Remuneration outcomes during the year ended 31 March 2005

Tables 1A, 1B, 2, 3, 4 and 5 comprise the ‘auditable’ part of the Directors’ Remuneration Report, being the information required by Part 3 of Schedule 7A to the Companies Act 1985.

1. Directors’ emoluments

The following tables set out an analysis of the pre-tax emoluments during the years ended 31 March 2005 and 2004, including bonuses but excluding pensions, for individual Directors who held office in National Grid Transco during the year ended 31 March 2005.

Table 1A		Year ended 31 March 2005					Year ended 31 March 2004
		Salary £000s	Annual bonus £000s	Benefits in kind(i) £000s	Total £000s		Total £000s
Executive Directors
Roger Urwin		701	404	20	1,125		1,051
Steve Lucas		395	234	19	648		611
Edward Astle		375	231	16	622		568
Steve Holliday (ii)		400	158	22	580		633
Nick Winser (iii)		335	183	13	531		593
Mike Jesanis (iv)		292	145	9	446		–
Rick Sergel (v) (vi)		153	76	13	242		735
Totals		2,651	1,431	112	4,194		4,191

(i)	Benefits in kind comprise benefits such as a fully expensed car, chauffeur, private medical insurance and life assurance.
(ii)	Steve Holliday will also receive, subject to the completion of the sales of four of the UK gas distribution networks, an additional ex gratia bonus of £80,000 to recognise his leadership of the sales process and the crystallisation of shareholder value at a significant premium to the regulatory value of these assets.
(iii)	In the previous year’s Directors’ Remuneration Report the reported emoluments of Nick Winser included ‘Benefits in kind’ of £128,000. This figure was overstated and should have been reported as £119,000. The comparative figures provided above reflect the amended total for the year ended 31 March 2004.
(iv)	Mike Jesanis’ bonus includes payments worth £4,524 in respect of his participation in the USA Goals Program (described in Annual Bonus Plan of Remuneration policy).
(v)	Rick Sergel received £5,800 for accrued and unused vacation, in addition to the details above.
(vi)	Rick Sergel’s bonus includes payments worth £2,376 in respect of his participation in the USA Goals Program (described in Annual Bonus Plan of Remuneration policy). Rick Sergel did not receive an additional pension value or severance on his retirement.

Table 1B		Year ended 31 March 2005				Year ended 31 March 2004
		Fees £000s	Other emoluments £000s	Total £000s		Total £000s
Non-executive Directors
Sir John Parker (i)		375	31	406		326
James Ross		64	–	64		115
John Grant		65	–	65		59
Ken Harvey		58	–	58		44
Paul Joskow		73	–	73		67
Stephen Pettit		58	–	58		47
Maria Richter		66	–	66		29
George Rose		61	–	61		59
John Allan (ii)		–	–	–		–
Totals		820	31	851		746

(i)	Sir John Parker’s other emoluments comprise benefits in kind such as a fully expensed car, private medical insurance and life assurance.
(ii)	John Allan was appointed to the Board on 1 May 2005.

2. Directors’ pensions

The table below gives details of the Executive Directors’ pension benefits in accordance with both Schedule 7A of the Companies Act 1985 and the UK Listing Authority’s Listing Rules.

Table 2	Additional benefit earned during the year ended 31 March 2005 £000s	Accrued entitlement as at 31 March 2005 £000s	Transfer value of accrued benefits as at 31 March (i) 2005 £000s 2004 £000s		Increase in transfer value less Director’s contributions £000s	Additional benefit earned during the year ended 31 March 2005 (excluding inflation) £000s	Transfer value of increase in accrued benefit in the year ended 31 March 2005 (excluding Director’s contributions and inflation) £000s
Roger Urwin	54	457	9,016	7,353	1,621	42	778
Steve Lucas	15	141	2,261	1,566	683	12	179
Edward Astle	15	45	639	366	250	14	173
Steve Holliday	15	53	679	404	251	15	163
Nick Winser (ii)	27	108	1,281	821	440	24	260
Mike Jesanis (iii)	39	197	1,687	1,278	409	39	375
Rick Sergel (iv)	5	377	5,025	4,576	449	5	272

