S-8

As filed with the Securities and Exchange Commission on October 16, 2008

Registration Statement No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-8

REGISTRATION STATEMENT UNDER

THE SECURITIES ACT OF 1933

Diageo plc

(Exact name of registrant as specified in its charter)

England (State or other jurisdiction of incorporation or organization) N.A. (I.R.S. Employer Identification No.)

8 Henrietta Place
London W1G 0NB, England

(Address of principal executive offices)

DIAGEO PLC 2008 PERFORMANCE SHARE PLAN

DIAGEO PLC 2008 SENIOR EXECUTIVE SHARE OPTION PLAN

(Full title of the plan)

Kellye Walker
Diageo North America, Inc.
801 Main Street
Norwalk, CT 06851

(Name, address and telephone number of agent for service)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o

CALCULATION OF REGISTRATION FEE

Title of Securities to be Registered(1)	Amount to be Registered(2)	Proposed Maximum Offering Price per Share(3)	Proposed Maximum Aggregate Offering Price(3)	Amount of Registration Fee
Ordinary Shares, par value 28 101/108 pence per share	60,000,000	$13.94	$836,400,000	$32,870.52

(1)The ordinary shares, par value 28 101/108 pence per share (the “Ordinary Shares”), of the Registrant may be represented by the Registrant’s American Depositary Shares (“ADSs”), each of which represents four Ordinary Shares. A separate registration statement on Form F-6 was filed with the Securities and Exchange Commission on December 17, 1997 (Registration No. 333-8010) for the registration of ADSs evidenced by American Depositary Receipts issuable upon deposit of Ordinary Shares.

(2)Plus such indeterminate number of additional Ordinary Shares as may be offered and issued to prevent dilution resulting from share splits or similar transactions in accordance with Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”).

(3)Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(h) under the Securities Act.  The estimate is based on the average of the high and low prices of the Ordinary Shares represented by the ADSs as reported on the New York Stock Exchange on October 10, 2008.

PART I

INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

EXPLANATORY NOTE

All information required by Part I of Form S-8 to be contained in the Section 10(a) prospectus is omitted from this Registration Statement in accordance with Rule 428 under the Securities Act, and the Note to Part I.  The documents containing the information specified in Part I will be delivered to the participants in the plans covered by this Registration Statement, as required by Rule 428(b) under the Securities Act.  Such documents are not being filed with the Securities and Exchange Commission (the “Commission”) as part of this Registration Statement or as prospectuses or prospectus supplements pursuant to Rule 424 under the Securities Act.

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PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.Incorporation of Documents by Reference

The following documents previously filed or furnished by Diageo plc (the “Registrant”) with the Commission are incorporated as of their respective dates by reference herein and shall be deemed a part hereof:

(a)The Registrant’s Annual Report on Form 20-F for the fiscal year ended June 30, 2008, filed with the Commission on September 15, 2008, pursuant to Section 13(a) of the Exchange Act of 1934, as amended (the “Exchange Act”);

(b)The description of the Registrant’s Ordinary Shares contained in the Registrant’s Form 6-K (File No. 001-10691) filed with the Commission on October 16, 2008 pursuant to Section 13(a) of the Exchange Act.

All documents filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date hereof and prior to the filing of a post-effective amendment that indicates that all securities offered have been sold or that deregisters all securities then remaining unsold shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents.  Reports on Form 6-K that the Registrant furnishes to the Commission will only be deemed incorporated by reference into this Registration Statement if such Report on Form 6-K so states that it is incorporated by reference herein.

Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein modifies or supersedes such statement.  Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement.

Item 4.Description of Securities

Not applicable.

Item 5.Interests of Named Experts and Counsel

Not applicable.

Item 6.Indemnification of Directors and Officers

From October 1, 2007, UK law does not permit a company directly or indirectly to indemnify a director of a company in connection with any negligence, default, breach of duty or breach of trust by the director in relation to the company unless the indemnity constitutes a “qualifying third party indemnity provision”.  An indemnity will be a “qualifying third party indemnity provision” for the purposes of the Companies Act 2006 (the “Companies Act”), provided that it does not indemnify the director against any liability the director incurs:

(a)to the company or to an associated company;

(b)to pay a criminal fine or a regulatory penalty;

(c)in defending criminal proceedings in which the director is convicted;

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(d)in defending civil proceedings brought by the company, or an associated company, in which judgment is given against the director; or

(e)in an unsuccessful application to the Court for relief from liability under the UK Companies Act.

Article 145 of the Registrant’s Articles of Association provides:

“To the extent permitted by the Companies Acts, the company may indemnify any director of the company or of any associated company against any liability and may purchase and maintain for any director of the company or of any associated company insurance against any liability.  No director of the company or of any associated company shall be accountable to the company or the members for any benefit provided pursuant to this article and the receipt of any such benefit shall not disqualify any person from being or becoming a director of the company.”

The relevant sections of the UK Companies Act provide as follows:

232 Provisions protecting directors from liability

(1)Any provision that purports to exempt a director of a company (to any extent) from any liability that would otherwise attach to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company is void.

(2)Any provision by which a company directly or indirectly provides an indemnity (to any extent) for a director of the company, or of an associated company, against any liability attaching to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company of which he is a director is void, except as permitted by–

(a)section 233 (provision of insurance),

(b)section 234 (qualifying third party indemnity provision), or

(c)section 235 (qualifying pension scheme indemnity provision).

(3)This section applies to any provision, whether contained in a company’s articles or in any contract with the company or otherwise.

(4)Nothing in this section prevents a company’s articles from making such provision as has previously been lawful for dealing with conflicts of interest.

233 Provision of insurance

Section 232(2) (voidness of provisions for indemnifying directors) does not prevent a company from purchasing and maintaining for a director of the company, or of an associated company, insurance against any such liability as is mentioned in that subsection.

234 Qualifying third party indemnity provision

(1)Section 232(2) (voidness of provisions for indemnifying directors) does not apply to qualifying third party indemnity provision.

(2)Third party indemnity provision means provision for indemnity against liability incurred by the director to a person other than the company or an associated company.

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Such provision is qualifying third party indemnity provision if the following requirements are met.

(3)The provision must not provide any indemnity against–

(a)any liability of the director to pay–

(i)a fine imposed in criminal proceedings, or

(ii)a sum payable to a regulatory authority by way of a penalty in respect of non-compliance with any requirement of a regulatory nature (however arising); or

(b)any liability incurred by the director–

(i)in defending criminal proceedings in which he is convicted, or

(ii)in defending civil proceedings brought by the company, or an associated company, in which judgment is given against him, or

(iii)in connection with an application for relief (see subsection (6)) in which the court refuses to grant him relief.

(4)The references in subsection (3)(b) to a conviction, judgment or refusal of relief are to the final decision in the proceedings.

(5)For this purpose–

(a)a conviction, judgment or refusal of relief becomes final–

(i)if not appealed against, at the end of the period for bringing an appeal, or

(ii)if appealed against, at the time when the appeal (or any further appeal) is disposed of; and

(b)an appeal is disposed of–

(i)if it is determined and the period for bringing any further appeal has ended, or

(ii)if it is abandoned or otherwise ceases to have effect.

(6)The reference in subsection (3)(b)(iii) to an application for relief is to an application for relief under–

section 661(3) or (4) (power of court to grant relief in case of acquisition of shares by innocent nominee), or

section 1157 (general power of court to grant relief in case of honest and reasonable conduct).

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235 Qualifying pension scheme indemnity provision

(1)Section 232(2) (voidness of provisions for indemnifying directors) does not apply to qualifying pension scheme indemnity provision.

(2)Pension scheme indemnity provision means provision indemnifying a director of a company that is a trustee of an occupational pension scheme against liability incurred in connection with the company’s activities as trustee of the scheme.

Such provision is qualifying pension scheme indemnity provision if the following requirements are met.

(3)The provision must not provide any indemnity against–

(a)any liability of the director to pay–

(i)a fine imposed in criminal proceedings, or

(ii)a sum payable to a regulatory authority by way of a penalty in respect of non-compliance with any requirement of a regulatory nature (however arising); or

(b)any liability incurred by the director in defending criminal proceedings in which he is convicted.

(4)The reference in subsection (3)(b) to a conviction is to the final decision in the proceedings.

(5)For this purpose–

(a)a conviction becomes final–

(i)if not appealed against, at the end of the period for bringing an appeal, or

(ii)if appealed against, at the time when the appeal (or any further appeal) is disposed of; and

(b)an appeal is disposed of–

(i)if it is determined and the period for bringing any further appeal has ended, or

(ii)if it is abandoned or otherwise ceases to have effect.

(6)In this section “occupational pension scheme” means an occupational pension scheme as defined in section 150(5) of the Finance Act 2004 (c. 12) that is established under a trust.

256 Associated bodies corporate

For the purposes of this Part–

(a)bodies corporate are associated if one is a subsidiary of the other or both are subsidiaries of the same body corporate, and

(b)companies are associated if one is a subsidiary of the other or both are subsidiaries of the same body corporate.

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239 Ratification of acts of directors

(1)This section applies to the ratification by a company of conduct by a director amounting to negligence, default, breach of duty or breach of trust in relation to the company.

(2)The decision of the company to ratify such conduct must be made by resolution of the members of the company.

(3)Where the resolution is proposed as a written resolution neither the director (if a member of the company) nor any member connected with him is an eligible member.

(4)Where the resolution is proposed at a meeting, it is passed only if the necessary majority is obtained disregarding votes in favour of the resolution by the director (if a member of the company) and any member connected with him.

This does not prevent the director or any such member from attending, being counted towards the quorum and taking part in the proceedings at any meeting at which the decision is considered.

(5)For the purposes of this section–

(a)“conduct” includes acts and omissions;

(b)“director” includes a former director;

(c)a shadow director is treated as a director; and

(d)in section 252 (meaning of “connected person”), subsection (3) does not apply (exclusion of person who is himself a director).

(6)Nothing in this section affects–

(a)the validity of a decision taken by unanimous consent of the members of the company, or

(b)any power of the directors to agree not to sue, or to settle or release a claim made by them on behalf of the company.

(7)This section does not affect any other enactment or rule of law imposing additional requirements for valid ratification or any rule of law as to acts that are incapable of being ratified by the company.

1157 Power of court to grant relief in certain cases

(1)If in proceedings for negligence, default, breach of duty or breach of trust against–

(a)an officer of a company, or

(b)a person employed by a company as auditor (whether he is or is not an officer of the company),

it appears to the court hearing the case that the officer or person is or may be liable but that he acted honestly and reasonably, and that having regard to all the circumstances of the case (including those connected with his appointment) he ought fairly to be excused, the court may relieve him, either wholly or in part, from his liability on such terms as it thinks fit.

(2)If any such officer or person has reason to apprehend that a claim will or might be made against him in respect of negligence, default, breach of duty or breach of trust–

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(a)he may apply to the court for relief, and

(b)the court has the same power to relieve him as it would have had if it had been a court before which proceedings against him for negligence, default, breach of duty or breach of trust had been brought.

(3)Where a case to which subsection (1) applies is being tried by a judge with a jury, the judge, after hearing the evidence, may, if he is satisfied that the defendant (in Scotland, the defender) ought in pursuance of that subsection to be relieved either in whole or in part from the liability sought to be enforced against him, withdraw the case from the jury and forthwith direct judgment to be entered for the defendant (in Scotland, grant decree of absolvitor) on such terms as to costs (in Scotland, expenses) or otherwise as the judge may think proper.

The directors and officers of the Registrant and its duly authorized US representative are insured against certain liabilities, including certain liabilities under US securities laws, which they may incur in their capacity as such under a liability insurance policy carried by Diageo plc.

Item 7.Exemption from Registration Claimed

Not applicable.

Item 8.Exhibits

Exhibit Number		Description
4.1	—	Memorandum and Articles of Association of the Registrant (incorporated by reference to Exhibit 99.1 to the Registrant’s Form 6-K filed on October 16, 2008) (Commission File No. 001-10691)
4.2	—	Diageo plc 2008 Performance Share Plan, approved by the shareholders of the Company on October 15, 2008
4.3	—	Diageo plc 2008 Senior Executive Share Option Plan, approved by the shareholders of the Company on October 15, 2008
5.1	—	Opinion of Slaughter and May on the validity of the securities being registered
23.1	—	Consent of KPMG Audit Plc
23.2	—	Consent of Slaughter and May (included in Exhibit 5.1)
24.1	—	Power of Attorney (included on signature page)

Item 9.Undertakings

(a)The undersigned Registrant hereby undertakes:

(1)To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i)to include any prospectus required by Section 10(a)(3) of the Securities Act;

(ii)to reflect in the prospectus any facts or events arising after the effective date of

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the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and

(iii)to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

provided, however , that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated by reference in the registration statement.

(2)That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and

(3)To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(b)The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(c)Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.  In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in London, England, on October 16, 2008.

DIAGEO PLC
By:	/s/ NC Rose
Name:	NC Rose
Title:	Chief Financial Officer

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each Director listed below and Paul Tunnacliffe, as his true and lawful attorneys-in-fact and agents, each with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments, including post-effective amendments, and supplements to this Registration Statement on Form S-8, and to file the same, with all exhibits hereto, and other documents in connection therewith, with the United States Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as each such person might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them or their substitute or substitutes, may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed on October 16, 2008 by the following persons in the capacities indicated:

Name	Title
/s/ PS Walsh	Executive Director
PS Walsh	(Principal Executive Officer)
/s/ NC Rose	Executive Director
NC Rose	(Principal Financial and Accounting Officer)
/s/ Dr Franz Humer	Director
Dr Franz Humer
/s/ Laurence Danon	Director
Laurence Danon

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Name	Title
/s/ Lord Hollick of Notting Hill	Director
Lord Hollick of Notting Hill
/s/ Maria Lilja	Director
Maria Lilja
/s/ Philip Scott	Director
Philip Scott
/s/ William Shanahan	Director
William Shanahan
/s/ Todd Stitzer	Director
Todd Stitzer
/s/ Paul Walker	Director
Paul Walker
/s/ Kellye Walker	Authorized U.S. Representative
Kellye Walker

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EXHIBIT INDEX

Exhibit Number		Description
4.1	—	Memorandum and Articles of Association of the Registrant (incorporated by reference to Exhibit 99.1 to the Registrant’s Form 6-K filed on October 16, 2008) (Commission File No. 001-10691)
4.2	—	Diageo plc 2008 Performance Share Plan, approved by the shareholders of the Company on October 15, 2008
4.3	—	Diageo plc 2008 Senior Executive Share Option Plan, approved by the shareholders of the Company on October 15, 2008
5.1	—	Opinion of Slaughter and May on the validity of the securities being registered
23.1	—	Consent of KPMG Audit Plc
23.2	—	Consent of Slaughter and May (included in Exhibit 5.1)
24.1	—	Power of Attorney (included on signature page)

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EX-4.2

Exhibit 4.2

THE DIAGEO PLC 2008 PERFORMANCE SHARE PLAN

Approved by shareholders of the Company on 15 October 2008

Adopted by the Remuneration Committee of the Company on 15 October 2008

The Plan is a discretionary benefit offered by the Diageo Group for the benefit of its employees.  Its main purpose is to increase the interest of the employees in Diageo plc’s long-term business goals and performance through share ownership.  The Plan is an incentive for the employees’ future performance and commitment to the goals of the Diageo Group.

Shares purchased or received under the Plan, any cash received under the Plan and any gains obtained under the Plan are not part of salary for any purpose (except to any extent required by statute).

The Plan is being offered for the first time in 2008 in selected countries and the remuneration committee of Diageo plc shall have the right to decide, in its sole discretion, whether or not further awards will be granted in the future and to which employees those awards will be granted.

The detailed rules of the Plan are set out overleaf.

CONTENTS

Rule			Page
1.	Definitions And Interpretation		1
2.	Eligibility		3
3.	Grant Of Awards		3
4.	Limits		6
5.	Vesting Of Awards		8
6.	Consequences Of Vesting		10
7.	Exercise Of Options		11
8.	Cash Alternative		12
9.	Lapse Of Awards		14
10.	Leavers And Deceased Participants		14
11.	Takeovers And Other Corporate Events		16
12.	Adjustment Of Awards		18
13.	Alterations		19
14.	Miscellaneous		20
Schedule 1		: GRANT OF A FORFEITABLE SHARES AWARD	23
Schedule 2		: CASH CONDITIONAL AWARDS	24
Schedule 3		: PERFORMANCE CONDITION	25

1.DEFINITIONS AND INTERPRETATION

1.1In the Plan, unless the context otherwise requires:

“ADS” means an American Depositary Share being an authorised depositary security representing for the time being 4 Shares in the Company and being evidenced by an authorised depositary receipt issued by the Bank and quoted on the New York Stock Exchange;

“Award” means a Conditional Award, a Forfeitable Shares Award or an Option;

“Bank” means The Bank of New York or such other bank as the Company may from time to time appoint to issue authorised depositary receipts;

“Committee” means the remuneration committee of the board of directors of the Company (or, on and after the occurrence of a corporate event described in Rule 11 (Takeovers and other corporate events), the remuneration committee of the board of directors of the Company as constituted immediately before such event occurs) and any duly appointed individual or committee appointed by the remuneration committee;

“Company” means Diageo plc (registered in England and Wales with registered number 23307);

“Conditional Award” means a conditional right to acquire Shares granted under the Plan;

“Control” means control within the meaning of section 995 of the Income Tax Act 2007;

“Dividend Equivalent” means a benefit calculated by reference to dividends paid on Shares as described in Rule 3.5;

“Early Vesting Date” means either:

(a)the date of cessation of employment of a Participant in the circumstances referred to in Rules 10.1 (Deceased Participants) and 10.2 (Retirement, ill-health, injury, disability, redundancy and transfer out of the Group); or

(b)a date of notification referred to in Rule 11.1 (General offers), the date of the relevant event referred to in Rule 11.2 (Schemes of arrangement and winding up) or the date of Vesting referred to in Rule 11.3 (Demergers and similar events);

“Exercise Period” means the period referred to in Rule 6.2 during which an Option may be exercised;

“Forfeitable Shares” means Shares comprised in a Forfeitable Shares Award which are subject to certain restrictions and forfeiture under the Plan;

“Forfeitable Shares Award” means the transfer of the beneficial interest in Forfeitable Shares to a Participant and the subsequent holding of that interest in accordance with the Plan;

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“Grant Date” means the date on which an Award is granted;

“Group Member” means:

(a)a Participating Company or a body corporate which is the Company’s holding company (within the meaning of section 1159 of the Companies Act 2006) or a Subsidiary of the Company’s holding company;

(b)a body corporate which is a subsidiary undertaking (within the meaning of section 1162 of that Act) of a body corporate within paragraph (a) above and has been designated by the Committee for this purpose; and

(c)any other body corporate in relation to which a body corporate within paragraph (a) or (b) above is able (whether directly or indirectly) to exercise 15% or more of its equity voting rights and has been designated by the Committee for this purpose;

“ITEPA” means the Income Tax (Earnings and Pensions) Act 2003;

“Listing Rules” means the Listing Rules published by the UKLA;

“London Stock Exchange” means London Stock Exchange plc or any successor to that company;

“New York Stock Exchange” means The New York Stock Exchange, Inc.;

“Normal Vesting Date” means the date on which an Award vests under Rule 5.1 (Timing of Vesting:  Normal Vesting Date);

“Option” means a right to acquire Shares granted under the Plan which is designated as an option by the Committee under Rule 3.2 (Type of Award);

“Option Price” means the amount, if any, payable on the exercise of an Option;

“Participant” means a person who holds an Award including his personal representatives;

“Participating Company” means the Company or any Subsidiary;

“Performance Condition” means a condition related to performance which is specified by the Committee under Rule 3.1 (Terms of grant);

“Plan” means the Diageo 2008 Performance Share Plan as amended from time to time;

“Rule” means a rule of the Plan;

“Shares” means fully paid ordinary shares in the capital of the Company;

“Subsidiary” means a body corporate which is a subsidiary (within the meaning of section 1159 of the Companies Act 2006) of the Company;

“Tax Liability” means any amount of tax or social security contributions for which a Participant would or may be liable and for which any Group Member or former Group

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Member would or may be obliged to (or would or may suffer a disadvantage if it were not to) account to any relevant authority;

“UKLA” means the United Kingdom Listing Authority;

“US Participant” means a Participant who is resident in the United States of America on the Grant Date;

“Vest” means:

(a)in relation to a Conditional Award, a Participant becoming entitled to have Shares or ADSs transferred to him (or his nominee) subject to the Rules;

(b)in relation to an Option, it becoming exercisable;

(c)in relation to a Forfeitable Shares Award, the restrictions imposed on the Forfeitable Shares under the Plan ceasing to apply

and Vesting shall be construed accordingly;

“Vested Shares” means those Shares in respect of which an Award Vests.

