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Director's Reports

Remuneration outcomes during the year ended 31 March 2007

Remuneration outcomes during the year ended 31 March 2007

Sections 1, 2, 3, 4 and 6 comprise the ‘auditable’ part of the Directors' Remuneration Report, being the information required by Part 3 of Schedule 7A to the Companies Act 1985.

1. Directors' emoluments

The following tables set out an analysis of the pre-tax emoluments during the years ended 31 March 2007 and 2006, including bonuses but excluding pensions, for individual Directors who held office in National Grid during the year ended 31 March 2007.

Table 1A	Year ended 31 March 2007						Year ended 31 March 2006
	Salary £000s	Annual bonus £000s	Benefits in kind (i) (cash) £000s	Benefits in kind (i) (non-cash) £000s	Termination payments £000s	Total £000s	Total £000s
Executive Directors
Steve Holliday (ii)	656	617	-	19	-	1,292	870
Roger Urwin (iii)	648	716	-	23	-	1,387	1,518
Steve Lucas (iv)	472	426	-	30	-	928	848
Nick Winser	420	372	-	14	-	806	771
Mark Fairbairn (iv) (v)	100	84	-	5	-	189	-
Edward Astle (iv)	420	406	12	9	-	847	759
Mike Jesanis (vi)	411	276	7	11	1,377	2,082	874
Total	3,127	2,897	19	111	1,377	7,531	5,640

(i) Benefits in kind comprise benefits such as private medical insurance, life assurance, either a fully expensed car or cash in lieu of a car and the use of a driver when required.

(ii) Steve Holliday's salary was £600,000 from 1 April 2006 to 31 December 2006 while in the role of Deputy Chief Executive and was increased to £825,000 with effect from 1 January 2007 on appointment to Chief Executive.

(iii) Roger Urwin's annual salary on leaving was £820,000. The figure above is a pro-rated salary for nine months and includes £33,000 in lieu of outstanding annual leave entitlement. He did not receive additional severance payments.

(iv) These Executive Directors participate in the Flexible Benefits Plan which operates by way of salary sacrifice, therefore, their salaries are reduced by the benefits they have purchased. The value of these benefits is included in the Benefits in kind (non-cash) figure. The values are: Steve Lucas £7,944, Mark Fairbairn £12.51 and Edward Astle £16.68.

(v) Mark Fairbairn was appointed to the Board on 1 January 2007.

(vi) Mike Jesanis ceased employment on 31 December 2006. On leaving, he received £65,000 (included in the salary figure above) in lieu of outstanding annual leave entitlement. He received a pro-rated bonus of £276,000 on leaving and £1,377,000 with respect to termination payments (which includes legal costs). In addition, he received £340,000 with respect to a consultancy arrangement. This arrangement will cease on 30 June 2007. The exchange rate averaged over the year 1 April 2006 to 31 March 2007 used for Mike Jesanis's values is US$1.91: £1. The exchange rate for the previous year was US$1.79: £1.

Table 1B	Year ended 31 March 2007			Year ended 31 March 2006
	Fees £000s	Other Emoluments £000s	Total £000s	Total £000s
Non-executive Directors
Sir John Parker (i)	500	53	553	445
Ken Harvey	68	-	68	67
Linda Adamany (ii)	25	-	25	-
John Allan	62	-	62	45
Paul Joskow	80	-	80	74
Stephen Pettit	68	-	68	68
Maria Richter	71	-	71	61
George Rose	71	-	71	67
John Grant (iii)	18	-	18	67
Total	963	53	1,016	894

(i) Sir John Parker's other emoluments comprise a fully expensed car, private medical insurance and life assurance.

(ii) Linda Adamany was appointed to the Board on 1 November 2006.

(iii) John Grant retired from the Board on 31 July 2006.