(i)	The transfer values shown at 31 March 2004 and 2005 represent the value of each Executive Director’s accrued benefits based on total service completed to the relevant date. The transfer values for the UK Executive Directors have been calculated in accordance with guidance note ‘GN11’ issued by the Institute of Actuaries and the Faculty of Actuaries. The transfer values for the US Directors have been calculated using discount rates based on high yield US corporate bonds and associated yields at the relevant dates.
(ii)	The above information allows for the accrual of a pension benefit of two thirds of salary at age 60 taking into account standard benefits earned prior to 1 September 1998. This means that, as well as the pension stated above, Nick Winser has an accrued lump sum entitlement of £188,000 as at 31 March 2005. The increase to the accumulated lump sum including inflation was £37,000 and excluding inflation was £33,000 in the year to 31 March 2005. The transfer value information above includes the value of the pension equivalent of the lump sum.
(iii)	Mike Jesanis was appointed to the Board with effect from 26 July 2004. The above information allows for the accrual of pension benefit for the full financial year. Through his participation in the Thrift Plan in the US, the Group also made contributions worth £2,874 to a defined contribution pension arrangement in respect of Mike.
(iv)	Rick Sergel retired on 1 August 2004. No enhancements were made to his pension benefits. He opted to receive his total single life annuity at retirement of $711,618 (£380,544) p.a. as a $525,252 (£280,883) lump sum plus a 100% joint and survivor annuity of $53,641 (£28,685) p.a. from the Qualified Plan plus a lump sum that was used to pay FICA taxes of $135,383 (£72,397) plus a 100% joint and survivor annuity of $533,407 (£285,244) p.a. from the Non-Qualified Plan. The transfer value calculated as at 31 March 2005 represents the value of the 100% joint and survivor annuities calculated at the age at date of retirement and market conditions at 31 March 2005, plus the lump sums that were paid. For Rick Sergel, the accrued pension shown in the 2003/04 Annual Report and Accounts of £31,000 was mis-stated as the monthly amount and was equivalent to an annual accrued pension of £372,000 p.a. The transfer value shown in the 2003/04 Annual Report and Accounts as at 31 March 2004 of £2,527,000 was mis-stated as it assumed an earliest right to unreduced pension at age 62 rather than 55. The amended figure is £4,576,000.

3. Directors’ interests in share options

The table below gives details of the Executive Directors’ holdings of share options awarded under the ESOP, the Share Matching Plan and Sharesave schemes.