1.2Any reference in the Plan to any enactment includes a reference to that enactment as from time to time modified, extended or re-enacted.

1.3Expressions in italics and headings are for guidance only and do not form part of the Plan.

2.ELIGIBILITY

An individual is eligible to be granted an Award only if he is an employee (including an executive director) of a Participating Company.  The Committee may, in its discretion, determine that the individual shall have a qualifying period of continuous service with the Company or any Subsidiary to be eligible to be granted an Award, such period not to exceed 5 years before the Grant Date

3.GRANT OF AWARDS

3.1Terms of grant

Subject to Rule 3.7 (Timing of grant), Rule 3.9 (Approvals and consents) and Rule 4 (Limits), the Committee may resolve to grant an Award on:

(a)the terms set out in the Plan; and

(b)such additional terms (whether a Performance Condition and/or any other terms) as the Committee may specify

to any person who is eligible to be granted an Award under Rule 2 (Eligibility).

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3.2Type of Award

On or before the Grant Date, the Committee shall determine whether an Award shall be a Conditional Award, an Option or a Forfeitable Shares Award.  If the Committee does not specify the type of an Award on or before the Grant Date then an Award shall be a Conditional Award.

3.3Grant of Award to US Participant

Where an Award is granted under Rule 3.1 (Terms of Grant) to a US Participant, it shall take the form of a Conditional Award and shall be to acquire ADSs and not Shares.

3.4Method of grant

An Award shall be granted as follows:

(a)a Conditional Award or an Option shall be granted by deed executed by the Company;

(b)if an Award is an Option, the Committee shall determine the Option Price (if any) on or before the Grant Date provided that the Committee may reduce or waive such Option Price on or prior to the exercise of the Option;

(c)a Forfeitable Shares Award shall be granted by the procedure set out in Schedule 1 to the Plan.

3.5Treatment of Dividends

The Committee may:

(a)decide at any time that a Participant (or his nominee) shall be entitled to receive a benefit determined by reference to the value of all or any of the dividends (including the dividend tax credit unless the Committee decides otherwise) that would have been paid on the Vested Shares or ADSs in respect of dividend record dates occurring during the period between the Grant Date and the date of Vesting and may further decide that such benefit shall be provided in cash and/or shares and/or ADSs. The Committee may decide to exclude the value of all or part of any special dividend from the amount of the Dividend Equivalent; or

(b)grant an Award on terms whereby the number of Shares or ADSs comprised in the Award shall increase by deeming dividends (excluding special dividends, unless the Committee decides otherwise) paid on the Shares or ADSs from the Grant Date to Vesting to have been reinvested in additional Shares or ADSs on such terms (as to the inclusion or exclusion of any dividend tax credit, the price at which any additional Shares or ADSs shall be deemed to have been purchased or otherwise) as the Committee shall decide.

This Rule shall not apply in the case of a Forfeitable Shares Award under which a Participant is entitled to receive dividends.

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3.6Method of satisfying Awards

Unless specified to the contrary by the Committee on the Grant Date, an Award may be satisfied:

(a)by the issue of new Shares; and/or

(b)by the transfer of treasury Shares; and/or

(c)by the transfer of Shares (other than the transfer of treasury Shares); or

(d)in the case of an Award granted to a US Participant, by the issue or transfer of ADSs.

The Committee may decide to change the way in which it is intended that an Award granted as a Conditional Award or an Option may be satisfied after it has been granted, having regard to the provisions of Rule 4 (Limits).

3.7Timing of grant

Subject to Rule 3.9 (Approvals and consents), an Award may only be granted:

(a)within the period of 6 weeks beginning with:

(i)the day on which the Plan is approved by shareholders of the Company; or

(ii)the dealing day after the date on which the Company announces its results for any period; or

(b)at any other time when the Committee considers that circumstances are sufficiently exceptional to justify its grant

but an Award may not be granted after [14 October 2018] (that is, the expiry of the period of 10 years beginning with the date on which the Plan is approved by shareholders of the Company).

3.8Non-transferability and bankruptcy

An Award granted to any person:

(a)shall not be transferred, assigned, charged or otherwise disposed of (except on his death to his personal representatives) and shall lapse immediately on any attempt to do so; and

(b)shall lapse immediately if he is declared bankrupt.

3.9Approvals and consents

The grant of any Award shall be subject to obtaining any approval or consent required under the Listing Rules, any relevant share dealing code of the Company, the City Code on Takeovers and Mergers, the listing rules of the New York Stock Exchange, or any other UK or overseas regulation or enactment.

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3.10Shareholding Condition

The Committee may decide that it shall be a condition of the grant of an Award that an individual eligible to be granted an Award shall have held beneficially a number of Shares determined by the Committee for such period as the Committee decides.  If the Committee decides to set such a shareholding condition, it must notify the individual of the condition no later than 3 calendar months before the beginning of the financial year in which it is intended to grant the Award.

4.LIMITS

4.15% in 10 years limit

An Award shall not be granted in any calendar year if, at the time of its proposed Grant Date, it would cause the number of Shares allocated (as defined in Rule 4.3) in the period of 10 calendar years ending with that calendar year under the Plan and under any other executive share plan adopted by the Company to exceed such number as represents 5% of the ordinary share capital of the Company in issue at that time.

4.210% in 10 years limit

An Award shall not be granted in any calendar year if, at the time of its proposed Grant Date, it would cause the number of Shares allocated (as defined in Rule 4.3) in the period of 10 calendar years ending with that calendar year under the Plan and under any other employee share plan adopted by the Company to exceed such number as represents 10% of the ordinary share capital of the Company in issue at that time.

4.3Meaning of “allocated”

For the purposes of Rules 4.1 and 4.2:

(a)Shares are allocated:

(i)when an option, award or other contractual right to acquire unissued Shares or treasury shares is granted;

(ii)where Shares are issued or treasury shares are transferred otherwise than pursuant to an option, award or other contractual right to acquire Shares, when those Shares are issued or treasury shares transferred;

(b)any Shares which have been issued or which may be issued (or any Shares transferred out of treasury or which may be transferred out of treasury) to any trustees to satisfy the exercise of any option, award or other contractual right shall count as “allocated” unless they are already treated as allocated under this Rule; and

(c)for the avoidance of doubt, existing Shares other than treasury shares that are transferred or over which options, awards or other contractual rights are granted shall not count as “allocated”.

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4.4Post-grant events affecting numbers of “allocated” Shares

For the purposes of Rule 4.3:

(a)where:

(i)any option, award or other contractual right to acquire unissued Shares or treasury shares is released or lapses (whether in whole or in part); or

(ii)after the grant of an option, award or other contractual right the Committee determines that:

(aa)where an amount is normally payable on its exercise it shall be satisfied without such payment but instead by the payment of cash equal to the gain made on its exercise; or

(bb)it shall be satisfied by the transfer of existing Shares (other than Shares transferred out of treasury)

the unissued Shares or treasury shares which consequently cease to be subject to the option, award or other contractual right shall not count as “allocated”; and

(b)the number of Shares allocated in respect of an option, award or other contractual right shall be such number as the Committee shall reasonably determine from time to time.

4.5Changes to investor guidelines

Treasury shares shall cease to count as “allocated” Shares for the purposes of Rule 4.3 if institutional investor guidelines cease to require such Shares to be so counted.

4.6Individual limit

(a)The maximum total market value of Shares or ADSs (calculated as set out in this Rule) over which Awards may be granted to any employee during any financial year of the Company is 375% of his salary (as defined in this Rule), unless Rule 4.6(b) applies.

(b)If the Committee decides that exceptional circumstances exist in relation to the recruitment or retention of an eligible employee then the maximum total market value of Shares or ADSs (calculated as set out in this Rule) over which Awards may be granted to that employee during a financial year of the Company is such higher percentage of his salary (as defined in this Rule) as the Committee may determine.

For the purpose of this Rule 4.6:

(i)an employee’s salary shall be taken to be his base salary (excluding benefits in kind), expressed as an annual rate payable by the Participating Companies to him on the Grant Date (or on such other date as the Committee shall reasonably determine).  Where a payment of salary is made in a currency other than sterling, the payment shall be treated as equal to the equivalent amount of

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sterling determined by using any rate of exchange which the Committee may reasonably select; and

(ii)the market value of the Shares or ADSs over which an Award is granted shall be taken to be an amount equal to the middle-market quotation of Shares (as derived from the London Stock Exchange Daily Official List) on the Grant Date or, if the Committee so determines, the average of the middle market quotations of a Share for the 3 dealing days before the Grant Date or the average of the middle market quotations of a Share during a period before the Grant Date determined by the Committee not exceeding the period of 12 months ending on the last day of the financial year of the Company before the Grant Date.

4.7Effect of limits

Any Award shall be limited and take effect so that the limits in this Rule 4 are complied with.

4.8Restriction on use of unissued Shares and treasury shares

No Shares may be issued or treasury shares transferred to satisfy the Vesting of any Conditional Award or the exercise of any Option to the extent that such issue or transfer would cause the number of Shares allocated (as defined in Rule 4.3 and adjusted under Rule 4.4) to exceed the limits in Rules 4.1 (5% in 10 years limit) and 4.2 (10% in 10 years limit) except where there is a variation of share capital of the Company which results in the number of Shares so allocated exceeding such limits solely by virtue of that variation.

5.VESTING OF AWARDS

5.1Timing of Vesting:  Normal Vesting Date

Subject to Rule 5.3 (Restrictions on Vesting: regulatory and tax issues), an Award shall Vest on the later of:

(a)the date on which the Committee determines whether or not any Performance Condition and any other condition imposed on the Vesting of the Award has been satisfied (in whole or part); and

(b)the third anniversary of the Grant Date (or such earlier date as the Committee shall determine at the Grant Date as the date of Vesting)

except where earlier Vesting occurs on an Early Vesting Date under Rule 10 (Leavers) or Rule 11 (Takeovers and other corporate events).

5.2Extent of Vesting

An Award shall only Vest to the extent:

(a)that any Performance Condition is satisfied on the Normal Vesting Date or, if appropriate, the Early Vesting Date;

(b)as permitted by any other term imposed on the Vesting of the Award; and

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(c)in relation to Vesting before the Normal Vesting Date, as permitted by Rules 10.1 (Deceased Participants), 10.2 (Retirement, ill-health, injury, disability, redundancy and transfer out of the Group), 10.3 (Cessation of employment in other circumstances) and 11.5 (Reduction in number of Vested Shares).

5.3Restrictions on Vesting: regulatory and tax issues

An Award shall not Vest unless and until the following conditions are satisfied:

(a)the Vesting of the Award, and the issue or transfer of Shares or ADSs after such Vesting would be lawful in all relevant jurisdictions and in compliance with the Listing Rules, any relevant share dealing code of the Company, the City Code on Takeovers and Mergers and any other relevant UK or overseas regulation or enactment;

(b)if, on the Vesting of the Award, a Tax Liability would arise by virtue of such Vesting, then the Participant authorises the Company to sell or procure the sale of sufficient Shares or ADSs on his behalf to ensure that any relevant Group Member receives the amount required to discharge the Tax Liability except to the extent that he agrees with the Committee to fund all or part of the Tax Liability in a different manner;

(c)the Participant has entered into such arrangements as the Committee requires (and where permitted in the relevant jurisdiction) to satisfy a Group Member’s liability to social security contributions in respect of the Vesting of the Award; and

(d)where the Committee requires, the Participant has entered into, or agreed to enter into, a valid election under Part 7 of ITEPA (Employment income:  elections to disapply tax charge on restricted securities) or any similar arrangement in any overseas jurisdiction.

For the purposes of this Rule 5.3, references to Group Member include any former Group Member.

5.4Tax liability before Vesting

If a Participant will, or is likely to, incur any Tax Liability before the Vesting of an Award then that Participant must enter into arrangements acceptable to any relevant Group Member to ensure that it receives the amount of such Tax Liability.  If no such arrangement is made then the Participant shall be deemed to have authorised the Company to sell or procure the sale of sufficient of the Shares or ADSs subject to his Award on his behalf to ensure that the relevant Group Member receives the amount required to discharge the Tax Liability and the number of Shares or ADSs subject to his Award shall be reduced accordingly.

For the purposes of this Rule 5.4, references to Group Member include any former Group Member.

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5.5Change of jurisdiction

If a Participant relocates to another jurisdiction before his Award Vests and, as a result of the relocation, the Participant or any Group Member would be subject to additional tax or social security on the Vesting of the Award or the Vesting of the Award in that other jurisdiction would be subject to any regulatory restriction, approval or consent, the Committee may determine that the Award may:

(a)Vest on such terms and during such period preceding the date on which the Participant relocates as the Committee may determine; or

(b)be released by the Participant for a Cash Conditional Award granted under Schedule 2.

6.CONSEQUENCES OF VESTING

6.1Conditional Awards

On or as soon as reasonably practicable after the Vesting of a Conditional Award and, in any event, within 30 days of Vesting, the Committee shall, subject to Rule 5(3)(b) (Payment of Tax Liability) and any arrangement made under Rule 5.3(c) (Restrictions on Vesting: regulatory and tax issues), transfer or procure the transfer of the Vested Shares or ADSs to the Participant (or a nominee for him).

6.2Options

An Option shall, subject to Rule 7.1 (Restrictions on the exercise of an Option: regulatory and tax issues), be exercisable in respect of Vested Shares or ADSs for a period of 12 months beginning with the date on which the Option Vests and, if unexercised at the end of that period, the Option shall then lapse unless it lapses earlier under Rule 10.3 (Cessation of employment in other circumstances), Rule 11.1 (General offers), Rule 11.2 (Schemes of arrangement and winding up) or Rule 11.3 (Demergers and similar events).

If an Option is not exercised during the last 30 days of the Exercise Period because of any regulatory restrictions referred to in Rule 7.1(a), the Committee may extend the period during which the Option may be exercised so as to permit the Option to be exercised as soon as those restrictions cease to apply.

6.3Forfeitable Shares Award

On the Vesting of a Forfeitable Shares Award, the Vested Shares or ADSs shall cease to be subject to the restrictions imposed on the Forfeitable Shares under the Plan and the Committee shall, subject to Rule 5.3(b) (Payment of Tax Liability) and any arrangement made under Rule 5.3(c) (Restrictions on Vesting: regulatory and tax issues), transfer or procure the transfer of:

(a)the legal title to the Vested Shares or ADSs; and/or

(b)any documents of title relating to the Vested Shares or ADSs

to the Participant (or a nominee for him) on or as soon as reasonably practicable after Vesting.

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6.4Dividend equivalent

If the Committee decided at any time under Rule 3.4(a) (Treatment of Dividends) that a Participant would be entitled to the Dividend Equivalent in relation to Shares or ADSs under their Award, then the provision of the Dividend Equivalent to the Participant shall be made as soon as practicable after Vesting and:

(a)in the case of a cash payment, shall be subject to such deductions (on account of tax or similar liabilities) as may be required by law or as the Committee may reasonably consider to be necessary or desirable;

(b)in the case of a provision of Shares or ADSs, Rule 5.3 (Restrictions on Vesting: regulatory and tax issues) shall apply as if such provision was the Vesting of an Award.

7.EXERCISE OF OPTIONS

7.1Restrictions on the exercise of an Option: regulatory and tax issues

An Option which has Vested may not be exercised unless the following conditions are satisfied:

(a)the exercise of the Option and the issue or transfer of Shares or ADSs after such exercise would be lawful in all relevant jurisdictions and in compliance with the Listing Rules, any relevant share dealing code of the Company, the City  Code on Takeovers and Mergers and any other relevant UK or overseas regulation or enactment;

(b)if, on the exercise of the Option, a Tax Liability would arise by virtue of such exercise, then the Participant authorises the Company to sell or procure the sale of sufficient Shares or ADSs on his behalf to ensure that any relevant Group Member receives the amount required to discharge the Tax Liability except to the extent that the Participant agrees with the Committee to fund all or part of the Tax Liability in a different manner;

(c)the Participant has entered into such arrangements as the Committee requires (and where permitted in the relevant jurisdiction) to satisfy a Group Member’s liability to social security contributions in respect of the exercise of the Option; and

(d)where the Committee requires, the Participant has entered into, or agreed to enter into, a valid election under Part 7 of ITEPA (Employment income:  elections to disapply tax charge on restricted securities) or any similar arrangement in any overseas jurisdiction.

For the purposes of this Rule 7.1, references to Group Member include any former Group Member.

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7.2Exercise in whole or part

An Option may be exercised to the maximum extent possible at the time of exercise or over such fewer number of Shares or ADSs as the Participant decides.

7.3Method of exercise

The exercise of any Option shall be effected in the form and manner prescribed by the Committee.  Unless the Committee, acting fairly and reasonably determines otherwise, any notice of exercise shall, subject to Rule 7.1 (Restrictions on the exercise of an Option: regulatory and tax issues), take effect only when the Company receives it, together with payment of any relevant Option Price (or, if the Committee so permits, an undertaking to pay that amount) and, if a Participant decides to satisfy the Tax Liability other than by selling Shares or ADSs pursuant to the authority in Rule 7.1(b), an agreement relating to the payment of the Tax Liability having been entered into.

7.4Transfer or allotment timetable

As soon as reasonably practicable after an Option has been exercised and, in any event, within 30 days of exercise, the Company shall, subject to Rule 7.1(b) (Payment of Tax Liability) and any arrangement made under Rule 7.1(c) (Restrictions on exercise: regulatory and tax issues), transfer or procure the transfer to him (or a nominee for him) or, if appropriate, allot to him (or a nominee for him) the number of Shares or ADSs in respect of which the Option has been exercised.

