Audit Committee Overview

BAE SYSTEMS RemCo Response to COVID-19 Affirmed policy that rewards will be paid only if performance meets targets . • No extraordinary support from governments; dividends continue to be paid. So rewards programs continue to operate and pay out only if performance targets are achieved over one and three year periods ⚫ No adjustment to previously-adopted performance conditions for annual bonuses or in-flight LTIP awards have been undertaken. Committee will review executive pay in the Q1 2021, when complete information on the Group's operational and financial performance for 2020 is available. Continued encouragement to all plan participants to "keep eyes on the ball." • LTI Grants Were Priced in a Volatile Market with discretion invoked • • 2020 March LTI grants were delayed by several weeks for Remco to understand Covid-related market volatility, prevailing grant values and regulatory environment regarding rewards Committee included provision in grant language regarding its future discretion in the event that there is a misalignment between pay and performance at time of vesting Communications with shareholders providing data on pattern of grant prices over time; strike prices. were within the range of previous years' grants Copyright 2020 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark. 26

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