2. Directors' pensions

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

Table 2	Personal contributions made to the scheme during the year £000s	Additional benefit earned during year ended 31 March 2007 £000s	Accrued entitlement as at 31 March 2007 £000s	Transfer value of accrued benefits as at 31 March (i)		Increase in transfer value less Director's contributions £000s	Additional benefit earned in the year ended 31 March 2007 (excluding inflation) pension £000s	Transfer value of increase in accrued benefit in the year ended 31 March 2007 (excluding inflation & Director contributions) £000s
Table 2			Accrued entitlement as at 31 March 2007 £000s	2007 £000s	2006 £000s
Steve Holliday (ii)	16	69	157	2,745	1,485	1,244	66	1,134
Roger Urwin (iii)	37	27	564	12,714	11,291	1,386	13	224
Steve Lucas	29	39	199	3,535	2,725	781	34	585
Nick Winser (iv)	25	21	152	2,406	2,000	381	16	213
Mark Fairbairn (v)	19	27	116	2,014	1,483	512	24	388
Edward Astle	16	17	78	1,416	1,086	314	15	253
Mike Jesanis (vi)	0	13	292	2,828	2,497	331	13	429

(i) The transfer values shown at 31 March 2006 and 2007 represent the value of each Executive Director's accrued benefits based on total service completed to the relevant date. The transfer values for the UK Executive Directors have been calculated in accordance with guidance note ‘GN11’ issued by the Institute of Actuaries and the Faculty of Actuaries. The transfer values for the US Director have been calculated using discount rates based on high yield US corporate bonds and associated yields at the relevant dates.

(ii) The above information takes into account a lump sum benefit related to a previous transfer-in. This means that as well as the pension quoted above, there is an accrued lump sum entitlement of £77,000 as at 31 March 2007. The increase to the accumulated lump sum including inflation was £27,000 and excluding inflation was £25,000 in the year to 31 March 2007. The transfer value information above includes the value of the lump sum.

(iii) The accrued entitlement is calculated as at 31 December 2006, the date Roger Urwin retired from the Board. The value of the pension as at 31 March 2007, which has increased by an additional £21,000 per annum, reflects the compensation for the late payment of the benefits to which he was entitled at the start of the year. The transfer value at 31 March 2007 is calculated on the transfer basis used for pensioners, as Roger Urwin had retired from the Board. The comparative figure for 31 March 2006 is calculated on the transfer basis for non-pensioner members. The change in methodology accounts for £1,043,000 of the increase in transfer value.

(iv) The above information allows for the accrual of a pension benefit of two thirds of salary at age 60 taking into account standard benefits earned prior to 1 September 1998. This means that, as well as the pension above, there is an accrued lump sum entitlement of £236,000 as at 31 March 2007. The increase to the accumulated lump sum including inflation was £20,000 and excluding inflation was £12,000 in the year to 31 March 2007. The transfer value information above includes the value of the lump sum.

(v) Mark Fairbairn joined the Board on 1 January 2007. The above information takes into account a lump sum benefit relating to a previous transfer-in. This means that, as well as the pension above, there is an accrued lump sum entitlement of £197,000 as at 31 March 2007. The increase to the accumulated lump sum including inflation was £36,000 and excluding inflation was £30,000 in the year to 31 March 2007. The transfer value information above includes the value of the lump sum.

(vi) The accrued entitlement is calculated as at 31 December 2006, the date Mike Jesanis ceased employment. Through participation in a Thrift Plan in the US, the Company also made contributions worth £4,230.12 to a defined contribution pension arrangement. The exchange rates as at 31 March 2007 and 31 December 2006, which have been used to convert the figures from US dollars to pounds sterling, are US$1.97: £1 and US$1.96: £1. The exchange rate as at 31 March 2006 was US$1.74: £1.

3. Directors' interests in share options

The table below gives details of the Executive Directors' holdings of share options awarded under the Executive Share Option Plan (ESOP), the Share Matching Plan (Share Match) and Sharesave schemes.

Table 3	Options held at 1 April 2006 or, if later, on appointment*	Options exercised or lapsed during the year	Market price at date of exercise (pence)	Options granted during the year	Options held at 31 March 2007, or if later, on retirement†	Exercise price per share (pence)	Normal exercise period

Steve Holliday
ESOP	67,497	-	-	-	67,497	481.5	June 2005 to June 2012
Share Match	10,350	-	-	-	10,350	100 in total	June 2005 to June 2012
	14,083	-	-	-	14,083	100 in total	June 2006 to June 2013
	18,713	-	-	-	18,713	nil	May 2007 to May 2014
	9,983	-	-	-	9,983	nil	June 2008 to June 2015