8.CASH ALTERNATIVE

8.1Committee determination

Where a Conditional Award Vests or where an Option has been exercised and Vested Shares or ADSs  have not yet been allotted or transferred to the Participant (or his nominee), the Committee may determine that, in substitution for his right to acquire such number of Vested Shares or ADSs as the Committee may decide (but in full and final satisfaction of his right to acquire those Shares or ADSs), he shall be paid by way of additional employment income a sum equal to the cash equivalent (as defined in Rule 8.2) of that number of Shares or ADSs in accordance with the following provisions of this Rule 8.

8.2Limitation on the application of Rule 8.1

Rule 8.1 shall not apply in relation to an Award made to a Participant in any jurisdiction where the presence of Rule 8.1 would cause:

(a)the grant of the Award to be unlawful or for it to fall outside any applicable securities law exclusion or exemption; or

(b)adverse tax or social security contributions consequences for the Participant or any Group Member as determined by the Committee

provided that this Rule 8.2 shall apply only if its application would prevent the occurrence of a consequence referred to in (a) or (b) above.

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8.3Cash equivalent

For the purpose of this Rule 8, the cash equivalent of a Share or ADS is:

(a)in the case of a Conditional Award, the market value of a Share or ADS on the day when the Award Vests;

(b)in the case of an Option, the market value of a Share or ADS on the day when the Option is exercised reduced by the Option Price in respect of that Share or ADS.

Market value on any day shall be determined as follows:

(i)if on the day of Vesting or exercise, Shares are quoted in the London Stock Exchange Daily Official List, the middle-market quotation of a Share, as derived from that List, on that day; or

(ii)in the case of an Award granted to a US Participant, if on the day of Vesting or exercise, ADSs are quoted on the New York Stock Exchange, the closing price of an ADS on the dealing day before that date; or

(iii)if Shares or ADSs are not so quoted, such value of a Share or ADS as the Committee reasonably determines.

8.4Payment of cash equivalent

Subject to Rule 8.4 (Share alternative), as soon as reasonably practicable after the Committee has determined under Rule 8.1 that a Participant shall be paid a sum in substitution for his right to acquire any number of Vested Shares or ADSs:

(a)the Company shall pay to him or procure the payment to him of that sum in cash; and

(b)if he has already paid the Company for those Shares or ADSs, the Company shall return to him the amount so paid by him.

8.5Share alternative

If the Committee so decides, the whole or any part of the sum payable under Rule 8.3 shall, instead of being paid to the Participant in cash, be applied on his behalf:

(a)in subscribing for Shares or issuing ADSs at a price equal to the market value by reference to which the cash equivalent is calculated; or

(b)in purchasing such Shares or ADSs; or

(c)partly in one way and partly in the other

and the Company shall allot or transfer to him (or his nominee) or procure the transfer to him (or his nominee) of the Shares so subscribed for, ADS so issued or Shares or ADSs purchased.

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8.6Deductions

There shall be deducted from any payment under this Rule 8 such amounts (on account of tax or similar liabilities) as may be required by law or as the Committee may reasonably consider to be necessary or desirable.

9.LAPSE OF AWARDS

An Award shall lapse:

(a)in accordance with the Rules; or

(b)to the extent it does not Vest under these Rules.

On the lapse of all or any part of a Forfeitable Shares Award, the beneficial interest (and, if appropriate, the legal interest) of the Forfeitable Shares in respect of which such Award has lapsed shall be transferred for no (or nominal) consideration to any person specified by the Committee.

10.LEAVERS AND DECEASED PARTICIPANTS

10.1Deceased Participants

If a Participant dies at a time when he is a director or employee of a Group Member before the Normal Vesting Date then, subject to Rule 5.3 (Restrictions on Vesting: regulatory and tax issues) and the remainder of this Rule, his Award shall Vest on the date of cessation.

For the purposes of this Rule, the Committee shall determine the number of Shares or ADSs which Vest by:

(i)applying the Performance Condition and any condition imposed on the Vesting of Awards; and

(ii)reducing the number of Shares or ADSs pro rata to reflect any unexpired part of the period of 3 years after the Grant Date (or such shorter period set by the Committee under Rule 5.1(b)) as at the time that the Participant ceases to be a director or employee unless the Committee, acting fairly and reasonably, decides that the pro rata reduction in the number of Shares or ADSs is inappropriate in any particular case when it shall increase the number of Shares or ADSs to such higher number as it decides (provided that the number does not exceed the number of Shares or ADSs determined under paragraph (i) above).

10.2Retirement, ill-health, injury, disability, redundancy and transfer out of the Group

If a Participant ceases to be a director or employee of a Group Member before the Normal Vesting Date by reason of:

(a)retirement with the agreement of his employer;

(b)ill-health, injury or disability (evidenced to the satisfaction of his employer);

(c)redundancy (within the meaning of the Employment Rights Act 1996) or any overseas equivalent; or

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(d)his office or employment being with either a company which ceases to be a Group Member or relating to a business or part of a business which is transferred to a person who is not a Group Member

subject to Rule 5.3 (Restrictions on Vesting: regulatory and tax issues), Rule 11 (Takeovers and other corporate events) and the remainder of this Rule, his Award shall Vest on the Normal Vesting Date (unless the Committee decides that his Award shall Vest on the date of cessation).

For the purposes of this Rule, the Committee shall determine the number of Shares  or ADSs which Vest by:

(i)applying the Performance Condition, any condition imposed on the Vesting of Awards and any other factors considered by the Committee to be relevant to reduce the number of Shares or ADSs which Vest; and

(ii)reducing the number of Shares or ADSs pro rata to reflect any unexpired part of the period of 3 years after the Grant Date (or such shorter period set by the Committee under Rule 5.1(b)) as at the time that the Participant ceases to be a director or employee unless the Committee, acting fairly and reasonably, decides that the pro rata reduction in the number of Shares or ADSs is inappropriate in any particular case when it shall increase the number of Shares or ADSs to such higher number as it decides (provided that the number does not exceed the number of Shares or ADSs determined under paragraph (i) above).

10.3Cessation of employment in other circumstances

If a Participant ceases to be a director or employee of a Group Member for any reason other than those specified in Rule 10.1 (Deceased Participants) and Rule 10.2 (Retirement, ill-health, injury, disability, redundancy and transfer out of the Group) then any Award held by him shall lapse immediately on such cessation unless the Committee, acting fairly and reasonably, decides that his Award shall Vest.  If the Committee permits an Award to Vest, Vesting shall, subject to Rule 5.3 (Restrictions on Vesting: regulatory and tax issues), Rule 11 (Takeovers and other corporate events) and the remainder of this Rule, occur on the Normal Vesting Date (unless the Committee decides that the Award shall Vest on the date of cessation).

For the purposes of this Rule, the Committee shall determine the number of Shares or ADSs which Vest by:

(i)applying the Performance Condition, any condition imposed on the Vesting of Awards and any other factors considered by the Committee to be relevant to reduce the number of Shares or ADSs which Vest; and

(ii)reducing the number of Shares or ADSs pro rata to reflect any unexpired part of the period of 3 years after the Grant Date (or such shorter period set by the Committee under Rule 5.1(b)) as at the time that the Participant ceases to be a director or employee unless the Committee, acting fairly and reasonably, decides that the pro rata reduction in the number of Shares or ADSs is inappropriate in any particular case when it shall increase the number of Shares

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or ADSs to such higher number as it decides (provided that the number does not exceed the number of Shares or ADSs determined under paragraph (i) above).

10.4Meaning of ceasing employment

A Participant shall not be treated for the purposes of this Rule 10 as ceasing to be a director or employee of a Group Member until such time as he is no longer a director or employee of any Group Member.  Any Participant who ceases to be such a director or employee before the Vesting of his Award in circumstances where he retains a statutory right to return to work then he shall be treated as not having ceased to be such a director or employee until such time (if at all) as he ceases to have such a right to return to work while not acting as an employee or director.

10.5Death following cessation of employment

If a Participant dies following cessation of employment in circumstances where his Award did not lapse but it has not Vested by the time of his death, it shall Vest immediately on his death to the extent determined by reference to the time of cessation in accordance with Rule 10.1 or 10.2.

11.TAKEOVERS AND OTHER CORPORATE EVENTS

11.1General offers

If any person (or group of persons acting in concert):

(a)obtains Control of the Company as a result of making a general offer to acquire shares in the Company; or

(b)having obtained Control of the Company makes such an offer and such offer becomes unconditional in all respects

the Committee shall within 7 days of becoming aware of that event notify every Participant of it and, subject to Rule 11.4 (Internal reorganisations), the following provisions shall apply:

(i)subject to Rule 5.3 (Restrictions on Vesting: regulatory and tax issues), all Awards shall Vest on the date of such notification if they have not then Vested, provided that or to the extent that the Performance Condition is satisfied on the occurrence of such an event, and Rule 11.5 (Reduction in number of Vested Shares) shall apply; and

(ii)any Option may, subject to Rule 7.1 (Restrictions on exercise) be exercised within 1 month of the date of such notification, but to the extent that an Option is not exercised within that period, that Option shall (regardless of any other provision of the Plan) lapse at the end of that period.

11.2Schemes of arrangement and winding up

In the event that:

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(a)a compromise or arrangement is sanctioned by the Court under section 899 of the Companies Act 2006 in connection with or for the purposes of a change in Control of the Company; or

(b)the Company passes a resolution for a voluntary winding up of the Company; or

(c)an order is made for the compulsory winding up of the Company

all Awards shall, subject to Rule 5.3 (Restrictions on Vesting: regulatory and tax issues), and Rule 11.4 (Internal reorganisations) Vest on the date of such event if they have not then Vested, provided that or to the extent that the Performance Condition is satisfied on the occurrence of such an event and Rule 11.5 (Reduction in number of Vested Shares) shall apply.

If an event described in this Rule occurs then an Option may, subject to Rule 7.1 (Restrictions on exercise) and Rule 11.4 (Internal reorganisations), be exercised within 1 month of such event, but to the extent that the Option is not exercised within that period, it shall (regardless of any other provision of the Plan) lapse at the end of that period.

11.3Demerger and similar events

If a demerger, special dividend or other similar event (the “Relevant Event”) is proposed which, in the opinion of the Committee, would affect the market price of Shares to a material extent, then the Committee may, at its discretion, decide that the following provisions will apply:

(a)the Committee shall, as soon as reasonably practicable after deciding to apply these provisions, notify a Participant that, subject to earlier lapse under Rule 10 (Leavers), his Award Vests provided that or to the extent that the Performance Condition is satisfied on the occurrence of such a Relevant Event and, if relevant, his Option may be exercised on such terms as the Committee may determine and during such period preceding the Relevant Event or on the Relevant Event as the Committee may determine;

(b)if an Award Vests, or an Option is exercised, conditional upon the Relevant Event and such event does not occur then the conditional Vesting or exercise shall not be effective and the Award shall continue to subsist; and

(c)if the Committee decides that an Award Vests under this Rule 11.3 then the date of that Vesting shall be the Early Vesting Date and the provisions of Rule 11.5 (Reduction in number of Vested Shares) shall apply.

11.4Internal reorganisations

In the event that:

(a)an offer (as referred to in Rule 11.1 (General offers)) is made or a compromise or arrangement (as referred to in Rule 11.2(a) (Schemes of arrangement and winding up)) is proposed which is expected to result in the Company becoming controlled by a new company (the “New Company”); and

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(b)at least 75% of the shares in the New Company will be held by substantially the same persons who immediately before the offer or proposal was made were shareholders in the Company; and

(c)the Committee and the New Company agree that this Rule should apply

then an Award shall not Vest under Rule 11.1 or Rule 11.2 but shall be automatically surrendered in consideration for the grant of a new award which the Committee determines is equivalent to the Award it replaces except that it will be over shares in the New Company or some other company.

The Rules will apply to any new award granted under this Rule 11.4 as if references to Shares or ADSs were references to shares over which the new award is granted and references to the Company were references to the company whose shares are subject to the new award.

11.5Corporate events: reduction in number of Vested Shares or ADSs

If an Award Vests under any of Rules 11.1 to 11.3 (Corporate Events), the Committee shall determine the number of Vested Shares or ADSs of that Award by:

(a)applying the Performance Condition and any other condition imposed on the Vesting of Awards; and

(b)if the Committee, acting fairly and reasonably, decides the number of Shares or ADSs shall be reduced pro rota to reflect any unexpired part of the period of 3 years after the Grant Date (or such shorter period set by the Committee under Rule 5.1 (b)).

If an Award Vests under any of Rules 11.1 to 11.3 when the holder of that Award has ceased to be a director or employee of a Group Member, then the number of Shares or ADSs which Vest shall be determined under Rule 10.1, 10.2 or 10.3 (whichever is relevant) in precedence over this Rule.

12.ADJUSTMENT OF AWARDS

12.1General rule

In the event of:

(a)any variation of the share capital of the Company; or

(b)a demerger, special dividend or other similar event which affects the market price of Shares or ADSs to a material extent

the Committee may make such adjustments as it considers appropriate under Rule 12.2 (Method of adjustment).

12.2Method of adjustment

An adjustment made under this Rule shall be to one or more of the following:

(a)the number of Shares or ADSs comprised in an Award;

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(b)subject to Rule 12.3 (Adjustment below nominal value), the Option Price; and

(c)where any Award has Vested or Option has been exercised but no Shares or ADSs have been transferred or allotted after such Vesting or exercise, the number of Shares or ADSs  which may be so transferred or allotted and (if relevant) the price at which they may be acquired.

12.3Adjustment below nominal value

An adjustment under Rule 12.2 (Method of adjustment) may reduce the price at which Shares may be subscribed for on the exercise of an Option to less than their nominal value, but only if and to the extent that the Committee is authorised:

(a)to capitalise from the reserves of the Company a sum equal to the amount by which the nominal value of the Shares in respect of which the Option is exercised and which are to be allotted after such exercise exceeds the price at which the Shares may be subscribed for; and

(b)to apply that sum in paying up such amount on such Shares

so that on exercise of any Option in respect of which such a reduction shall have been made the Committee shall capitalise that sum (if any) and apply it in paying up that amount.

13.ALTERATIONS

13.1General rule on alterations

Except as described in Rule 13.2 (Shareholder approval), and Rule 13.4 (Alterations to disadvantage of Participants), the Committee may at any time alter the Plan or the terms of any Award granted under it.

13.2Shareholder approval

Except as described in Rule 13.3 (Exceptions to shareholder approval), no alteration to the advantage of an individual to whom an Award has been or may be granted shall be made under Rule 13.1 (General rule on alternations) to the provisions concerning:

(a)eligibility;

(b)the individual limits on participation;

(c)the overall limits on the issue of Shares or the transfer of treasury Shares;

(d)the basis for determining a Participant’s entitlement to, and the terms of, Shares or ADSs or cash provided under the Plan;

(e)the adjustments that may be made in the event of any variation of capital; and

(f)the terms of this Rule 13.2

without the prior approval by ordinary resolution of the members of the Company in general meeting.

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13.3Exceptions to shareholder approval

Rule 13.2 (Shareholder approval) shall not apply to:

(a)any minor alteration 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 for Participants or any Group Member; or

(b)any alteration relating to the Performance Condition made under Rule 13.5.

13.4Alterations to disadvantage of Participants

No alteration to the material disadvantage of any Participant (other than to any Performance Condition) shall be made under Rule 13.1 unless:

(a)the Committee shall have invited every relevant Participant to indicate whether or not he approves the alteration; and

(b)the alteration is approved by a majority of those Participants who have given such an indication.

13.5Alterations to a Performance Condition

The Committee may amend any Performance Condition without prior shareholder approval if:

(a)any circumstance has arisen which causes the Committee reasonably to consider that it would be appropriate to amend the Performance Condition;

(b)the altered Performance Condition will, in the reasonable opinion of the Committee, be not materially less difficult to satisfy than the unaltered Performance Condition would have been but for the circumstance in question; and

(c)the Committee shall act fairly and reasonably in making the alteration.

14.MISCELLANEOUS

14.1Employment

The rights and obligations of any individual under the terms of his office or employment with any Group Member shall not be affected by his participation in the Plan or any right which he may have to participate in it.  An individual who participates in the Plan waives any and all rights to compensation or damages in consequence of the termination of his office or employment for any reason whatsoever (and regardless of whether such termination is lawful or unlawful) insofar as those rights arise or may arise from him ceasing to have rights under an Award as a result of such termination.  Participation in the Plan shall not confer a right to continued employment upon any individual who participates in it.  The grant of any Award does not imply that any further Award will be granted nor that a Participant has any right to receive any further Award.

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14.2Disputes

In the event of any dispute or disagreement as to the interpretation of the Plan, or as to any question or right arising from or relating to the Plan, the decision of the Committee shall be final and binding upon all persons.

The exercise of any power or discretion by the Committee shall not be open to question by any person and a Participant or former Participant shall have no rights in relation to the exercise of or omission to exercise any such power or discretion.

14.3Share rights

All Shares allotted under the Plan shall rank equally in all respects with Shares then in issue except for any rights attaching to such Shares by reference to a record date before the date of the allotment.

Where Vested Shares are transferred to Participants (or their nominee) or, in the case of Forfeitable Shares, released from their restrictions under the Plan, Participants will be entitled to all rights attaching to such Shares by reference to a record date on or after the date of such transfer or release of such restrictions.

14.4Notices

Any notice or other communication under or in connection with the Plan may be given:

(a)by personal delivery or by post, in the case of a company to its registered office, and in the case of an individual to his last known address, or, where he is a director or employee of a Group Member, either to his last known address or to the address of the place of business at which he performs the whole or substantially the whole of the duties of his office or employment; or

(b)in an electronic communication to their usual business address or such other address for the time being notified for that purpose to the person giving the notice; or

(c)by such other method as the Committee determines.

14.5Third parties

No third party has any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of the Plan.

14.6Benefits not pensionable

Benefits provided under the Plan shall not be pensionable.

14.7Data protection

Each Participant consents to the collection, processing and transfer of his personal data for any purpose relating to the operation of the Plan.  This includes:

(a)providing personal data to any Group Member and any third party such as trustees of any employee benefit trust, administrators of the Plan, registrars, brokers and any of their respective agents;

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(b)processing of personal data by any such Group Member or third party;

(c)transferring personal data to a country outside the European Economic Area (including a country which does not have data protection laws equivalent to those prevailing in the European Economic Area); and

(d)providing personal data to potential purchasers of the Company, the Participant’s employer or the business in which the Participant works.

14.8Governing law

The Plan and all Awards shall be governed by and construed in accordance with the law of England and Wales and the Courts of England and Wales have exclusive jurisdiction to hear any dispute.