Table 3	Options held at 1 April 2004 or, if later, on appointment*	Options exercised or lapsed during the year	Market price at date of exercise (pence)	Options granted during the year	Options held at 31 March 2005 or, if earlier, on retirement †	Exercise price per share (pence)	Normal exercise period
Roger Urwin
ESOP	169,340	–	–	–	169,340	280.50	Sep 2000	Sep 2007
	91,656	–	–	–	91,656	375.75	June 2001	June 2008
	22,098	–	–	–	22,098	455.25	June 2002	June 2009
	33,867	–	–	–	33,867	531.50	June 2003	June 2010
	133,214	–	–	–	133,214	563.00	June 2004	June 2011
	186,915	–	–	–	186,915	481.50	June 2005	June 2012
Share Match	4,047	–	–	–	4,047	100 in total	June 2001	June 2005
	3,884	–	–	–	3,884	100 in total	Jan 2002	June 2006
	3,859	–	–	–	3,859	100 in total	Jan 2002	June 2007
	5,635	–	–	–	5,635	100 in total	June 2004	June 2008
	18,644	–	–	–	18,644	100 in total	June 2005	June 2012
	25,000	–	–	–	25,000	100 in total	June 2006	June 2013
	–	–	–	30,762	30,762	nil(i)	May 2007	May 2014
Sharesave	2,910	–	–	–	2,910	317.00	Apr 2007	Sep 2007
Total	701,069	–	–	30,762	731,831
Steve Lucas
ESOP	54,404	–	–	–	54,404	434.25	Dec 2005	Dec 2012
Share Match	–	–	–	16,909	16,909	nil(i)	May 2007	May 2014
Sharesave	2,700	–	–	–	2,700	350.00	Mar 2006	Aug 2006
Total	57,104	–	–	16,909	74,013
Edward Astle
ESOP	193,952	–	–	–	193,952	479.50	Sep 2004	Sep 2011
	101,246	–	–	–	101,246	481.50	June 2005	June 2012
	112,262	–	–	–	112,262	434.25	Dec 2005	Dec 2012
	131,086	–	–	–	131,086	400.50	June 2006	June 2013
Share Match	6,553	–	–	–	6,553	100 in total	June 2005	June 2012
	13,812	–	–	–	13,812	100 in total	June 2006	June 2013
	–	–	–	15,716	15,716	nil(i)	May 2007	May 2014
Sharesave	2,392	–	–	–	2,392	397.00	Sep 2005	Feb 2006
Total	561,303	–	–	15,716	577,019
Steve Holliday
ESOP	150,000	–	–	–	150,000	540.00	Mar 2004	Mar 2011
	71,936	–	–	–	71,936	563.00	June 2004	June 2011
	101,246	–	–	–	101,246	481.50	June 2005	June 2012
Share Match	10,350	–	–	–	10,350	100 in total	June 2005	June 2012
	14,083	–	–	–	14,083	100 in total	June 2006	June 2013
	–	–	–	18,713	18,713	nil(i)	May 2007	May 2014
Sharesave	4,692	–	–	–	4,692	350.00	Mar 2008	Aug 2008
Total	352,307	–	–	18,713	371,020
Nick Winser
ESOP	10,633	–	–	–	10,633	375.75	June 2001	June 2008
	47,236	–	–	–	47,236	455.25	June 2002	June 2009
	19,755	–	–	–	19,755	531.50	June 2003	June 2010
	24,156	–	–	–	24,156	563.00	June 2004	June 2011
	37,383	–	–	–	37,383	481.50	June 2005	June 2012
Share Match	872	872	465 (iv)	–	–	100 in total	Jan 2002	June 2006
	980	980	465 (iv)	–	–	100 in total	Jan 2002	June 2007
	1,694	1,694	465 (iv)	–	–	100 in total	June 2004	June 2008
	2,509	–	–	–	2,509	100 in total	June 2005	June 2012
	3,937	–	–	–	3,937	100 in total	June 2006	June 2013
	–	–	–	14,059	14,059	nil(i)	May 2007	May 2014
Sharesave	5,007	5,007	464.75	–	–	337.00	Sep 2004	Feb 2005
Total	154,162	8,553	–	14,059	159,668
Mike Jesanis (appointed to the Board on 26 July 2004)
ESOP	77,861*	–	–	–	77,861	566.50	Mar 2003	Mar 2010
	51,169*	–	–	–	51,169	563.00	June 2004	June 2011
	66,099*	–	–	–	66,099	481.50	June 2005	June 2012
Total (shares)	195,129	–	–	–	195,129
Phantom ADSs (ii)	639*	–	–	27	666	$39.590	–	–
	2,740*	–	–	117	2,857	$34.270	–	–
	3,154*	–	–	134	3,288	$32.320	–	–
	2,777*	–	–	118	2,895	$39.376	–	–
Total (Phantom ADSs)	9,310	–	–	396	9,706
Rick Sergel (retired from the Board on 26 July 2004)
ESOP	201,845	–	–	–	201,845 †	566.50	July 2004	July 2005
	134,321	–	–	–	134,321 †	563.00	July 2004	July 2005
	172,836	–	–	–	172,836 †	481.50	July 2004	July 2005
Total (shares)	509,002	–	–	–	509,002
Phantom ADSs (iii)	4,782 (v)	–	–	–	4,782†	$39.590	–	–
	5,658 (v)	–	–	–	5,658 †	$34.270	–	–
	6,144 (v)	–	–	–	6,144 †	$32.320	–	–
	–	–	–	5,455	5,455 †	$39.376	–	–
Total (Phantom ADSs)	16,584	–	–	5,455	22,039