Sharesave	4,692	-	-	-	4,692	350	Mar 2008 to Aug 2008
Total	125,318	-		-	125,318

Roger Urwin
ESOP	169,340	-	-	-	169,340†	280.5	Jan 2007 to Sep 2007
	91,656	-	-	-	91,656†	375.75	Jan 2007 to Dec 2007
	22,098	-	-	-	22,098†	455.25	Jan 2007 to Dec 2007
	33,867	-	-	-	33,867†	531.5	Jan 2007 to Dec 2008
	124,610	-	-	-	124,610†	481.5	Jan 2007 to Dec 2008
Share Match	18,644	-	-	-	18,644†	100 in total	Jan 2007 to Jun 2007
	25,000	-	-	-	25,000†	100 in total	Jan 2007 to Dec 2008
	30,762	-	-	-	30,762†	nil	Jan 2007 to Dec 2008
	25,570	-	-	-	25,570†	nil	Jan 2007 to Dec 2008

Sharesave	2,910	-	-	-	2,910†(i)	317	Apr 2007 to Sep 2007
Total	544,457	-		-	544,457†

Steve Lucas
ESOP	54,404	-	-	-	54,404	434.25	Dec 2005 to Dec 2012

Share Match	16,909	-	-	-	16,909	nil	May 2007 to May 2014
	14,778	-	-	-	14,778	nil	June 2008 to June 2015

Sharesave	-	-	-	1,693	1,693	558	Apr 2010 to Sep 2010
Total	86,091	-		1,693	87,784

Nick Winser
ESOP	19,755	-	-	-	19,755	531.5	June 2003 to June 2010

Share Match	3,937	3,937(ii)	592.5	-	-	100 in total	June 2006 to June 2013
	14,059	-	-	-	14,059	nil	May 2007 to May 2014
	11,581	-	-	-	11,581	nil	June 2008 to June 2015
Total	49,332	3,937		-	45,395

Mark Fairbairn
ESOP	8,649*	-	-	-	8,649	375.75	June 2001 to June 2008
	2,180*	-	-	-	2,180	435.75	July 2002 to July 2009
	33,489*	-	-	-	33,489	531.5	June 2003 to June 2010
	31,152*	-	-	-	31,152	481.5	June 2005 to June 2012

Share Match	4,897*	-	-	-	4,897	nil	May 2007 to May 2014
	2,134*	-	-	-	2,134	nil	June 2008 to June 2015

Sharesave	833*	-	-	-	833	397	Sep 2007 to Feb 2008
	862*	-	-	-	862	383	Apr 2010 to Feb 2008
	1,760*	-	-	-	1,760	558	Apr 2012 to Sep 2012
Total	85,956*	-		-	85,956

Edward Astle
ESOP	67,497	-	-	-	67,497	481.5	June 2005 to June 2012
	131,086	-	-	-	131,086	400.5	June 2006 to June 2013

Share Match	6,553	-	-	-	6,553	100 in total	June 2005 to June 2012
	13,812	-	-	-	13,812	100 in total	June 2006 to June 2013
	15,716	-	-	-	15,716	nil	May 2007 to May 2014
	14,637	-	-	-	14,637	nil	June 2008 to June 2015
Total	249,301	-		-	249,301

Mike Jesanis
ESOP	77,861	-	-	-	77,861† (iii)	566.5	Jan 2007 to Dec 2007
	66,099	-	-	-	66,099† (iii)	481.5	Jan 2007 to Dec 2007
Total	143,960	-		-	143,960†

Phantom ADS (iv)	699	717	$54.34	18	-	$39.590
	3,000	3,076	$54.34	76	-	$34.270
	3,452	3,539	$54.34	87	-	$32.320
	3,039	3,116	$54.34	77	-	$39.376
	4,730	4,850	$54.34	120	-	$47.762
Total (Phantom ADSs)	14,920	15,298		378	-

(i) In accordance with the Rules of the scheme, the option had been granted three years prior to Roger Urwin's leave date and he was therefore able to complete the contract and exercise his option during the normal exercise period.

(ii) Nick Winser exercised a Share Match award over 3,937 shares. The market price at the date of exercise was 592.5p and he was required to pay 100p to exercise the award. He also received £2,348 in respect of a cash payment in lieu of dividends on the exercise of the Share Match award.

(iii) Mike Jesanis exercised his options over 143,960 shares in January 2007 at a market price of 721p, after he ceased employment on 31 December 2006.

