
| | Corporate Responsibility Committee | £10,000 |
| Senior Independent Director | | £20,000 |
* Not payable to Chairman of Committee