(i)	Nil cost Share Match options were awarded in May 2004, previously the exercise price was 100 pence per award.
(ii)	In place of participation in the Share Matching Plan, Mike Jesanis elected to defer the ADS component of his bonus into a deferred compensation plan. For a Phantom award under a deferred compensation plan the ADS market value is tracked, additional value is accrued for dividends and the value is delivered, net of normal US deductions, depending on the participants’ election i.e. in 10 years, on a specified age date from 55 to 75, or on leaving, including retirement. The market price of ADSs at 31 March 2005 was $46.750.
(iii)	In place of participation in the Share Matching Plan, Rick Sergel elected to defer the ADS component of his bonus into a deferred compensation plan. The July 2004 award was in respect of the period from 1 April 2004 to his retirement on 26 July 2004. All Phantom ADS awards vested immediately on retirement from the Board.
(iv)	Nick Winser received £2,500 in respect of a cash payment in lieu of dividends, on the exercise of three Share Match awards.
(v)	In the previous year’s Directors’ Remuneration Report, the Phantom ADS awards were disclosed in error as being 4,347, 5,332 and 5,938 ADSs respectively. These awards were under-reported as they did not reflect additional awards due to dividend reinvestment.

Executive Share Option Plan (ESOP)

No further awards will be made under this plan but there are outstanding options granted in previous years. Such options will normally be exercisable between the third and tenth anniversaries of the date of grant, subject to performance conditions. The performance conditions attaching to outstanding ESOP options are set out below. If the performance condition is not satisfied after the first three years then it will be re-tested as indicated.

For options granted in June 2000, options worth up to 100% of an optionholder’s base salary will become exercisable in full if Total Shareholder Return (TSR), measured over the period of three years beginning with the financial year in which the option is granted, is at least median compared with a comparator group of companies. Grants in excess of 100% of salary, vest on a sliding scale, becoming fully exercisable if the Group’s TSR is in the top quartile. The performance condition attaching to options granted in June 2000 is tested annually throughout the lifetime of the option. These options remain unvested. For options granted from March 2001, the same TSR test is used but the performance condition may only be re-tested in years four and five. These options remain unvested and a final re-test will be undertaken in March 2006.

The comparator group was revised in June 2002 and used for options granted in June and December 2002 and is set out below:

Allegheny Energy, Inc.	Energy East Corporation	NSTAR Corporation	Scottish Power plc
BG Group plc	Exelon Corporation	Potomac Electric Power Company	The Southern Company, Inc.
British Energy plc	FirstEnergy Corporation	Powergen plc	TXU, Inc.
Centrica plc	FPL Group, Inc.	Progress Energy, Inc.	United Utilities plc
Consolidated Edison, Inc.	International Power plc	Public Service Enterprise Group, Inc.	Xcel Energy, Inc.
Duke Energy Corporation	Northeast Utilities Corporation	Scottish & Southern Energy plc

These options have now vested having reached median performance, such that 100% of salary has vested. Details of the exercise periods are shown in table 3.

Details of the closing price of National Grid Transco shares as at 31 March 2005 and the high and low prices during the year are shown below table 6.

4. Directors’ interests in the Performance Share Plan

The table below gives details of the Executive Directors’ holdings of conditional shares awarded under the National Grid Transco Performance Share Plan (PSP). Under this Plan Executive Directors receive a conditional award of shares, up to a maximum of 125% of salary, which is subject to a TSR performance condition over a three-year performance period. Shares are then released following a further one-year retention period.