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SCHEDULE 1 : GRANT OF A FORFEITABLE SHARES AWARD

On or before the grant of a Forfeitable Shares Award, each employee selected for such an Award must enter into an agreement with the Company under the terms of which the employee agrees both in respect of the Shares or ADSs comprised in the Award at the Grant Date and any additional Shares or ADSs that may become subject to the Award under Rule 3.4 (Treatment of Dividends):

(a)to have full beneficial ownership of the Shares or ADSs;

(b)unless the Committee decides otherwise to waive his right to all cash and scrip dividends on his Forfeitable Shares until Vesting;

(c)that he will not assign, transfer, charge or otherwise dispose of any Forfeitable Shares or any interest in such Forfeitable Shares until Vesting save as otherwise required by the Rules;

(d)if required by the Committee, to enter into any elections under Part 7 of ITEPA and any election to transfer, or any agreement to pay, secondary Class 1 National Insurance contributions in relation to his Forfeitable Shares; and

(e)to sign any documentation to give effect to the terms of the Forfeitable Shares Award.

The date of such agreement shall be the Grant Date of the Forfeitable Shares Award.

On the Grant Date (or as soon as practicable after the payment date of the relevant dividend in the case of additional Shares or ADSs that are to become subject to the Forfeitable Shares Award under Rule 3.4 (Treatment of Dividends)) either the legal ownership of the Forfeitable Shares shall be held on the Participant’s behalf by a nominee as chosen from time to time by the Committee or the Participant shall deposit the share certificate (or any other document of title) relating to the Forfeitable Shares together with a signed but otherwise uncompleted instrument of transfer with such person as the Committee may from time to time decide.

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SCHEDULE 2 : CASH CONDITIONAL AWARDS

The Rules of the Plan shall apply to a right (a “Cash Conditional Award”) to receive a cash sum granted or to be granted under this Schedule as if it was a Conditional Award, except as set out in this Schedule.  Where there is any conflict between the Rules and this Schedule, the terms of this Schedule shall prevail.

1.The Committee may grant or procure the grant of a Cash Conditional Award.

2.Each Cash Conditional Award shall relate to a given number of notional Shares or ADSs.

3.On the Vesting of the Cash Conditional Award, the holder of that Award shall be entitled to a cash sum which shall be equal to the “Cash Value” of the notional Vested Shares or ADSs, where the Cash Value of a notional Share or ADS is the market value of a Share or ADS on the date of Vesting of the Cash Conditional Award.  For the purposes of this Schedule, the market value of a Share or ADS on any day shall be determined in accordance with Rule 8.3 (Cash equivalent).

4.The cash sum payable under paragraph 3 above shall be paid by the employer of the Participant as soon as practicable after the Vesting of the Cash Conditional Award, net of any deductions (on account of tax or similar liabilities) as may be required by law.

5.For the avoidance of doubt, a Cash Conditional Award shall not confer any right on the holder of such an Award to receive Shares or ADSs or any interest in Shares or ADSs.

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SCHEDULE 3 : PERFORMANCE CONDITION

The first Awards granted under the Plan after it is approved by shareholders will be subject to the Performance Condition set out below.  The Committee may set a different Performance Condition for subsequent Awards.

All words and expressions defined in the Rules of the Plan shall have the same meanings when used in this Performance Condition.  Where there is any conflict between the Rules and this Performance Condition, the terms of this Performance Condition shall prevail.

1.Definitions

“Net Return Index” means the index that reflects movements in share price over a   period and dividends reinvested on a net basis (without any associated tax credit) in shares on the payment date;

“Peer Group Companies” means other companies of relevant size and international spread to the Company chosen by the Committee before the Grant Date listed in the Appendix to this Performance Condition;

“TSR” means total shareholder return calculated for the Company and each of the Peer Group Companies as calculated by Bloomberg (or any other financial information provider as selected by the Committee) over the Performance Period calculated as:

TSR2 minus TSR1

TSR1

TSR1 is its average share price over each weekday (excluding Saturdays and Sundays) during the 12-month period ending on the weekday immediately before the beginning of the Financial Year in which the Grant Date falls; and

TSR2 is its average Net Return Index over each weekday (excluding Saturdays and Sundays) during the 12-month period ending on the final weekday of the Performance Period;

“Financial Year” means a financial year of the Company within the meaning of section 390 of the Companies Act 2006;

“Performance Period” means the three consecutive Financial Years of which the first is the Financial Year in which the Grant Date falls.

2.Underlying performance condition and vesting

Awards will only Vest if the Committee is satisfied that there has been an underlying improvement in the financial performance of the Company over the Performance Period.  The Committee shall, in it absolute discretion, determine the method by which the financial performance of the Company shall be measured.

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3.TSR Condition and vesting

(a)The TSR over the Performance Period will be calculated for the Company and all other Peer Group Companies.  The Company and each Peer Group Company will be ranked in descending order of performance.

(b)Subject to paragraph 2 above, Awards shall only be capable of Vesting if the Company’s TSR for the Performance Period results in a ranking that is at or above the median compared with the TSR for the Performance Period of the Peer Group Companies.  The percentage of an Award that is capable of Vesting upon the satisfaction of the Performance Condition is as follows:

TSR Ranking	% of Award capable of Vesting
1st or 2nd	100%
3rd	95%
4th	75%
5th	65%
6th	55%
7th	50%
8th	40%
9th	25%
10th or below	0%

4.Adjustments

The Committee may make such adjustments to the method of calculating TSR, the Peer Group Companies or any other feature of the terms of this Schedule as it considers appropriate to ensure that the TSR Condition in paragraph 3 above achieves its original purpose.

5.Leavers and Deceased Participants

If the Participant ceases to be a director or employee of a Group Member as described in Rules 10.1 to 10.3 in circumstances where his Award Vests before the end of the Performance Period:

(a)the Performance Period shall end on the last weekday of the month before the month of cessation; and

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(b)TSR2 shall be the average Net Return Index over each weekday (excluding Saturdays and Sundays):

(i)for the period beginning with the first weekday of the Financial Year and ending on the last weekday of the month before the month of cessation if the date of cessation occurs during the first Financial Year of the Performance Period;

(ii)the period of 12 months ending on the last weekday of the month before the month of cessation if the date of cessation occurs after the end of the first Financial Year of the Performance Period.

6.Takeovers and other corporate events

If an event as described in Rule 11 occurs:

(a)the Performance Period shall end on the date of that event; and

(b)TSR2 shall be the Net Return Index on the date of that event provided that the Net Return Index for the Company shall be based on the price paid for a Share in the Company under the relevant event and, if the offer is a share offer or there are a number of alternatives under the offer, the value of the shares or the highest value of those alternatives at such date as the Committee may determine.

7.Peer Group Company events

Subject to the Committee’s discretion under paragraph 4 above, the Committee shall take the following steps in respect of the events described below:

(a)in the event of a demerger involving a Peer Group Company:

(i)TSR should be measured, following the demerger, for the entity (the “Surviving Entity”) which retains the London Stock Exchange (or overseas equivalent) serial number which applied to the original Peer Group Company during the Performance Period; and

(ii)TSR for the original company up to the date of the demerger should be recalculated so that it reflects TSR for the proportion of the original Peer Group Company equal to the value of the Surviving Entity at the time of the demerger;

(b)in the event of an acquisition of a Peer Group Company by another Peer Group Company, TSR should be measured for the acquiring company following the acquisition and the Peer Group Company that has been acquired shall be removed from the Peer Group Companies and the Vesting schedule set out in paragraph 3 above shall be adjusted accordingly;

(c)if any Peer Group Company ceases to exist, its shares cease to be listed in the Official List of the London Stock Exchange (or overseas equivalent), or otherwise is so changed as to make it, in the opinion of the Committee,

unsuitable as a Peer Group Company, the Committee may, in its absolute discretion, exclude that company (in which case, the Vesting schedule set out in paragraph 3 above shall be adjusted accordingly) or include a substitute for that company.

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8.Disputes

The calculations of the Committee shall not be open to question and, in the absence of fraud, the Committee shall be under no liability to any person by reason of those calculations or of anything done or omitted by them for the purposes of or in connection with those calculations.

APPENDIX

The initial Peer Group Companies of the Company will be:

Anheuser-Busch, Brown-Forman, Cadbury, Carlsberg, Coca-Cola, Colgate Palmolive, Groupe Danone, Heineken, Heinz, InBev, Nestle, PepsiCo, Pernod Ricard, Procter & Gamble, SABMiller, Unilever.

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EX-4.3

Exhibit 4.3

THE DIAGEO PLC 2008 SENIOR EXECUTIVE SHARE OPTION PLAN

Approved by shareholders of the Company on 15 October 2008

Adopted by the Remuneration Committee of the Company on 15 October 2008

HMRC Reference (Part A only): X103011

The Plan is a discretionary benefit offered by the Diageo Group for the benefit of its employees.  Its main purpose is to increase the interest of the employees in Diageo plc’s long-term business goals and performance through share ownership.  The Plan is an incentive for the employees’ future performance and commitment to the goals of the Diageo Group.

Shares purchased under the Plan, any cash received under the Plan and any gains made by exercising options granted under the Plan are not part of salary for any purpose (except to any extent required by statute).

It is intended that the Plan will be offered for the first time in 2008 in selected countries.  The remuneration committee of Diageo plc shall have the right to decide, in its sole discretion, whether or not further options will be offered in the future and to which employees those options will be granted.

Participating in the Plan is an investment opportunity distinct from any employment contract.  Participation in the Plan entails the risks associated with an investment.  An individual who participates in the Plan is treated as being aware of such risks and accepts such risks of his own free will.

The detailed rules of the Plan are set out in this document.

CONTENTS

Rule		Page
Part A - HMRC Approved		1
1.	Definitions And Interpretation	1
2.	Eligibility	2
3.	Grant Of Options	3
4.	Limits	5
5.	Exercise Of Options	7
6.	Leavers And Deceased Participants	9
7.	Takeovers And Other Corporate Events	12
8.	Adjustment Of Options	15
9.	Alterations	16
10.	Miscellaneous	17
Part B - Unapproved		19
1.	Definitions And Interpretation	19
2.	Eligibility	20
3.	Grant Of Options	20
4.	Limits	22
5.	Exercise Of Options	24
6.	Leavers And Deceased Participants	28
7.	Takeovers And Other Corporate Events	31
8.	Adjustment Of Options	33
9.	Alterations	34
10.	Miscellaneous	35
11.	Incentive Stock Options	37
Schedule 1: SHARE APPRECIATION RIGHTS		40
Schedule 2: PERFORMANCE CONDITION		41

PART A - HMRC APPROVED

1.DEFINITIONS AND INTERPRETATION

1.1In the Plan, unless the context otherwise requires:

“Committee” means the remuneration committee of the board of directors of the Company (or, on and after the occurrence of a corporate event described in Rule 7 (Takeovers and other corporate events), the remuneration committee of the board of directors of the Company as constituted immediately before such event occurs) and any duly appointed individual or committee appointed by the remuneration committee;

“Company” means Diageo plc (registered in England and Wales with registered number 23307);

“Control” means control within the meaning of section 719 of ITEPA;

“Grant Date” means the date on which an Option is granted;

“Group Member” means:

(a)a Participating Company or a body corporate which is the Company’s holding company (within the meaning of section 1159 of the Companies Act 2006) or a subsidiary (also within the meaning of section 1159 of that Act) of the Company’s holding company;

(b)a body corporate which is a subsidiary undertaking (within the meaning of section 1162 of that Act) of a body corporate within paragraph (a) above and has been designated by the Committee for this purpose; and

(c)any other body corporate in relation to which a body corporate within paragraph (a) or (b) above is able (whether directly or indirectly) to exercise 15% or more of its equity voting rights and has been designated by the Committee for this purpose;

“HMRC” means H.M. Revenue & Customs;

“ITEPA” means the Income Tax (Earnings and Pensions) Act 2003;

“Listing Rules” means the Listing Rules published by the UKLA;

“London Stock Exchange” means London Stock Exchange plc or any successor to that company;

“Option” means a right to acquire Shares granted under the Plan;

“Participant” means a person who holds an Option including his personal representatives;

“Participating Company” means the Company or any Subsidiary;

“Performance Condition” means an objective condition related to performance which is specified by the Committee under Rule 3.1 (Terms of grant);

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“Plan” means the Diageo plc 2008 Senior Executive Share Option Plan as amended from time to time;

“Rule” means a rule of the Plan;

“Schedule 4” means Schedule 4 to ITEPA;

“Shares” means fully paid ordinary shares in the capital of the Company which satisfy the requirements of paragraphs 16 to 20 of Schedule 4 (fully paid up, unrestricted ordinary share capital) unless Rule 5.11 (Shares ceasing to satisfy Schedule 4 requirements) applies;

“Subsidiary” means a body corporate which is a subsidiary (within the meaning of section 1159 of the Companies Act 2006) of the Company and of which the Company has Control;

“Tax Liability” means any amount of tax or social security contributions for which a Participant would or may be liable and for which any Group Member or former Group Member would or may be obliged to (or would or may suffer a disadvantage if it were not to) account to any relevant authority;

“UKLA” means the United Kingdom Listing Authority;

and expressions not defined in Part A of the Plan have the same meanings as they have in Schedule 4.

1.2Any reference in the Plan to any enactment includes a reference to that enactment as from time to time modified, extended or re-enacted.

1.3Expressions in italics and headings are for guidance only and do not form part of the Plan.

2.ELIGIBILITY

2.1General rule on eligibility

Subject to Rule 2.3 (Individuals not eligible), an individual is eligible to be granted an Option only if he is a full-time director or qualifying employee as defined in Rule 2.2.

2.2Individuals eligible

For the purposes of Rule 2.1:

(a)a full-time director is an individual who is a director of a Participating Company and is obliged to devote not less than 25 hours a week (excluding meal breaks) to the performance of the duties of his office or employment with that and any other Participating Company; and

(b)a qualifying employee is an employee of a Participating Company (except an employee who is a director of a Participating Company).

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2.3Individuals not eligible

An individual is not eligible to be granted an Option at any time when he is not eligible to participate in the Plan by virtue of paragraph 9 of Schedule 4 (material interest in a close company).

3.GRANT OF OPTIONS

3.1Terms of grant

Subject to Rule 3.5 (Timing of grant), Rule 3.7 (Approvals and consents) and Rule 4 (Limits), the Committee may resolve to grant an Option on:

(a)the terms set out in Part A of the Plan; and

(b)such additional terms (whether a Performance Condition and/or any other terms) as the Committee may specify

to any person who is eligible to be granted an Option under Rule 2 (Eligibility).

3.2Method of grant

An Option shall be granted by deed executed by the Company.

3.3Method of satisfying Options

Unless specified to the contrary by the Committee at the time of grant of an Option, an Option may be satisfied:

(a)by the issue of new Shares; and/or

(b)by the transfer of treasury Shares; and/or

(c)by the transfer of Shares (other than the transfer of treasury Shares).

The Committee may decide to change the way in which it is intended that an Option may be satisfied after it has been granted, having regard to the provisions of Rule 4 (Limits).

3.4Option price

The Committee shall decide before an Option is granted the price at which Shares may be acquired by the exercise of that Option, but the price shall not be less than:

(a)if Shares are quoted in the London Stock Exchange Daily Official List, the average of the middle-market quotation of the Shares (as derived from that List) for the 3 dealing days before the Grant Date (or on such other dealing day(s) as may be agreed with HMRC) provided such dealing day(s) do not fall within any period when dealings in Shares are prohibited under the Company’s share dealing code;

(b)if Rule 3.4(a) does not apply, the market value (within the meaning of Part VIII of the Taxation of Chargeable Gains Act 1992) of Shares, as agreed in advance for the purposes of the Plan with HMRC Shares and Assets Valuation, on the Grant Date (or such other day(s) as may be agreed with HMRC); and

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(c)in the case of an Option to acquire Shares only by subscription, the nominal value of those Shares.

3.5Timing of grant

Subject to Rule 3.7 (Approvals and consents), an Option may only be granted:

(a)within the period of 6 weeks beginning with:

(i)the day on which the Plan is approved by shareholders of the Company; or

(ii)the dealing day after the day on which the Company announces its results for any period; or

(b)at any other time when the Committee considers that circumstances are sufficiently exceptional to justify its grant

but an Option may not be granted:

(c)under Part A of the Plan before the day on which Part A of the Plan is approved by HMRC under Schedule 4; or

(d)after [14 October 2018] (that is, the expiry of the period of 10 years beginning with the date on which the Plan is approved by shareholders of the Company).

3.6Non-transferability and bankruptcy

An Option granted to any person:

(a)shall not be transferred, assigned, charged or otherwise disposed of (except on his death to his personal representatives) and shall lapse immediately on any attempt to do so; and

(b)shall lapse immediately if he is declared bankrupt.

3.7Approvals and consents

The grant of any Option shall be subject to obtaining any approval or consent required under the Listing Rules, any relevant share dealing code of the Company, the City Code on Takeovers and Mergers, or any other relevant UK or overseas regulation or enactment.

3.8Shareholding condition

The Committee may decide that it shall be a condition of the grant of an Option that an individual eligible to be granted an Option shall have held beneficially a number of Shares determined by the Committee for such period as the Committee decides.  If the Committee decides to set such a shareholding condition, it must notify the individual of the condition no later than 3 calendar months before the beginning of the financial year in which it is intended to grant the Option.

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4.LIMITS

4.15% in 10 years limit

An Option shall not be granted in any calendar year if, at the time of its proposed Grant Date, it would cause the number of Shares allocated (as defined in Rule 4.3) in the period of 10 calendar years ending with that calendar year under the Plan and under any other executive share plan adopted by the Company to exceed such number as represents 5% of the ordinary share capital of the Company in issue at that time.

4.210% in 10 years limit

An Option shall not be granted in any calendar year if, at the time of its proposed Grant Date, it would cause the number of Shares allocated (as defined in Rule 4.3) in the period of 10 calendar years ending with that calendar year under the Plan and under any other employee share plan adopted by the Company to exceed such number as represents 10% of the ordinary share capital of the Company in issue at that time.

4.3Meaning of “allocated”

For the purposes of Rules 4.1 and 4.2:

(a)Shares are allocated:

(i)when an option, award or other contractual right to acquire unissued Shares or treasury shares is granted;

(ii)where Shares are issued or treasury shares are transferred other than in respect of an option, award or other contractual right to acquire Shares, when those Shares are issued or treasury shares transferred;

(b)any Shares which have been issued or which may be issued (or any Shares transferred out of treasury or which may be transferred out of treasury) to any trustees to satisfy the exercise of any option, award or other contractual right  shall be treated as “allocated” unless they are already treated as allocated under this Rule; and

(c)for the avoidance of doubt, existing Shares other than treasury shares that are transferred or over which options, awards or other contractual rights are granted shall not count as “allocated”.

4.4Post-grant events affecting numbers of “allocated” Shares

For the purposes of Rule 4.3:

(a)where:

(i)any option, award or other contractual right to acquire unissued Shares or treasury shares is released or lapses (whether in whole or in part); or

(ii)after the grant of an option, award or other contractual right the Committee determines that:

(aa)where an amount is normally payable on its exercise it shall be satisfied without such payment but instead by the payment of cash equal to the gain made on its exercise; or

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(bb)it shall be satisfied by the transfer of existing Shares (other than Shares transferred out of treasury)

the unissued Shares or treasury shares which consequently cease to be subject to the option, award or other contractual right shall not count as allocated; and

(b)the number of Shares allocated in respect of an option, award or other contractual right shall be such number as the Committee shall reasonably determine from time to time.