Table 4	Conditional shares at 31 March 2004 or, if later, on appointment*	Awards exercised/ lapsed during year	Awards granted during year	Market price at award (pence)	Date of award	Vested in year	Lapsed without vesting in year	Conditional shares at 31 March 2005 or, if earlier, on retirement †	Release date
Roger Urwin	195,866	–	–	405.25	June 2003	–	–	195,866	June 2007
	–	–	198,587	424.875	June 2004	–	–	198,587	June 2008
Total	195,866	–	198,587			–	–	394,453
Steve Lucas	115,669	–	–	405.25	June 2003	–	–	115,669	June 2007
	–	–	116,210	424.875	June 2004	–	–	116,210	June 2008
Total	115,669	–	116,210			–	–	231,879
Edward Astle	107,958	–	–	405.25	June 2003	–	–	107,958	June 2007
	–	–	110,326	424.875	June 2004	–	–	110,326	June 2008
Total	107,958	–	110,326			–	–	218,284
Steve Holliday	115,669	–	–	405.25	June 2003	–	–	115,669	June 2007
	–	–	117,681	424.875	June 2004	–	–	117,681	June 2008
Total	115,669	–	117,681			–	–	233,350
Nick Winser	92,535	–	–	405.25	June 2003	–	–	92,535	June 2007
	–	–	98,558	424.875	June 2004	–	–	98,558	June 2008
Total	92,535	–	98,558			–	–	191,093
Mike Jesanis  (i)	41,871*	–	–	405.25	June 2003	–	–	41,871	June 2007
	ADSs 19,987*	–	–	$39.40	June 2004	–	–	ADSs19,987	June 2008
Total	41,871*	–	–			–	–	41,871
	ADSs 19,987*	–	–			–	–	ADSs 19,987
Rick Sergel	152,063	–	–	405.25	June 2003	–	152,063	–†	June 2007
Total	152,063	–	–			–	152,063	–†

(i)	Mike Jesanis received an award over ADSs in June 2004, based on a market price of $39.40 per ADS. Each ADS represents 5 ordinary shares.

5. Directors’ interests under the Lattice Long Term Incentive Scheme

The following table shows awards under the Lattice Long Term Incentive Scheme (LTIS) that were rolled over at the time of the merger between National Grid Group plc and Lattice Group plc by Steve Lucas and that were still held at 31 March 2005.

	Original award date	Award held at 1 April 2004 including dividend reinvestment shares	Adjusted market price for award at rollover	Shares resulting from dividend reinvestment in year	Award released during year	Market price at date of release (pence)	Award held at 31 March 2005 or on retirement †	Date award released
Steve Lucas	Nov 2000	81,492	350.43	2,122	83,614	461.80	–	Nov 2004
	Nov 2001	96,589	388.24	1,612	–	–	98,201	Nov 2005
Total		178,081		3,734	83,614	–	98,201

Lattice LTIS

No awards have been made under this Plan since November 2001. Under the terms of the Lattice LTIS, notional allocations of shares were made to key individuals. The allocations were subject to a performance condition over three years as set out below and a further retention period of one year. The number of shares actually released to participants depended on the Group’s TSR compared with that of other regulated utility companies operating in a similar environment.

The 2000 and 2001 LTIS awards held by Steve Lucas continued over a number of National Grid Transco shares shown above and remain subject to the rules of the LTIS except that (i) since 21 October 2002, the performance target measures the Group’s TSR against the original comparator group of each award; and (ii) the awards will not be forfeited on ceasing employment unless the Remuneration Committee decides otherwise.

The comparator group used for the 2000 and 2001 LTIS awards is set out below:

Powergen plc	Pennon Group plc	Centrica plc	British Energy plc
Kelda Group plc	United Utilities plc	Scottish Power plc	BT Group plc
Scottish & Southern Energy plc	Severn Trent plc	Viridian Group plc	Railtrack plc (2000 only)
BAA plc	AWG plc	International Power plc	Thames Water plc (2000 only)

No awards vested if the Group’s TSR over the performance period, when compared with that of the other companies in the comparator group, fell below median. For TSR between that of the median and upper quartile of comparator group constituent companies the proportion of shares that vested was calculated on a straight-line basis between 40% and 100%, and for TSR performance at or above upper quartile the awards vested in full.