4.5Changes to investor guidelines

Treasury shares shall cease to count as “allocated” Shares for the purposes of Rule 4.3 if institutional investor guidelines cease to require such Shares to be so counted.

4.6Individual limit

(a)Subject to Rule 4.7 (HMRC limit), the maximum total market value of Shares (calculated as set out in this Rule) over which Options may be granted to any employee during any financial year of the Company is 375% of his salary (as defined in this Rule), unless Rule 4.6(b) applies.

(b)If the Committee decides that exceptional circumstances exist in relation to the recruitment or retention of an employee when the maximum total market value of Shares over which Options may be granted to that employee during a financial year of the Company is such higher percentage of his salary (as defined in this Rule) as the Committee may determine.

For the purpose of this Rule 4.6:

(c)an employee’s salary shall be taken to be his base salary (excluding benefits in kind), expressed as an annual rate payable by the Participating Companies to him on the Grant Date (or on such other date as the Committee shall reasonably determine).  Where a payment of salary is made in a currency other than sterling, the payment shall be treated as equal to the equivalent amount of sterling determined by using any rate of exchange which the Committee may reasonably select; and

(d)the market value of the Shares over which an Option is granted shall be calculated:

(i)for an Option, on the days by reference to which the price at which Shares may be acquired by the exercise of that Option was determined under Rule 3.4 (Option price); and

(ii)for an option granted under any other share option plan approved by HMRC under Schedule 4, at the time when it was granted or, in a case where an agreement relating to the shares has been made under paragraph 22 of Schedule 4, such earlier time or times as may be provided in that agreement.

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4.7HMRC limit

No person shall be granted an Option which would, at the time it is granted, cause the total market value of the Shares (calculated as set out in Rule 4.6(b)) which he may acquire as a result of options granted to him (and not exercised) under:

(a)Part A of the Plan; and

(b)any other share option plan approved under Schedule 4 and established by the Company or by any associated company of the Company

to exceed £30,000 (or such other limit as may from time to time be imposed by Schedule 4).

4.8Effect of limits

Any Option shall be limited and take effect so that the limits in this Rule 4 are complied with.

5.EXERCISE OF OPTIONS

5.1General prohibition on exercise before third anniversary of the Grant Date

An Option may only be exercised on or after the third anniversary of the Grant Date except where Rule 6 (Leavers and deceased Participants), Rule 7.1 (General offers), Rule 7.2 (Compulsory acquisition, schemes of arrangement and winding up) or Rule 7.3 (Demerger and similar events) applies.

5.2Performance Condition and other exercise conditions

An Option may only be exercised:

(a)to the extent that the Performance Condition is satisfied; and

(b)as permitted by any other term specified under Rule 3.1(b).

The Option shall lapse regardless of any other Rule to the extent the Performance Condition is not satisfied.

5.3Restrictions on exercise:  regulatory and tax issues

An Option may not be exercised unless the following conditions are satisfied:

(a)the exercise of the Option and the issue or transfer of Shares after such exercise would be lawful in all relevant jurisdictions and in compliance with the Listing Rules, any relevant share dealing code of the Company, the City Code on Takeovers and Mergers and any other relevant UK or overseas regulation or enactment;

(b)if a Tax Liability would arise by virtue of the exercise of the Option, then, unless the Participant agrees with the Committee to fund all or part of the Tax Liability in a different manner, the Participant authorises the Company to sell or procure the sale of sufficient Shares on his behalf to ensure that any relevant Group Member receives the amount required to discharge the Tax Liability;

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(c)the Participant has entered into such arrangements as the Committee requires by way of agreement or election under Paragraphs 3A and 3B (respectively) of Schedule 1 of the Social Security Contributions and Benefits Act 1992 to satisfy a Group Member’s liability to social security contributions in respect of the exercise of the Option; and

(d)if the Participant will exercise the Option in circumstances which will give rise to a Tax Liability and the Committee requires, the Participant has entered into, or agreed to enter into, a valid election under Part 7 of ITEPA (Employment income:  elections to disapply tax charge on restricted securities).

For the purposes of this Rule 5.3, references to Group Member include any former Group Member.

5.4Restriction on exercise: material interest in a close company

A Participant shall not be eligible to exercise an Option at any time when he is not eligible to participate in Part A of the Plan by virtue of paragraph 9 of Schedule 4 (material interest in close company).

5.5Long stop date for exercise

An Option may not in any circumstances (and regardless of any other Rule) be exercised after the expiry of 10 years beginning with the Grant Date (or such shorter period beginning with the Grant Date as the Committee may have decided before the grant of that Option) and if not exercised shall lapse at the end of such period.

5.6Exercise in whole or in part

An Option may be exercised to the maximum extent possible at the time of exercise or over such fewer number of Shares as the Participant decides.

5.7Method of exercise

The exercise of any Option shall be effected in the form and manner prescribed by the Committee and subject to the prior approval of HMRC.  Unless the Committee, acting fairly and reasonably, determines otherwise, any notice of exercise shall, subject to Rules 5.3 and 5.4 (Restrictions on exercise), take effect only when the Company receives it, together with:

(a)payment of the relevant price at which Shares can be acquired under the Option (or, if the Committee so permits, an undertaking to pay that amount); and

(b)if a Tax Liability arises and if a Participant decides to satisfy the Tax Liability other than by selling Shares pursuant to the authority in Rule 5.3(b), an agreement relating to the payment of the Tax Liability having been entered into.

5.8Restriction on use of unissued Shares and treasury shares

No Shares may be issued or treasury shares transferred to satisfy the exercise of any Option to the extent that such issue or transfer would cause the number of Shares allocated (as defined in Rule 4.3 (Meaning of “allocated”) and adjusted under Rule 4.4

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(Post-grant events affecting numbers of “allocated” Shares)) to exceed the limits in Rules 4.1 (5 % in 10 years limit) and 4.2 (10 % in 10 years limit) except where there is a variation of share capital of the Company which results in the number of Shares so allocated exceeding such limits solely by virtue of that variation.

5.9Allotment and transfer timetable

Within 30 days after an Option has been exercised by a Participant, the Committee shall allot to him (or a nominee for him) or, if appropriate, transfer or procure the transfer to him (or a nominee for him) of the number of Shares in respect of which the Option has been exercised.

5.10Share rights

All Shares allotted under the Plan shall rank equally in all respects with Shares then in issue except for any rights attaching to such Shares by reference to a record date before the date of allotment.  Where Shares are transferred under the Plan after the exercise of an Option, Participants will be entitled to any rights attaching to such Shares by reference to a record date on or after the date of such transfer.

5.11Shares ceasing to satisfy Schedule 4 requirements

If at any time the Shares cease to satisfy the requirements of paragraphs 16 to 20 of Schedule 4 (fully paid up, unrestricted, ordinary share capital):

(a)an Option may be exercised regardless of that fact (but subject to the other provisions of the Plan); and

(b)the Company shall notify HMRC as soon as practicable (which may withdraw its approval of Part A of the Plan under Schedule 4).

6.LEAVERS AND DECEASED PARTICIPANTS

6.1Deceased Participants

If a Participant dies at a time when either he is a director or employee of a Group Member or he is or may be entitled to exercise the Option under Rule 6.2 (Retirement, ill-health, injury, disability, redundancy and transfer out of the Group) or Rule 6.4 (Cessation of employment in other circumstances), the following provisions apply:

(a)any Option granted to him that is already capable of exercise at the time of death shall, subject to Rules 5.3 and 5.4 (Restrictions on exercise), continue to be capable of exercise by his personal representatives for a period of 12 months after his death and if not exercised shall lapse at the end of that period;

(b)any other Option granted to him may, subject to Rules 5.3 and 5.4 (Restrictions on exercise) and the remainder of this Rule, be exercised by his personal representatives during the period of 12 months after his death and if not exercised shall lapse at the end of that period; and

(c)in both cases (a) and (b) above the period for exercise shall be shortened if Rule 5.5 (Long stop date for exercise), Rule 7.1 (General offers), Rule 7.2

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(Compulsory acquisition, schemes of arrangement and winding up) or Rule 7.3 (Demerger and similar events) applies.

For the purposes of this Rule, the Committee shall determine the number of Shares over which the Option becomes exercisable by:

(i)applying the Performance Condition and any other term specified by the Committee on the Grant Date; and

(ii)reducing the number of Shares pro rata to reflect any unexpired part of the period of 3 years after the Grant Date as at the time that the Participant ceases to be a director or employee unless the Committee, acting fairly and reasonably, decides that the pro rata reduction in the number of Shares is inappropriate in any particular case when it shall increase the number of Shares to such higher number as it decides (provided that the number does not exceed the number of Shares determined under paragraph (i) above).

6.2Retirement, ill-health, injury, disability, redundancy and transfer out of the Group

If a Participant ceases to be a director or employee of a Group Member by reason of:

(a)retirement with the agreement of his employer;

(b)ill-health, injury or disability (evidenced to the satisfaction of his employer);

(c)redundancy (within the meaning of the Employment Rights Act 1996) or any overseas equivalent; or

(d)his office or employment being either with a company which ceases to be a Group Member or relating to a business or part of a business which is transferred to a person who is not a Group Member

the following provisions apply:

(e)any Option granted to him that is already capable of exercise at the date of cessation shall, subject to Rules 5.3 and 5.4 (Restrictions on exercise) and Rule 6.1 (Deceased Participants), continue to be capable of exercise for a period of 6 months after the date of cessation and if not exercised shall lapse at the end of that period;

(f)any other Option granted to him may, subject to Rules 5.3 and 5.4 (Restrictions on exercise), Rule 6.1 (Deceased Participants) and the remainder of this Rule, be exercised during the period of 6 months after the third anniversary of the Grant Date, unless the Committee decides that his Option may be exercised during such period immediately following the date of cessation as the Committee may determine (not being greater than 42 months after the Grant Date) and if not exercised shall lapse at the end of that period; and

(g)in both cases (e) and (f) above, the period for exercise shall be shortened if Rule 5.5 (Long stop date for exercise), Rule 7.1 (General offers), Rule 7.2 (Compulsory acquisition, schemes of arrangement and winding up) or Rule 7.3 (Demerger and similar events) applies.

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For the purposes of this Rule, the Committee shall determine the number of Shares over which the Option becomes exercisable by:

(i)applying the Performance Condition and any other term specified by the Committee on the Grant Date; and

(ii)reducing the number of Shares pro rata to reflect any unexpired part of the period of 3 years after the Grant Date as at the time that the Participant ceases to be a director or employee unless the Committee, acting fairly and reasonably, decides that the pro rata reduction in the number of Shares is inappropriate in any particular case when it shall increase the number of Shares to such higher number as it decides (provided that the number does not exceed the number of Shares determined under paragraph (i) above).

6.3Specified Retirement Age

For the purposes of paragraph 35A of Schedule 4, the specified retirement age shall be 55.

6.4Cessation of employment in other circumstances

If a Participant ceases to be a director or employee of a Group Member for any reason other than those specified in Rule 6.1 (Deceased Participants), and Rule 6.2 (Retirement, ill-health, injury, disability, redundancy and transfer out of the Group), the following provisions apply:

(a)any Option granted to him may not be exercised at all and shall lapse on such cessation unless the Committee, acting fairly and reasonably, decides it may be exercised under this Rule 6.4;

(b)if the Committee permits the Option to be exercised then it may, subject to Rule 5.3 and Rule 5.4 (Restrictions on exercise), Rule 6.1 (Deceased Participants) and the remainder of this Rule, be exercised during the period of 6 months after the third anniversary of the Grant Date, unless the Committee decides that his Option may be exercised during such period immediately following the date of cessation as the Committee may determine (not being greater than 42 months after the Grant Date) and if not exercised shall lapse at the end of that period; and

(c)the period for exercise referred to in (b) above shall be shortened if Rule 5.5 (Long stop date for exercise), Rule 7.1 (General offers), Rule 7.2 (Compulsory acquisition, schemes of arrangement and winding up) or Rule 7.3 (Demerger and similar events) applies.

For the purposes of this Rule, the Committee shall determine the number of Shares over which the Option becomes exercisable by:

(i)applying the Performance Condition and any other term specified by the Committee on the Grant Date; and

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(ii)reducing the number of Shares pro rata to reflect any unexpired part of the period of 3 years after the Grant Date as at the time that the Participant ceases to be a director or employee unless the Committee, acting fairly and reasonably, decides that the pro rata reduction in the number of Shares is inappropriate in any particular case when it shall increase the number of Shares to such higher number as it decides (provided that the number does not exceed the number of Shares determined under paragraph (i) above).

6.5Meaning of ceasing employment

A Participant shall not be treated for the purposes of this Rule 6 as ceasing to be a director or employee of a Group Member until such time as he is no longer a director or employee of any Group Member.  Any Participant who ceases to be such a director or employee before exercising an Option in circumstances where he retains a statutory right to return to work then he shall be treated as not having ceased to be such a director or employee until such time (if at all) as he ceases to have such a right to return to work while not acting as an employee or director.

7.TAKEOVERS AND OTHER CORPORATE EVENTS

7.1General offers

If any person (or any group of persons acting in concert):

(a)obtains Control of the Company as a result of making a general offer to acquire shares in the Company; or

(b)having obtained Control of the Company makes such an offer and such offer becomes unconditional in all respects

the Committee shall within 7 days of becoming aware of that event notify every Participant of it and, subject to Rules 5.3 and 5.4 (Restrictions on exercise), Rule 5.5 (Long stop date of exercise), Rule 6 (Leavers and deceased Participants) and Rule 7.7 (Internal reorganisations), any Option may be exercised within 1 month (or such longer period not exceeding 6 months as the Committee may permit) of such notification, provided that or to the extent that the Performance Condition is satisfied on the occurrence of such an event and Rule 7.6 (Reduction in number of Shares) shall apply.

7.2Compulsory acquisition, schemes of arrangement and winding up

In the event that:

(a)any person becomes bound or entitled to acquire shares in the Company under sections 979 to 985 of the Companies Act 2006;

(b)under section 899 of the Companies Act 2006 the Court sanctions a compromise or arrangement proposed for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies;

(c)the Company passes a resolution for a voluntary winding up of the Company; or

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(d)an order is made for the compulsory winding up of the Company

an Option may, subject to Rules 5.3 and 5.4 (Restrictions on exercise), Rule 5.5 (Long stop date for exercise), Rule 6 (Leavers and deceased Participants) and Rule 7.7 (Internal reorganisations), be exercised within 1 month of such event, provided that or to the extent that the Performance Condition is satisfied on the occurrence of such an event and Rule 7.6 (Reduction in number of Shares) shall apply, but to the extent that the Option is not exercised within that period, it shall (regardless of any other provision of the Plan) lapse at the end of that period.

7.3Demerger and similar events

If a demerger, special dividend or other similar event (the “Relevant Event”) is proposed which, in the opinion of the Committee, would affect the market price of Shares to a material extent, then the Committee may, at its discretion and acting fairly and reasonably, decide that the following provisions will apply:

(a)the Committee shall, as soon as reasonably practicable after deciding to apply these provisions, notify a Participant that, subject to Rules 5.3 and 5.4 (Restrictions on exercise), Rule 5.5 (Long stop date of exercise), and Rule 6 (Leavers and deceased Participants), his Option may be exercised on such terms as the Committee may determine and during such period preceding the Relevant Event or on the Relevant Event as the Committee may determine provided that or to the extent that the Performance Condition is satisfied on the occurrence of such a Relevant Event and Rule 7.6 (Reduction in number of Shares) shall apply, but to the extent that the Option is not exercised within that period, it shall (regardless of any other provision of the Plan) lapse at the end of that period; and

(b)if an Option is exercised in advance of and conditional upon the Relevant Event and such event does not occur then the conditional exercise shall not be effective and the Option shall continue to subsist.

7.4Option rollover: general provisions

If any company (the “acquiring company”):

(a)obtains Control of the Company as a result of making a general offer to acquire:

(i)the whole of the issued ordinary share capital of the Company (other than that which is already owned by it) which is made on a condition such that if it is satisfied the person making the offer will have Control of the Company; or

(ii)all the Shares (other than those Shares already owned by it); or

(b)obtains Control of the Company as a result of a compromise or arrangement sanctioned by the Court under section 899 of the Companies Act 2006; or

(c)becomes bound or entitled to acquire shares in the Company under sections 979 to 985 of the Companies Act 2006

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any Participant may, at any time within the relevant period specified under paragraph 26(3) of Schedule 4, by agreement with the acquiring company, release any Option granted under Part A of the Plan (the “Old Option”) in consideration of the grant to him of an Option (the “New Option”) which for the purposes of paragraph 27 of Schedule 4 is equivalent to the Old Option but relates to shares in a different company (whether the acquiring company itself or some other company falling within paragraph 16(b) or (c) of Schedule 4).

7.5Option rollover: interpretation of Rules

Where a New Option is granted under Rule 7.4 (Option rollover: general provisions) the following terms of Part A of the Plan shall, in relation to the New Option, be construed as if:

(a)except for the purposes of the definitions of “Group Member”, “Participating Company” and “Subsidiary” in Rule 1.1 and the reference to the “Committee” in Rule 5.5, the expression the “Company” were defined as “a company whose shares may be acquired by the exercise of Options granted under Part A of the Plan”;

(b)the Performance Condition had been satisfied (subject to any alterations made under Rule 9.5 (Alterations to the Performance Condition) including the altered Performance Condition applying to the New Option); and

(c)Rule 9.2 (Shareholder approval) were omitted.

7.6Corporate events:  reduction in number of Shares

Where, under any of Rules 7.1 to 7.3 (Corporate events), an Option would (subject to the satisfaction of any Performance Condition) become exercisable before the end of the full period over which performance would otherwise be measured under the Performance Condition then the number of Shares over which the Option becomes exercisable shall be determined by the Committee by:

(a)applying the Performance Condition and any other term specified by the Committee on the Grant Date; and

(b)if the Committee, acting fairly and reasonably, decides the number of Shares shall be reduced pro rata to reflect any unexpired part of the period of 3 years after the Grant Date.

If an Option becomes exercisable under any of Rules 7.1 to 7.3 when the holder of that Option has ceased to be a director or employee of a Group Member, then the number of Shares over which the Option becomes exercisable shall be determined under Rule 6.1, 6.2 or 6.4 (whichever is relevant) in precedence over this Rule.

7.7Internal reorganisations

In the event that:

(a)an offer (as referred to in Rule 7.1 (General offers)) is made or a compromise or arrangement (as referred to in Rule 7.2(b) (Schemes of arrangement)) is

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proposed which is expected to result in the Company becoming controlled by a new company (the “New Company”);

(b)at least 75% of the shares in the New Company will be held by substantially the same persons who immediately before the offer or proposal was made were shareholders in the Company; and

(c)the Committee and the New Company agree that this Rule should apply

then an Option granted under Part A of the Plan shall not become exercisable under Rule 7.1 (General offers) or Rule 7.2 (Compulsory acquisition, schemes of arrangement and winding up) but may nonetheless be released in consideration for the grant of a New Option under Rule 7.4 and, if not so released, shall then automatically lapse at the end of the relevant period specified in paragraph 26(3) of Schedule 4.

8.ADJUSTMENT OF OPTIONS

8.1General rule

Subject to Rules 8.3 (HMRC approval), in the event of any variation of the share capital of the Company, the Committee may make such adjustment as it considers appropriate under Rule 8.2 (Method of adjustment).

8.2Method of adjustment

An adjustment made under this Rule shall be to one or more of the following:

(a)the number of Shares in respect of which any Option may be exercised;

(b)subject to Rule 8.4 (Adjustment below nominal value), the price at which Shares may be acquired by the exercise of any Option; and

(c)where any Option has been exercised but no Shares have been allotted or transferred after such exercise, the number of Shares which may be so allotted or transferred and the price at which they may be acquired.

8.3HMRC approval

At a time when Part A of the Plan is approved by HMRC under Schedule 4, no adjustment under Rule 8.2 (Method of adjustment) shall be made without the prior approval of HMRC.

8.4Adjustment below nominal value

An adjustment under Rule 8.2 (Method of adjustment) may reduce the price at which Shares may be subscribed for on the exercise of an Option to less than their nominal value, but only if and to the extent that the Committee is authorised:

(a)to capitalise from the reserves of the Company a sum equal to the amount by which the nominal value of the Shares in respect of which the Option is exercised and which are to be allotted after such exercise exceeds the price at which the Shares may be subscribed for; and

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(b)to apply that sum in paying up such amount on such Shares

so that on exercise of any Option in respect of which such a reduction shall have been made the Committee shall capitalise that sum (if any) and apply it in paying up that amount.

9.ALTERATIONS

9.1General rule

Except as described in Rule 9.2 (Shareholder approval) and Rule 9.4 (Alterations to disadvantage of Participants), the Committee may at any time alter the Plan or the terms of any Option.

If an alteration which does not solely relate to the Performance Condition is made to a key feature (as defined in paragraph 30(4) of Schedule 4) of the Plan at a time when Part A of the Plan is approved by HMRC under Schedule 4, the alteration will not have effect unless and until either HMRC has approved the alteration or the Committee resolves that the alteration shall take effect even if this causes the Plan to cease to be approved under Schedule 4.

9.2Shareholder approval

Except as described in Rule 9.3 (Exceptions to shareholder approval), no alteration to the advantage of an individual to whom an Option has been or may be granted shall be made under Rule 9.1 (General rule on alterations) to the provisions concerning:

(a)eligibility;

(b)the individual limits on participation;

(c)the overall limits on the issue of Shares or the transfer of treasury Shares;

(d)the basis for determining a Participant’s entitlement to, and the terms of, Shares provided under the Plan;

(e)the adjustments that may be made in the event of any variation of capital; and

(f)the terms of this Rule 9.2

without the prior approval by ordinary resolution of the members of the Company in general meeting.

9.3Exceptions to shareholder approval

Rule 9.2 (Shareholder approval) shall not apply to:

(a)any minor alteration 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 for Participants or any Group Member; or

(b)any alteration relating to a Performance Condition made under Rule 9.5.

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9.4Alterations to disadvantage of Participants

No alteration to the material disadvantage of any Participant (other than to any Performance Condition) shall be made under Rule 9.1 unless:

(a)the Committee shall have invited every relevant Participant to indicate whether or not he approves the alteration; and

(b)the alteration is approved by a majority of those Participants who have given such an indication.

9.5Alterations to a Performance Condition

The Committee may amend any Performance Condition without prior shareholder approval if:

(a)any circumstance has arisen which causes the Committee reasonably to consider that it would be appropriate to amend the Performance Condition;

(b)the altered Performance Condition will, in the reasonable opinion of the Committee, be not materially less difficult to satisfy than the unaltered Performance Condition would have been but for the circumstance in question; and

(c)the Committee shall act fairly and reasonably in making the alteration.

10.MISCELLANEOUS

10.1Employment

The rights and obligations of any individual under the terms of his office or employment with any Group Member shall not be affected by his participation in the Plan or any right which he may have to participate in it.  An individual who participates in the Plan waives any and all rights to compensation or damages in consequence of the termination of his office or employment for any reason whatsoever (and regardless of whether such termination is lawful or unlawful) insofar as those rights arise or may arise from his ceasing to have rights under or be entitled to exercise any Option as a result of such termination.  Participation in the Plan shall not confer a right to continued employment upon any individual who participates in it.  The grant of an Option does not imply that any further Options will be granted nor that a Participant has any right to be granted any further Options.

10.2Disputes

In the event of any dispute or disagreement as to the interpretation of the Plan, or as to any question or right arising from or relating to the Plan, the decision of the Committee shall be final and binding upon all persons.

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The exercise of any power or discretion by the Committee shall not be open to question by any person and a Participant or former Participant shall have no rights in relation to the exercise of or omission to exercise any such power or discretion.

10.3Notices

Any notice or other communication under or in connection with the Plan may be given:

(a)by personal delivery or by post, in the case of a company to its registered office, and in the case of an individual to his last known address, or, where he is a director or employee of a Group Member, either to his last known address or to the address of the place of business at which he performs the whole or substantially the whole of the duties of his office or employment; or

(b)in an electronic communication to their usual business address or such other address for the time being notified for that purpose to the person giving the notice; or

(c)by such other method as the Committee determines.

10.4Third parties

No third party has any right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of the Plan.

10.5Benefits not pensionable

Benefits provided under the Plan shall not be pensionable.

10.6Data Protection

Each Participant consents to the collection, processing and transfer of his personal data for any purpose relating to the operation of the Plan.  This includes:

(a)providing personal data to any Group Member and any third party such as trustees of any employee benefit trust, administrators of the Plan, registrars, brokers and any of their respective agents;

(b)processing of personal data by any such Group Member or third party;

(c)transferring personal data to a country outside the European Economic Area (including a country which does not have data protection laws equivalent to those prevailing in the European Economic Area); and

(d)providing personal data to potential purchasers of the Company, the Participant’s employer or the business in which the Participant works.

10.7Governing law

The Plan and all Options shall be governed by and construed in accordance with the law of England and Wales and the Courts of England and Wales have exclusive jurisdiction to hear any dispute.

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PART B - UNAPPROVED

1.DEFINITIONS AND INTERPRETATION

1.1In the Plan, unless the context otherwise requires:

“ADS” means an American Depositary Share being an authorised depositary security representing for the time being 4 Shares in the Company and being evidenced by an authorised depositary receipt issued by the Bank and quoted on the New York Stock Exchange;

“Bank” means The Bank of New York or such other bank as the Company may from time to time appoint to issue authorised depositary receipts;

“Committee” means the remuneration committee of the board of directors of the Company (or, on and after the occurrence of a corporate event described in Rule 7 (Takeovers and other corporate events), the remuneration committee of the board of directors of the Company as constituted immediately before such event occurs) and any duly appointed individual or committee appointed by the remuneration committee;

“Company” means Diageo plc (registered in England and Wales with registered number 23307);

“Control” means control within the meaning of section 719 of ITEPA;

“Grant Date” means the date on which an Option is granted;

“Group Member” means:

(a)a Participating Company or a body corporate which is the Company’s holding company (within the meaning of section 1159 of the Companies Act 2006) or a subsidiary (also within the meaning of section 1159 of that Act) of the Company’s holding company;

(b)a body corporate which is a subsidiary undertaking (within the meaning of section 1162 of that Act) of a body corporate within paragraph (a) above and has been designated by the Committee for this purpose; and

(c)any other body corporate in relation to which a body corporate within paragraph (a) or (b) above is able (whether directly or indirectly) to exercise 15% or more of its equity voting rights and has been designated by the Committee for this purpose;

“ITEPA” means the Income Tax (Earnings and Pensions) Act 2003;

“Listing Rules” means the Listing Rules published by the UKLA;

“London Stock Exchange” means London Stock Exchange plc;

“New York Stock Exchange” means The New York Stock Exchange, Inc.;

“Option” means a right to acquire Shares or, where relevant, ADSs granted under the Plan;

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“Participant” means a person who holds an Option including his personal representatives;

“Participating Company” means the Company or any Subsidiary;

“Performance Condition” means an objective condition related to performance which is specified by the Committee under Rule 3.1 (Terms of grant);

“Plan” means the Diageo plc 2008 Senior Executive Share Option Plan as amended from time to time;

“Rule” means a rule of the Plan;

“Shares” means fully paid ordinary shares in the capital of the Company;

“Subsidiary” means a body corporate which is a subsidiary (within the meaning of section 1162 of the Companies Act 2006) of the Company;

“Tax Liability” means any amount of tax or social security contributions for which a Participant would or may be liable and for which any Group Member or former Group Member would or may be obliged to (or would or may suffer a disadvantage if it were not to) account to any relevant authority;

“UKLA” means the United Kingdom Listing Authority;

“US Participant” means a Participant who is resident in the United States of America on the Grant Date.

1.2Any reference in the Plan to any enactment includes a reference to that enactment as from time to time modified, extended or re-enacted.

1.3Expressions in italics and headings are for guidance only and do not form part of the Plan.

2.ELIGIBILITY

An individual is eligible to be granted an Option only if he is an employee (including an executive director) of a Participating Company.

3.GRANT OF OPTIONS

3.1Terms of grant

Subject to Rule 3.6 (Timing of grant), Rule 3.8 (Approvals and consents) and Rule 4 (Limits), the Committee may resolve to grant an Option on:

(a)the terms set out in Part B of the Plan; and

(b)such additional terms (whether a Performance Condition and/or any other terms) as the Committee may specify

to any person who is eligible to be granted an Option under Rule 2 (Eligibility).

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3.2Grant of Option to a US Participant

Where an Option is granted under Rule 3.1 (Terms of grant) to a US Participant, such Option shall be to acquire ADSs and not Shares.

3.3Method of grant

An Option shall be granted by deed executed by the Company.

3.4Method of satisfying Options

Unless specified to the contrary by the Committee at the time of grant of an Option, an Option may be satisfied:

(a)by the issue of new Shares; and/or

(b)by the transfer of treasury Shares; and/or

(c)by the transfer of Shares (other than the transfer of treasury Shares); or

(d)in the case of an Option granted to a US Participant, by the issue or transfer of ADSs.

The Committee may decide to change the way in which it is intended that an Option may be satisfied after it has been granted, having regard to the provisions of Rule 4 (Limits).

3.5Option price

The Committee shall decide before an Option is granted the price at which Shares or ADSs may be acquired by the exercise of that Option, but the price shall not be less than:

(a)if Shares are quoted in the London Stock Exchange Daily Official List, the average of the middle-market quotation of the Shares (as derived from that List) for the 3 dealing days before the Grant Date (or on such other dealing day(s) as the Committee may decide) provided such dealing day(s) do not fall within any period when dealings in Shares are prohibited under the Company’s share dealing code;

(b)if the Option is granted over ADSs, the average of the closing prices of the ADSs on the New York Stock Exchange for the 3 New York Stock Exchange trading days before the Grant Date; or

(c)if Rule 3.5(a) or (b) (as appropriate) does not apply, the market value of the Shares or ADSs as determined by the Committee;

(d)in the case of an Option to acquire Shares only by subscription, the nominal value of those Shares.

3.6Timing of grant

Subject to Rule 3.8 (Approvals and consents), an Option may only be granted:

(a)within the period of 6 weeks beginning with:

(i)the day on which the Plan is approved by shareholders of the Company; or

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(ii)the dealing day after the day on which the Company announces its results for any period; or

(b)at any other time when the Committee considers that circumstances are sufficiently exceptional to justify its grant

but an Option may not be granted after [14 October 2018] (that is, the expiry of the period of 10 years beginning with the date on which the Plan is approved by shareholders of the Company).

3.7Non-transferability and bankruptcy

An Option granted to any person:

(a)shall not be transferred, assigned, charged or otherwise disposed of (except on his death to his personal representatives) and shall lapse immediately on any attempt to do so; and

(b)shall lapse immediately if he is declared bankrupt.

3.8Approvals and consents

The grant of any Option shall be subject to obtaining any approval or consent required under the Listing Rules, any relevant share dealing code of the Company, the City Code on Takeovers and Mergers, the listing rules of the New York Stock Exchange, or any other relevant UK or overseas regulation or enactment.

3.9Shareholding condition

The Committee may decide that it shall be a condition of the grant of an Option that an individual eligible to be granted an Option shall have held beneficially a number of Shares determined by the Committee for such period as the Committee decides.  If the Committee decides to set such a shareholding condition, it must notify the individual of the condition no later than 3 calendar months before the beginning of the financial year in which it is intended to grant the Option.

4.LIMITS

4.15% in 10 year limit

An Option shall not be granted in any calendar year if, at the time of its proposed Grant Date, it would cause the number of Shares allocated (as defined in Rule 4.3) in the period of 10 calendar years ending with that calendar year under the Plan and under any other executive share plan adopted by the Company to exceed such number as represents 5% of the ordinary share capital of the Company in issue at that time.

4.210% in 10 year limit

An Option shall not be granted in any calendar year if, at the time of its proposed Grant Date, it would cause the number of Shares allocated (as defined in Rule 4.3) in the period of 10 calendar years ending with that calendar year under the Plan and under any other

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employee share plan adopted by the Company to exceed such number as represents 10% of the ordinary share capital of the Company in issue at that time.

4.3Meaning of “allocated”

For the purposes of Rules 4.1 and 4.2:

(a)Shares are allocated:

(i)when an option, award or other contractual right to acquire unissued Shares or treasury shares is granted;

(ii)where Shares are issued or treasury shares are transferred other than in respect of an option, award or other contractual right to acquire Shares, when those Shares are issued or treasury shares transferred;

(b)any Shares which have been issued or which may be issued (or any Shares transferred out of treasury or which may be transferred out of treasury) to any trustees to satisfy the exercise of any option, award or other contractual right shall be treated as “allocated” unless they are already treated as allocated under this Rule; and

(c)for the avoidance of doubt, existing Shares other than treasury shares that are transferred or over which options, awards or other contractual rights are granted shall not count as “allocated”.

4.4Post-grant events affecting numbers of “allocated” Shares

For the purposes of Rule 4.3:

(a)where:

(i)any option, award or other contractual right to acquire unissued Shares or treasury shares is released or lapses (whether in whole or in part); or

(ii)after the grant of an option, award or other contractual right the Committee determines that:

(aa)where an amount is normally payable on its exercise it shall be satisfied without such payment but instead by the payment of cash equal to the gain made on its exercise; or

(bb)it shall be satisfied by the transfer of existing Shares (other than Shares transferred out of treasury)

the unissued Shares or treasury shares which consequently cease to be subject to the option, award or other contractual right shall not count as “allocated”; and

(b)the number of Shares allocated in respect of an option, award or other contractual right shall be such number as the Committee shall reasonably determine from time to time.

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4.5Changes to investor guidelines

Treasury shares shall cease to count as “allocated” Shares for the purposes of Rule 4.3 if institutional investor guidelines cease to require such Shares to be so counted.

4.6Individual limit

(a)The maximum total market value of Shares or ADSs (calculated as set out in this Rule) over which Options may be granted to any employee during any financial year of the Company is 375% of his salary (as defined in this Rule), unless Rule 4.6(b) applies.

(b)If the Committee decides that exceptional circumstances exist in relation to the recruitment or retention of an eligible employee then the maximum total market value of Shares or ADSs (calculated as set out in this Rule) over which Options may be granted to that employee during a financial year of the Company is such higher percentage of his salary (as defined in this Rule) as the Committee may determine.

(c)For the purpose of this Rule 4.6:

(i)an employee’s salary shall be taken to be his base salary (excluding benefits in kind), expressed as an annual rate payable by the Participating Companies to him as at the Grant Date (or on such other date as the Committee shall reasonably determine).  Where a payment of salary is made in a currency other than sterling, the payment shall be treated as equal to the equivalent amount of sterling determined by using any rate of exchange which the Committee may reasonably select; and

(ii)the market value of the Shares or ADSs over which an Option is granted shall be calculated by reference to the price at which Shares or ADSs may be acquired by the exercise of that Option as determined under Rule 3.5 (Option price).

4.7Effect of limits

Any Option shall be limited and take effect so that the limits in this Rule 4 are complied with.

Where the grant of an Option under Part A of the Plan is limited solely by virtue of Rule 4.7 of that Part (HMRC limit) the grant shall be effective under this Part B of the Plan subject to the limits set out in this Part.

5.EXERCISE OF OPTIONS

5.1General prohibition on exercise before third anniversary of the Grant Date

An Option may only be exercised on or after the third anniversary of the Grant Date except where Rule 6 (Leavers and deceased Participants), Rule 7.1 (General offers), Rule 7.2 (Compulsory acquisition, schemes of arrangement and winding up) or Rule 7.3 (Demerger and similar events) applies or such earlier date as the Committee shall determine.

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5.2Performance Condition and other exercise conditions

An Option may only be exercised:

(a)to the extent that the Performance Condition is satisfied; and

(b)as permitted by any other term specified under Rule 3.1(b).

The Option shall lapse regardless of any other Rule to the extent that the Performance Condition is not satisfied.

5.3Restrictions on exercise: regulatory and tax issues

An Option may not be exercised unless the following conditions are satisfied:

(a)the exercise of the Option and the issue or transfer of Shares or ADSs after such exercise would be lawful in all relevant jurisdictions and in compliance with the Listing Rules, any relevant share dealing code of the Company, the City Code on Takeovers and Mergers and any other relevant UK or overseas regulation or enactment;

(b)if a Tax Liability would arise by virtue of the exercise of the Option then the Participant authorises the Company to sell or procure the sale of sufficient Shares or ADSs on his behalf to ensure that any relevant Group Member receives the amount required to discharge the Tax Liability except to the extent that he agrees with the Committee to fund all or part of the Tax Liability in a different manner;

(c)the Participant has entered into such arrangements as the Committee requires (and where permitted in the relevant jurisdiction) to satisfy a Group Member’s liability to social security contributions in respect of the exercise of the Option; and

(d)where the Committee requires, the Participant has entered into, or agreed to enter into, a valid election under Part 7 of ITEPA (Employment income:  elections to disapply tax charge on restricted securities) or any similar arrangement in any overseas jurisdiction.

For the purposes of this Rule 5.3, references to Group Member include any former Group Member.

5.4Long stop date for exercise

An Option may not in any circumstances (and regardless of any other Rule) be exercised after the expiry of 10 years beginning with the Grant Date (or such shorter period beginning with the Grant Date as the Committee may have decided before the grant of that Option) and if not exercised shall lapse at the end of such period.

5.5Exercise in whole or in part

An Option may be exercised to the maximum extent possible at the time of exercise or over such fewer number of Shares or ADSs as the Participant decides.

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5.6Method of exercise

The exercise of any Option shall be effected in the form and manner prescribed by the Committee.  Unless the Committee, acting fairly and reasonably determines otherwise, any notice of exercise shall, subject to Rule 5.3 (Restrictions on exercise:  regulatory and tax issues) take effect only when the Company receives it, together with:

(a)payment of the relevant price at which Shares or ADSs can be acquired under the Option (or, if the Committee so permits, an undertaking to pay that amount); and

(b)if a Participant decides to satisfy the Tax Liability other than by selling Shares or ADSs pursuant to the authority in Rule 5.3(b), an agreement relating to the payment of the Tax Liability having been entered into.