During 2004/05, the 2000 award was released to Steve Lucas following the end of the retention period. The 2001 award vested when the Group’s TSR was measured against the comparator group at the end of the performance period such that 100% of the award vested. Shares under this award will be held for a further year, the retention period, and will be released in November 2005.

6. Directors’ beneficial interests

The Directors’ beneficial interests (which include those of their families) in the ordinary shares of National Grid Transco of 10p each are shown below.

	Ordinary shares at 31 March 2005 (i) or, if earlier, on retirement †	Ordinary shares at 1 April 2004 or, if later, on appointment*	Options/awards over ordinary shares at 31 March 2005 or, if earlier, on resignation †(iii)	Options/awards over ordinary shares at 1 April 2004 or, if later, on appointment*
Roger Urwin (ii)(iv)	249,517	231,292	1,126,284	896,935
Steve Lucas (ii)(v)(vi)(vii)	102,063	42,961	404,093	350,854
Edward Astle(ii)	21,118	11,973	795,303	669,261
Steve Holliday (ii)(iv)	25,843	14,629	604,370	467,976
Nick Winser (ii)	36,515	19,781	350,761	246,697
Mike Jesanis (ii)	3,557	3,412*	336,935	336,935*
Rick Sergel (ii)	3,058 †	3,058	509,002 †	661,065
Sir John Parker	52,229	40,229	–	–
James Ross	19,000 †	19,000	–	–
John Grant	10,000	10,000	–	–
Ken Harvey	3,874	1,874	–	–
Paul Joskow	5,000	5,000	–	–
Stephen Pettit	3,000	1,875	–	–
Maria Richter	2,000	–	–	–
George Rose	5,025	5,025	–	–
John Allan (viii)	–	–	–	–

(i)	There has been no other change in the beneficial interests of the Directors in the ordinary shares of National Grid Transco between 1 April 2005 and 18 May 2005 except in respect of routine monthly purchases under the SIP (see note (iv) below).
(ii)	Each of the Executive Directors, with the exception of Rick Sergel and Mike Jesanis, was for Companies Act purposes, deemed to be a potential beneficiary under the National Grid Qualifying Employee Share Ownership Trust (QUEST) and in the National Grid Transco 1996 Employee Benefit Trust and thereby to have an interest in the 6,364,355 National Grid Transco shares held by the QUEST and the 100,000 National Grid Transco shares held by the 1996 Employee Benefit Trust as at 31 March 2005.
(iii)	Including the PSP awards detailed in table 4 above.
(iv)	Beneficial interest includes shares purchased under the monthly operation of the SIPin the year to 31 March 2005. Further shares were purchased in April and May 2005 on behalf of Steve Holliday (49 shares) and Roger Urwin (49 shares).
(v)	Steve Lucas was, for Companies Act purposes, deemed to be a potential beneficiary in the 103,732 National Grid Transco shares held by Mourant and Co. Trustees, as trustee of the Lattice Group Employee Shares Trust operated in conjunction with the Lattice LTISand the 6,981 National Grid Transco shares held by Lattice Group Trustees Limited as trustee of the Lattice Group Employee Share Ownership Trust, as at 31 March 2005.
(vi)	Beneficial interest includes shares acquired pursuant to the Lattice All Employee Share Ownership Plan.
(vii)	Including the Lattice LTISawards detailed in table 5 above.
(viii)	John Allan was appointed to the Board on 1 May 2005.
The closing price of a National Grid Transco share on 31 March 2005 was 490.25p. The range during the year was 549.50p (high) and 421.25p (low). Please note that the Register of Directors’ Interests contains full details of shareholdings and options/awards held by Directors as at 31 March 2005.

On behalf of the Board

Helen Mahy
Group Company Secretary and General Counsel
18 May 2005

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