5.7Restriction on use of unissued Shares and treasury shares

No Shares may be issued or treasury shares transferred to satisfy the exercise of any Option to the extent that such issue or transfer would cause the number of Shares allocated (as defined in Rule 4.3 (Meaning of “allocated”) and adjusted under Rule 4.4 (Post-grant events of affecting numbers of “allocated” Shares)) to exceed the limits in Rules 4.1 (5% in 10 year limit) and 4.2 (10% in 10 year limit) except where there is a variation of share capital of the Company which results in the number of Shares so allocated exceeding such limits solely by virtue of that variation.

5.8Allotment and transfer timetable

Within 30 days after an Option has been exercised by a Participant, the Board shall allot to him (or a nominee for him) or, if appropriate, transfer or procure the transfer to him (or a nominee for him) of the number of Shares or ADSs in respect of which the Option has been exercised.

5.9Share rights

All Shares allotted under the Plan shall rank equally in all respects with Shares then in issue except for any rights attaching to such Shares by reference to a record date before the date of allotment.

Where Shares are transferred under the Plan after the exercise of an Option, Participants will be entitled to any rights attaching to such Shares by reference to a record date on or after the date of such transfer.

5.10Cash alternative

Where an Option has been exercised by a Participant in respect of any number of Shares or ADSs, and those Shares or ADSs have not yet been allotted or transferred to him (or his nominee), the Committee may determine that, in substitution for his right to acquire such number of those Shares or ADSs as the Committee may decide (but in full and final satisfaction of that right), he shall be paid by way of additional employment income a sum equal to the cash equivalent (as defined in Rule 5.10(a)) of that number of Shares or ADSs in accordance with the following provisions of this Rule 5.10.

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(a)For the purpose of this Rule 5.10, the cash equivalent of a Share or an ADS is the amount by which the market value of that Share or ADS exceeds the option price.  The market value of a Share or ADS for this purpose is:

(i)if on the day of exercise, Shares are quoted in the London Stock Exchange Daily Official List, the middle-market quotation of a Share, as derived from that List, on that day; or

(ii)in the case of an Option granted to a US Participant, if on the day of exercise, ADSs are quoted on the New York Stock Exchange, the closing price of an ADS on the dealing day before that date; or

(iii)if Shares or ADSs are not so quoted, such value of a Share or ADS as the Committee reasonably determines.

(b)Subject to Rule 5.10(c), as soon as reasonably practicable after the Committee has determined under this Rule 5.10 that a Participant shall be paid a sum in substitution for his right to acquire any number of Shares or ADSs:

(i)the Company shall pay to him or procure the payment to him of that sum in cash; and

(ii)if he has already paid the Company for those Shares or ADSs, the Company shall return to him the amount so paid by him.

(c)There shall be deducted from any payment under this Rule 5.10 such amounts (on account of tax or similar liabilities) as may be required by law or as the Committee may reasonably consider to be necessary or desirable.

(d)If the Committee so decides, the whole or any part of the sum payable under Rule 5.10(b)(i) (but after any deductions under Rule 5.10(c)) shall, instead of being paid to the Participant in cash, be applied on his behalf:

(i)in subscribing for Shares or issuing ADSs at a price equal to the market value by reference to which the cash equivalent is calculated; or

(ii)in purchasing such Shares or ADSs; or

(iii)partly in one way and partly in the other

and the Company shall allot or transfer to him (or his nominee) or procure the transfer to him (or his nominee) of the Shares so subscribed for or Shares or ADSs purchased.

5.11Limitation on the application of Rule 5.10

Rule 5.10 shall not apply in relation to an Option granted to a Participant in any jurisdiction where the presence of Rule 5.10 would cause:

(a)the grant of the Option to be unlawful or for it to fall outside any applicable securities law exclusion or exemption; or

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(b)adverse tax or social security contribution consequences for the Participant or any Group Member as determined by the Board

provided that this Rule 5.11 shall apply only if its application would prevent the occurrence of a consequence referred to in (a) or (b) above.

5.12Change of jurisdiction

If a Participant relocates to another jurisdiction before his Option becomes exercisable and, as a result of the relocation, the Participant or any Group Member would be subject to additional tax or social security on the exercise of the Option or the exercise of the Option in that other jurisdiction would be subject to any regulatory restriction, approval or consent, the Committee may determine that the Option may be:

(a)exercised on such terms and during such period preceding the date on which the Participant relocates as the Committee may determine; or

(b)released by the Participant for a Share Appreciation Right which shall be paid in cash under paragraph 6 of Schedule 1.

6.LEAVERS AND DECEASED PARTICIPANTS

6.1Deceased Participants

If a Participant dies at a time when either he is a director or employee of a Group Member or he is or may be entitled to exercise the Option under Rule 6.2 (Retirement, ill-health, injury, disability, redundancy and transfer out of the Group) or Rule 6.3 (Cessation of employment in other circumstances), the following provisions apply:

(a)any Option granted to him that is already capable of exercise at the time of death shall, subject to Rule 5.3 (Restrictions on exercise), continue to be capable of exercise by his personal representatives for a period of 12 months after his death and if not exercised shall lapse at the end of that period;

(b)any other Option granted to him may, subject to Rule 5.3 (Restrictions on exercise) and the remainder of this Rule, be exercised by his personal representatives during the period of 12 months after his death and if not exercised shall lapse at the end of that period; and

(c)in both cases (a) and (b) above the period for exercise shall be shortened if Rule 5.4 (Long stop date for exercise), Rule 7.1 (General offers), Rule 7.2 (Compulsory acquisition, schemes of arrangement and winding up) or Rule 7.3 (Demerger and similar events) applies.

For the purposes of this Rule, the Committee shall determine the number of Shares or ADSs over which the Option becomes exercisable by:

(i)applying the Performance Condition and any other term specified by the Committee on the Grant Date; and

(ii)reducing the number of Shares or ADSs pro rata to reflect any unexpired part of the period of 3 years after the Grant Date  (or such shorter period set by the

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Committee under Rule 5.1) as at the time that the Participant ceases to be a director or employee unless the Committee, acting fairly and reasonably, decides that the pro rata reduction in the number of Shares or ADSs is inappropriate in any particular case when it shall increase the number of Shares or ADSs to such higher number as it decides (provided that the number does not exceed the number of Shares or ADSs determined under paragraph (i) above).

6.2Retirement, ill-health, injury, disability, redundancy and transfer out of the Group

If a Participant ceases to be a director or employee of a Group Member by reason of:

(a)retirement with the agreement of his employer;

(b)ill-health, injury or disability (evidenced to the satisfaction of his employer);

(c)redundancy (within the meaning of the Employment Rights Act 1996) or any overseas equivalent; or

(d)his office or employment being either with a company which ceases to be a Group Member or relating to a business or part of a business which is transferred to a person who is not a Group Member

the following provisions apply:

(e)any Option granted to him that is already capable of exercise at the date of cessation shall, subject to Rule 5.3 (Restrictions on exercise) and Rule 6.1 (Deceased Participants), continue to be capable of exercise for a period of 6 months after the date of cessation and if not exercised shall lapse at the end of that period;

(f)any other Option granted to him may, subject to Rule 5.3 (Restrictions on exercise), Rule 6.1 (Deceased Participants) and the remainder of this Rule, be exercised during the period of 6 months after the third anniversary of the Grant Date, unless the Committee decides that his Option may be exercised during such period immediately following the date of cessation as the Committee may determine (not being greater than 42 months after the Grant Date) and if not exercised shall lapse at the end of that period; and

(g)in both cases (d) and (e) above, the period for exercise shall be shortened if Rule 5.4 (Long stop date for exercise), Rule 7.1 (General offers), Rule 7.2 (Compulsory acquisition, schemes of arrangement and winding up) or Rule 7.3 (Demerger and similar events) applies.

For the purposes of this Rule, the Committee shall determine the number of Shares  or ADSs over which the Option becomes exercisable by:

(i)applying the Performance Condition, any other term specified by the Committee on the Grant Date and any other factors considered by the Committee to be relevant to reduce the number of Shares or ADSs over which the Option becomes exercisable; and

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(ii)reducing the number of Shares or ADSs pro rata to reflect any unexpired part of the period of 3 years after the Grant Date  (or such shorter period set by the Committee under Rule 5.1) as at the time that the Participant ceases to be a director or employee unless the Committee, acting fairly and reasonably, decides that the pro rata reduction in the number of Shares or ADSs is inappropriate in any particular case when it shall increase the number of Shares or ADSs to such higher number as it decides (provided that the number does not exceed the number of Shares or ADSs determined under paragraph (i) above).

6.3Cessation of employment in other circumstances

If a Participant ceases to be a director or employee of a Group Member for any reason other than those specified in Rule 6.1 (Deceased Participants) and Rule 6.2 (Retirement, ill-health, injury, disability, redundancy and transfer out of the Group), the following provisions apply:

(a)any Option granted to him may not be exercised at all and shall lapse on such cessation unless the Committee, acting fairly and reasonably, decides it may be exercised under this Rule 6.3;

(b)if the Committee permits the Option to be exercised then it may, subject to Rule 5.3 (Restrictions on exercise), Rule 6.1 (Deceased Participants) and the remainder of this Rule, be exercised during the period of 6 months after the third anniversary of the Grant Date, unless the Committee decides that his Option may be exercised during such period immediately following the date of cessation as the Committee may determine (not being greater than 42 months after the Grant Date) and if not exercised shall lapse at the end of that period; and

(c)the period for exercise referred to in (b) above shall be shortened if Rule 5.4 (Long stop date for exercise), Rule 7.1 (General offers), Rule 7.2 (Compulsory acquisition, schemes of arrangement and winding up) or Rule 7.3 (Demerger and similar events) applies.

For the purposes of this Rule, the Committee shall determine the number of Shares  or ADSs over which the Option becomes exercisable by:

(i)applying the Performance Condition, any other term specified by the Committee on the grant Date and any other factors considered by the Committee to be relevant to reduce the number of Shares or ADSs over which the Option becomes exercisable; and

(ii)reducing the number of Shares or ADSs pro rata to reflect any unexpired part of the period of 3 years after the Grant Date  (or such shorter period set by the Committee under Rule 5.1) as at the time that the Participant ceases to be a director or employee unless the Committee, acting fairly and reasonably, decides that the pro rata reduction in the number of Shares or ADSs is inappropriate in any particular case when it shall increase the number of Shares or ADSs to such higher number as it decides (provided that the number does not exceed the number of Shares or ADSs determined under paragraph (i) above).

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6.4Meaning of ceasing employment

A Participant shall not be treated for the purposes of this Rule 6 as ceasing to be a director or employee of a Group Member until such time as he is no longer a director or employee of any Group Member.  Any Participant who ceases to be such a director or employee before exercising an Option in circumstances where he retains a statutory right to return to work then he shall be treated as not having ceased to be such a director or employee until such time (if at all) as he ceases to have such a right to return to work while not acting as an employee or director.

7.TAKEOVERS AND OTHER CORPORATE EVENTS

7.1General offers

If any person (or any group of persons acting in concert):

(a)obtains Control of the Company as a result of making a general offer to acquire shares in the Company; or

(b)having obtained Control of the Company makes such an offer and such offer becomes unconditional in all respects

the Committee shall within 7 days of becoming aware of that event notify every Participant of it and, subject to 5.3 (Restrictions on exercise), Rule 5.4 (Long stop date for exercise), Rule 6 (Leavers and deceased Participants) and Rule 7.5 (Internal reorganisations), any Option may be exercised within 1 month (or such longer period as the Committee may permit) of such notification, provided that or to the extent that the Performance Condition is satisfied on the occurrence of such an event and Rule 7.4 (Reduction in number of Shares or ADSs) shall apply.

7.2Compulsory acquisition, schemes of arrangement and winding up

In the event that:

(a)any person becomes bound or entitled to acquire shares in the Company under sections 979 to 985 of the Companies Act 2006;

(b)under section 899 of the Companies Act 2006 the Court sanctions a compromise or arrangement proposed for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies;

(c)the Company passes a resolution for a voluntary winding up of the Company; or

(d)an order is made for the compulsory winding up of the Company

an Option may, subject to Rule 5.3 (Restrictions on exercise), Rule 5.4 (Long stop date for exercise), Rule 6 (Leavers and deceased Participants) and Rule 7.5 (Internal reorganisations), be exercised within 1 month of such event, provided that or to the extent that the Performance Condition is satisfied on the occurrence of such an event and Rule 7.4 (Reduction in number of Shares or ADSs) shall apply, but to the extent that the

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Option is not exercised within that period, it shall (regardless of any other provision of the Plan) lapse at the end of that period.

7.3Demerger and similar events

If a demerger, special dividend or other similar event (the “Relevant Event”) is proposed which, in the opinion of the Committee, would affect the market price of Shares to a material extent, then the Committee may, at its discretion and acting fairly and reasonably, decide that the following provisions will apply:

(a)the Committee shall, as soon as reasonably practicable after deciding to apply these provisions, notify a Participant that, subject to Rule 5.2 (Performance Condition), Rule 5.3 (Restrictions on exercise), Rule 5.4 (Long stop date for exercise) and Rule 6 (Leavers and deceased Participants), his Option may be exercised on such terms as the Committee may determine and during such period preceding the Relevant Event or on the Relevant Event as the Committee may determine provided that or to the extent that the Performance Condition is satisfied on the occurrence of such a Relevant Event and Rule 7.4 (Reduction in number of Shares or ADSs) shall apply, but to the extent that the Option is not exercised within that period, it shall (regardless of any other provision of the Plan) lapse at the end of that period; and

(b)if an Option is exercised in advance of and conditional upon the Relevant Event and such event does not occur then the conditional exercise shall not be effective and the Option shall continue to subsist.

7.4Corporate events:  reduction in number of Shares or ADSs

Where, under any of the Rules 7.1 to 7.3 (Corporate events), an Option would (subject to the satisfaction of any Performance Condition) become exercisable before the end of the full period over which performance would otherwise be measured under the Performance Condition then the number of Shares or ADSs over which the Option becomes exercisable shall be determined by the Committee by:

(i)applying the Performance Condition and any other term specified by the Committee on the Grant Date; and

(ii)if the Committee, acting fairly and reasonably, decides the number of Shares or ADSs shall be reduced pro rata to reflect any unexpired part of the period of 3 years after the Grant Date (or such shorter period set by the Committee under Rule 5.1)

If an Option becomes exercisable under any of Rules 7.1 to 7.3 when the holder of that Option has ceased to be a director or employee of a Group Member, then the number of Shares or ADSs over which the Option becomes exercisable shall be determined under Rule 6.1, 6.2 or 6.3 (whichever is relevant) in precedence over this Rule.

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7.5Internal reorganisations

In the event that:

(a)an offer (as referred to in Rule 7.1 (General offers)) is made or a compromise or arrangement (as referred to in Rule 7.2(b) (Schemes of arrangement)) is proposed which is expected to result in the Company becoming controlled by a new company (the “New Company”);

(b)at least 75% of the shares in the New Company will be held by substantially the same persons who immediately before the offer or proposal was made were shareholders in the Company; and

(c)the Committee and the New Company agree that this Rule should apply

then an Option granted under Part B of the Plan (the “Original Option”) shall not become exercisable under Rule 7.1 (General offers) or Rule 7.2 (Compulsory acquisition, schemes of arrangement and winding up) but shall be automatically surrendered in consideration for the grant of a new Option which the Committee determines is equivalent to the Original Option it replaces except that it will be over shares in the New Company or some other company.

The Rules will apply to any new Option granted under this Rule 7.5 as if references to Shares or ADSs were references to shares over which the new Option is granted and references to the Company were references to the company whose shares are subject to the new Option.

8.ADJUSTMENT OF OPTIONS

8.1General rule

In the event of:

(a)any variation of the share capital of the Company; or

(b)a demerger, special dividend or other similar event which affects the market price of Shares or ADSs to a material extent

the Committee may make such adjustment as it considers appropriate under Rule 8.2 (Method of adjustment).

8.2Method of adjustment

An adjustment made under this Rule shall be to one or more of the following:

(a)the number of Shares in respect of which any Option may be exercised;

(b)the number of ADSs in respect of which an Option may be exercised;

(c)subject to Rule 8.3 (Adjustment below nominal value), the price at which Shares or ADSs may be acquired by the exercise of any Option; and

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(d)where any Option has been exercised but no Shares or ADSs have been allotted or transferred after such exercise, the number of Shares or ADSs which may be so allotted or transferred and the price at which they may be acquired.

8.3Adjustment below nominal value

An adjustment under Rule 8.2 (Method of adjustment) may reduce the price at which Shares may be subscribed for on the exercise of an Option to less than their nominal value, but only if and to the extent that the Committee is authorised:

(a)to capitalise from the reserves of the Company a sum equal to the amount by which the nominal value of the Shares in respect of which the Option is exercised and which are to be allotted after such exercise exceeds the price at which the Shares may be subscribed for; and

(b)to apply that sum in paying up such amount on such Shares

so that on exercise of any Option in respect of which such a reduction shall have been made the Committee shall capitalise that sum (if any) and apply it in paying up that amount.

9.ALTERATIONS

9.1General rule

Except as described in Rule 9.2 (Shareholder approval) and Rule 9.4 (Alterations to disadvantage of Participants), the Committee may at any time alter the Plan or the terms of any Option granted under it.

9.2Shareholder approval

Except as described in Rule 9.3 (Exceptions to shareholder approval), no alteration to the advantage of an individual to whom an Option has been or may be granted shall be made under Rule 9.1 (General rule on alterations) to the provisions concerning:

(a)eligibility;

(b)the individual limits on participation;

(c)the overall limits on the issue of Shares or the transfer of treasury Shares;

(d)the basis for determining a Participant’s entitlement to, and the terms of, Shares or ADSs or cash provided under the Plan;

(e)the adjustments that may be made in the event of any variation of capital; and

(f)the terms of this Rule 9.2

without the prior approval by ordinary resolution of the members of the Company in general meeting.

9.3Exceptions to shareholder approval

Rule 9.2 (Shareholder approval) shall not apply to:

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(a)any minor alteration 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 for Participants or any Group Member; or

(b)any alteration relating to a Performance Condition made under Rule 9.5.

9.4Alterations to disadvantage of Participants

No alteration to the material disadvantage of any Participant (other than to any Performance Condition) shall be made under Rule 9.1 unless:

(a)the Committee shall have invited every relevant Participant to indicate whether or not he approves the alteration; and

(b)the alteration is approved by a majority of those Participants who have given such an indication.

9.5Alterations to a Performance Condition

The Committee may amend any Performance Condition without prior shareholder approval if:

(a)any circumstance has arisen which causes the Committee reasonably to consider that it would be appropriate to amend the Performance Condition;

(b)the altered Performance Condition will, in the reasonable opinion of the Committee, be not materially less difficult to satisfy than the unaltered Performance Condition would have been but for the circumstance in question; and

(c)the Committee shall act fairly and reasonably in making the alteration.

10.MISCELLANEOUS

10.1Employment

The rights and obligations of any individual under the terms of his office or employment with any Group Member shall not be affected by his participation in the Plan or any right which he may have to participate in it.  An individual who participates in the Plan waives any and all rights to compensation or damages in consequence of the termination of his office or employment for any reason whatsoever (and regardless of whether such termination is lawful or unlawful) insofar as those rights arise or may arise from his ceasing to have rights under or be entitled to exercise any Option as a result of such termination.  Participation in the Plan shall not confer a right to continued employment upon any individual who participates in it.  The grant of any Option does not imply that any further Options will be granted nor that a Participant has any right to be granted any further Options.

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10.2Disputes

In the event of any dispute or disagreement as to the interpretation of the Plan, or as to any question or right arising from or relating to the Plan, the decision of the Committee shall be final and binding upon all persons.

The exercise of any power or discretion by the Committee shall not be open to question by any person and a Participant or former Participant shall have no rights in relation to the exercise of or omission to exercise any such power or discretion.

10.3Notices

Any notice or other communication under or in connection with the Plan may be given:

(a)by personal delivery or by post, in the case of a company to its registered office, and in the case of an individual to his last known address, or, where he is a director or employee of a Group Member, either to his last known address or to the address of the place of business at which he performs the whole or substantially the whole of the duties of his office or employment; or

(b)in an electronic communication to their usual business address or such other address for the time being notified for that purpose to the person giving the notice; or

(c)by such other method as the Committee determines.

10.4Third parties

No third party has any right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of the Plan.

10.5Benefits not pensionable

Benefits provided under the Plan shall not be pensionable.

10.6Data Protection

Each Participant consents to the collection, processing and transfer of his personal data for any purpose relating to the operation of the Plan.  This includes:

(a)providing personal data to any Group Member and any third party such as trustees of any employee benefit trust, administrators of the Plan, registrars, brokers and any of their respective agents;

(b)processing of personal data by any such Group Member or third party;

(c)transferring personal data to a country outside the European Economic Area (including a country which does not have data protection laws equivalent to those prevailing in the European Economic Area); and

(d)providing personal data to potential purchasers of the Company, the Participant’s employer or the business in which the Participant works.

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10.7Governing law

The Plan and all Options shall be governed by and construed in accordance with the law of England and Wales and the Courts of England and Wales have exclusive jurisdiction to hear any dispute.

11.INCENTIVE STOCK OPTIONS

11.1Definitions

In this Rule:

“Incentive Stock Option” means an Option as defined in and satisfying the requirements of section 422 of the Code;

“Code” means the United States Internal Revenue Code of 1986 (as amended);

“Market Value” at any date means the fair market value of the number of ADSs on that date, as reasonably determined by the Committee, provided that if on such date the ADSs are listed on the New York Stock Exchange, the fair market value shall be not less than the closing price of such ADSs on the Grant Date;

“Non-Qualified Stock Option” means an Option which is not an Incentive Stock Option.

11.2Grant of Incentive Stock Option

The Committee may grant an Incentive Stock Option over ADSs to any US Participant upon the terms set out in the Plan and subject to the additional terms and conditions in this Rule provided that the US Participant is an employee of:

(a)the Company; or

(b)a “subsidiary corporation” (as defined in section 424(f) of the Code) with respect to the Company; or

(c)a “parent corporation” (as defined in section 424(e) of the Code) with respect to the Company.

11.3Option price for Incentive Stock Option

(a)Subject to Rule 11.4, the option price for an ADS subject to an Incentive Stock Option granted under this Rule may not be less than the Market Value of the ADS on the Grant Date.

(b)A person who, within the meaning of section 422(b)(6) of the Code, is deemed to own shares in the Company possessing more than 10% of the total combined voting power of all classes of shares of the Company (or of its parent or subsidiary corporations within the meaning of section 424 of the Code) shall be eligible to receive an Incentive Stock Option only if the option price of an ADS is at least 110% of the Market Value of the ADS on the Grant Date and only if the term of the Option does not exceed 5 years.

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11.4Individual Limit

(a)The aggregate Market Value determined at the Grant Date of the number of ADSs with respect to which Incentive Stock Options first become exercisable by any US Participant in any calendar year under the Plan (or any other stock option required to be taken into account under section 422(d) of the Code) shall not exceed US $100,000.

(b)To the extent that this US $100,000 limit is exceeded, an Incentive Stock Option will be treated as a Non-Qualified Stock Option.

(c)Each Option that is intended to be granted as an Incentive Stock Option shall so indicate that, and to what extent, the Option is intended to be an Incentive Stock Option.

11.5Leavers

Section 421(a) of the Code will not apply to an Incentive Stock Option unless it is exercised no more than:

(a)12 months after the date of termination of employment because of total and permanent disability or

(b)3 months after the date of termination of employment for any reason other than that described in paragraph (a) and death.

11.6Other Dispositions

(a)Section 421(a) of the Code will not apply to ADSs acquired upon exercise of Incentive Stock Options if such ADSs are disposed of in a disqualifying disposition within the meaning of section 422 of the Code by a US Participant within either 2 years from the Grant Date of such Option or 1 year from the transfer of the ADSs to satisfy such Option, or in any other disqualifying disposition within the meaning of section 422 of the Code.

(b)If a disqualifying disposition occurs, the US Participant shall be required to notify the Company in writing as soon as practicable of the date and terms of the disposition and, if the Company (or any affiliate) has a tax withholding obligation, the US Participant shall pay to the Company (or affiliate) an amount equal to any withholding tax the Company (or affiliate) is required to pay as a result of the disqualifying disposition.

11.7Maximum Aggregate Number of Shares Underlying ADSs

The maximum aggregate number of Shares underlying the ADSs with respect to Incentive Stock Options which may be issued under the Plan is 50,000,000.

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11.8Modifications

Any modification, extension or renewal of an Incentive Stock Option shall be subject to the terms of Treasury Regulation 1.424-1.

11.9Miscellaneous

Notwithstanding any other provisions of the Plan, the Company will not be required to issue or cause to be issued any ADSs if at such time such issuance would violate the United States Federal Securities laws or any other laws of the United States or any state of the United States.  In addition, the holder of any ADSs issued in connection with the Plan agrees not to sell or transfer such ADSs in violation of the United States Federal Securities laws or any other laws of the United States or any state of the United States.  The Company shall have the right in its sole discretion to modify the terms of the Plan at any time and from time to time as it deems necessary or appropriate to ensure or facilitate such compliance and to include appropriate legends on any Options or ADSs issued or caused to be issued in connection with the Plan.

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SCHEDULE 1:  SHARE APPRECIATION RIGHTS

A Share Appreciation Right (“SAR”) may be granted under this Schedule to Part B of the Plan.  The Rules shall apply to a SAR as if it were an Option, except as set out in this Schedule.  Where there is any conflict between the Rules and this Schedule, the terms of this Schedule shall prevail.

1.Before the grant of a SAR, the Committee shall determine a “base price” for each Share or ADS under the SAR.  The base price shall be subject to the same restrictions as an option price set out in Rule 3.5 of Part B of the Plan.  There shall be no amount payable on the exercise of a SAR.

2.Subject to paragraph 7 below, within 30 days after a SAR has been exercised by a Participant, the Committee shall procure the transfer to him (or a nominee for him) or, if appropriate, allot to him (or a nominee for him) the number of Shares or ADSs which shall have an aggregate market value (as defined in paragraph 5 below) as near as possible equal to (but not exceeding) the notional gain (as defined in paragraph 4 below).

3.The notional gain is the amount by which the aggregate market value of the number of Shares or ADSs in respect of which the SAR is exercised exceeds the aggregate base price (as calculated in accordance with paragraph 1 above) of that number of Shares or ADSs.

4.For the purposes of this Schedule the market value of a Share or ADS is:

(a)if Shares are quoted in the London Stock Exchange Daily Official List, the middle market quotation of a Share (as derived from that List) on the day before the day on which the SAR is exercised; or

(b)if ADSs are quoted on the New York Stock Exchange, the closing price of the ADS on the New York Stock Exchange on the day before the day on which the SAR is exercised

(c)where Shares are not so quoted, such value on the day on which the SAR is exercised as the Committee, acting fairly and reasonably, shall decide.

5.Shares or ADSs may only be allotted to a Participant (or a nominee for him) who exercises his SAR to the extent that the Committee is authorised to capitalise from the reserves of the Company a sum equal to at least the aggregate nominal value of the Shares to be allotted to satisfy the exercise of the SAR and to apply that sum in paying up such amount on such Shares.

6.If the Committee so decides, the whole or any part of the notional gain determined under paragraph 4 above shall, instead of being delivered to the Participant (or his nominee) in Shares or ADSs under paragraph 3 above, be paid in cash.

7.Any payment of cash under paragraph 6 above will be subject to deduction of such amount (on account of tax and similar liabilities) as may be required by law or as the Committee may reasonably consider to be necessary or desirable.

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SCHEDULE 2:  PERFORMANCE CONDITION

The first Options granted under the Plan after it is approved by shareholders will be subject to the Performance Condition set out below.  The Committee may set a different Performance Condition for subsequent Options.

All words and expressions defined in the Rules of the Plan shall have the same meanings when used in this Performance Condition.  Where there is any conflict between the Rules and this Performance Condition, the terms of this Performance Condition shall prevail.

1.Definitions

“EPS” means the basic earnings per share of the Company as reported to shareholders, adjusted to neutralise the impact of foreign exchange and on such other basis as deemed appropriate by the Committee(1);

“Financial Year” means a financial year of the Company within the meaning of section 390 of the Companies Act 2006;

“Performance Period” means the three consecutive Financial Years of which the first is the Financial Year in which the Grant Date falls.

2.Condition and vesting

(a)The Performance Condition is that the Company’s average EPS growth over the Performance Period must be at least equal to 6% compound per annum (calculated by comparing EPS for the Financial Year ending immediately before the Performance Period starts with EPS for the last Financial Year in the Performance Period).

(b)The percentage of an Option subject to the Performance Condition that will become exercisable upon the satisfaction of the Performance Condition is as follows:

Average EPS growth	% of Option exercisable
10% compound p.a. or more	100%
Between 6% and 10% compound p.a.	Pro rata between 30% and 100%
6% compound p.a.	30%
Less than 6% compound p.a.	0%

(1)If the Committee makes adjustments to the method of calculating EPS, the Committee shall consider whether such adjustment should be reported in the Company's Remuneration Report for the Financial Year in which the adjustment is made.

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3.Adjustments

The Committee may make such adjustments to the method of calculating EPS or any other feature of the terms of this Performance Condition as it considers appropriate to take account of:

(a)any increase or variation of the share capital of the Company;

(b)any change to accounting standards;

(c)there being no EPS of the Company for any relevant Financial Year; or

(d)any other factors considered by the Committee to be relevant.

4.Leavers and Deceased Participants

If the Participant ceases to be a director or employee of a Group Member as described in Rules 6.1, 6.2 and 6.4 of Part A of the Plan or in Rules 6.1 to 6.3 of Part B of the Plan in circumstances where his Option is exercisable before the end of the original Performance Period, the Committee will determine the extent to which the Performance Condition has been satisfied (if at all) up to the date of cessation as follows:

(a)if the date of cessation occurs before the end of the first Financial Year of the Performance Period, the Committee shall determine the extent to which the Performance Condition has been satisfied on such reasonable basis as it may decide;

(b)if the relevant event occurs after the end of the first Financial Year in the Performance Period, the Company’s compound EPS growth shall be calculated on the basis of the most recently completed Financial Year of the Company.

5.Takeovers and other corporate events

If an event as described in Rule 7 of the Plan occurs, the Performance Period shall end on the date of that event and the Committee shall determine the extent to which the Performance Condition has been satisfied (if at all) up to the date of the relevant event as follows:

(a)if the relevant event occurs before the end of the first Financial Year of the Performance Period, the Committee shall determine the extent to which the Performance Condition has been satisfied on such reasonable basis as it may decide;

(b)if the relevant event occurs after the end of the first Financial Year in the Performance Period, the Company’s compound EPS growth shall be calculated on the basis of the most recently completed Financial Year of the Company.

6.Disputes

The calculations of the Committee shall not be open to question and, in the absence of fraud, the Committee shall be under no liability to any person by reason of those calculations or of anything done or omitted by them for the purposes of or in connection with those calculations.

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EX-5.1

Exhibit 5.1

	16 October 2008
Diageo plc	Your reference
8 Henrietta Place
London W1G 0NB	Our reference
United Kingdom	SRBP/GGB
	Direct line
	020 7090 3650

Dear Sirs,

THE DIAGEO PLC 2008 PERFORMANCE SHARE PLAN
THE DIAGEO PLC 2008 SENIOR EXECUTIVE SHARE OPTION PLAN

(each a “Share Plan” and, together, the “Share Plans”)

We have acted as English legal advisers to Diageo plc (the “Company”) and are giving this opinion in connection with the Registration Statement on Form S-8 (the “Registration Statement”) of the Company to be filed with the United States Securities and Exchange Commission (the “SEC”) on or around 16 October 2008. We have not been concerned with investigating or verifying the facts set out in the Registration Statement.

For the purposes of this opinion, we have examined copies of:-

1.the Memorandum and Articles of Association of the Company certified as true, complete and up-to-date by the deputy secretary of the company;

2.the rules of the Share Plans (the “Rules”);

3.the Registration Statement;

4.the deputy secretary’s certificate dated 16 October 2008 in respect of the Company (the “Deputy Secretary’s Certificate”); and

5.entries shown on CH Direct print outs obtained by us from the Companies House database at 10 a.m. on 16 October 2008 of the file of the Company maintained at Companies House (the “Company Searches”).

This letter sets out our opinion on certain matters of the law of England and Wales as at today’s date. We have not made an investigation of, and do not express any opinion on, any other law. This letter is to be construed in accordance with the law of England and Wales.

In giving this opinion we have assumed:

(i)the conformity to original documents of all copy or draft documents examined by us, the genuineness of all signatures and that the copy of the memorandum and articles of association of the Company examined by us is complete and accurate and conforms to the original;

(ii)the accuracy and completeness of the statements made in the Deputy Secretary’s Certificate;

(iii)that (i) the information disclosed by the Company Searches and by our telephone search on 16 October 2008 at 10 a.m. at the Central Registry of Winding-up Petitions in relation to the Company (together the “Searches”) was then complete, up-to-date and accurate and has not since then been altered or added to and (ii) the Searches did not fail to disclose any information relevant for the purposes of this opinion;

(iv)that (i) no proposal for a voluntary arrangement, and no moratorium has been obtained, in relation to the Company under Part I of the Insolvency Act 1986, (ii) the Company has not given any notice in relation to or passed any voluntary winding-up resolution, (iii) no application has been made or petition presented to a court, and no order has been made by a court, for the winding-up or administration of the Company, and no step has been taken to dissolve the Company, (iv) no liquidator, administrator, receiver, administrative receiver, trustee in bankruptcy or similar officer has been appointed in relation to the Company or any of its assets or revenues, and no notice has been given or filed in relation to the appointment of such an officer, and (v) no insolvency proceedings or analogous procedures have been commenced in any jurisdiction outside England and Wales;

(v)that, insofar as any obligation under a Share Plan is performed in, or is otherwise subject to, any jurisdiction other than England and Wales, its performance will not be illegal or ineffective by virtue of the law of that jurisdiction;

(vi)that the Rules which we have examined are in force, were validly adopted by the Company and have been and will be operated in accordance with their terms;

(vii)that any shares issued under a Share Plan (the “Shares”) will be issued by the Company in good faith and in furtherance of its objects under its memorandum and articles of association and will be in the best interests and to the advantage of the Company;

(viii)that, in respect of each issue of Shares, the Company will have sufficient authorised but unissued share capital and the directors of the Company will have been granted the necessary authority to allot and issue the relevant Shares;

(ix)that a meeting of the board of directors of the Company or a duly authorised and constituted committee of the board of directors of the Company has been or will be duly convened and held, prior to the allotment and issue of the Shares, at which it was or will be resolved to allot and issue the Shares;

(x)that the Shares will, before allotment or issue, have been fully paid up in accordance with the Companies Acts 1985 and 2006 (as applicable);

(xi)that the Shares are issued in accordance with the Rules;

(xii)that the name of the relevant allottee and Shares allotted are duly entered in the register of members of the Company;

(xiii)that the Company has not made and will not make a payment out of capital in respect of the purchase of its own shares which would cause a liability to be incurred by its shareholders under the UK Insolvency Act 1986 (as amended);

(xiv)that none of the holders of the Company’s shares has or will receive any dividends or distribution which constitute an unlawful distribution pursuant to common law or the Companies Acts 1985 and 2006 (as applicable);

(xv)that there is no actual or implied additional contractual relationship between the Company and the holders of the Shares, except for any contract of employment, the Company’s articles of association and the Share Plans.

Based on and subject to the foregoing and subject to the reservations mentioned below and to any matters not disclosed to us, we are of the opinion that:-

1.The Company is a public limited company duly incorporated under the laws of England and Wales and is a validly existing company.

2.When the Shares are issued and delivered against full payment therefor as contemplated in the Registration Statement and in conformity with the Company’s memorandum and articles of association and so as not to violate any applicable law, such Shares will have been validly issued and fully paid up and no further contributions in respect of such Shares will be required to be made to the Company by the holders thereof, by reason solely of their being such holders.

Our Reservations are as follows:

I.Insofar as any obligation under a Share Plan is to be performed in any jurisdiction other than England and Wales, an English court may have to have regard to the law of that jurisdiction in relation to the manner of performance and the steps to be taken in the event of defective performance.

II.We express no opinion as to whether specific performance, injunctive relief or any other form of equitable remedy would be available in respect of any obligation of the Company under or in respect of a Share Plan.

III.The obligations of the Company under or in respect of the Share Plans will be subject to any law from time to time in force relating to liquidation or administration or any other law or legal procedure affecting generally the enforcement of creditors’ rights.

IV.The Searches are not conclusive as to whether or not insolvency proceedings have been commenced in relation to the Company or any of its assets. For example, information required to be filed with the Registrar of Companies or the Central Registry of Winding up Petitions is not in all cases required to be filed immediately (and may not be filed at all or on time); once filed, the information may not be made publicly available immediately (or at all); information filed with a District Registry or County Court may not, and in the case of administrations will not, become publicly available at the Central Registry; and the Searches may not reveal whether insolvency proceedings or analogous procedures have been commenced in jurisdictions outside England and Wales.

This opinion is addressed solely to you in connection with the filing of the Registration Statement and may not be relied upon by any other person or for any other purposes than those set out in this opinion.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. In giving this consent, we do not admit that we are within the category of persons whose consent is required within section 7 of the Securities Act 1933, as amended or the rules and regulations of the SEC thereunder.

Yours Faithfully,

Slaughter and May

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
Diageo plc:

We consent to the use of our reports dated 27 August 2008 with respect to the consolidated balance sheets of Diageo plc as of 30 June 2008 and 2007, and the related consolidated income statements, consolidated statements of recognised income and expense and consolidated  cash flow statements for each of the years in the three-year period ended 30 June 2008, and the effectiveness of internal control over financial reporting as of 30 June 2008, incorporated herein by reference.

KPMG Audit Plc

London, England

16 October 2008