(iv) In place of participation in the Share Matching Plan, Mike Jesanis elected to defer the ADS component of his bonuses between 2001 and 2005 inclusively into a deferred compensation plan. For a Phantom award under the deferred compensation plan, the ADS market value is tracked, additional value is accrued for dividends and the value is delivered, net of normal US deductions, depending on the participants' election ie in 10 years, on a specified age date from 55 to 75, or on leaving, including retirement. The closing market price of ADSs at 30 March 2007, the last business day for the year ended 31 March 2007, was US$78.81. The range during the year was $78.81 (high) and $48.83 (low). Each ADS represents five ordinary shares.

Executive Share Option Plan (ESOP)

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

Options worth up to 100% of an optionholder's base salary will become exercisable in full if TSR, measured over the period of three years beginning with the financial year in which the option is granted, is at least median compared with a comparator group of companies. Grants in excess of 100% of salary vest on a sliding scale, becoming fully exercisable if the Company's TSR is in the top quartile.

Grants made in 2000

The performance condition attached to options granted in June 2000 is tested annually throughout the lifetime of the option. These options remain unvested.

The comparator group for the 2000 award is unaudited and this information follows below. The Remuneration Committee at that time believed the group to be an appropriate mix of energy distribution sector companies, including UK and international utilities.

Allegheny Energy, Inc.
BG Group plc
British Energy plc
Central & South West Corporation
Consolidated Edison, Inc.
Duke Energy Corporation

Energy East Corporation
FPL Group, Inc.
GPU, Inc.
Innogy Holdings plc
International Power plc
Niagara Mohawk Holdings, Inc.

NSTAR
Powergen plc
Progress Energy, Inc.
Public Service Enterprise Group, Inc.
Scottish & Southern Energy plc
Scottish Power plc

The Southern Company, Inc.
TXU, Corp
United Utilities plc
Xcel Energy, Inc.

Grants made in 2003

In June 2003, Edward Astle received a grant of Executive Share Options on the basis of 1.5 times base salary at that time, as a one-off award, to fulfill an existing contractual commitment made on his recruitment. He was the only participant to receive such an award in 2003. The comparator group used for this award is unaudited and was the same group as that used for the 2003 PSP award. The first test of the performance criterion was undertaken in March 2006. The performance criterion was not met and was, therefore, re-tested in March 2007, where the performance criterion was not met again. The final re-test will be undertaken in March 2008.

No alteration to the advantage of the participant maybe made without prior approval of shareholders.

4. Directors' interests in the PSP and DSP

The table below gives details of the Executive Directors' holdings of conditional shares awarded under the PSP. Under the PSP, Executive Directors receive a conditional award of shares, up to a current maximum of 125% of salary, which is subject to performance criteria over a three year performance period (see Long-term incentive – Performance Share PLan (PSP) for further details). Shares are then released on the fourth anniversary of the date of grant, following a retention period. The table includes conditional share awards under the DSP, whereby Executive Directors receive an award of shares representing one half of any bonus earned in the year. The deferred shares are held in Trust for three years before release.

	Type of award	PSP and DSP Conditional awards at 31 March 2006 or , if later, on appointment*	Awards lapsed during year	Awards vested in year	Awards granted during year	Market price at award (pence except#)	Date of award	Conditional awards at 31 March 2007 or, if earlier, on retirement†	Release date
Steve Holliday	PSP	115,669	115,669(i)	-	-	405.25	June 2003	-	-
	PSP	117,681	-	-	-	424.875	June 2004	117,681	June 2008
	PSP	100,801	-	-	-	527.03	June 2005	100,801	June 2009
	PSP	-	-	-	126,788	591.5382	June 2006	126,788	June 2010
	DSP	-	-	-	36,389	583.96	June 2006	36,389	June 2009
Total		334,151	115,669	-	163,177			381,659

Roger Urwin	PSP	195,866	195,866(i)	-	-	405.25	June 2003	-†	-
	PSP	198,587(ii)	-	-	-	424.875	June 2004	198,587†	June 2008
	PSP	181,442(ii)	-	-	-	527.03	June 2005	181,442†	June 2009
	DSP	-	-	-	62,881	583.96	June 2006	62,881†	July 2007
Total		575,895	195,886	-	62,881			442,910†

Steve Lucas	PSP	115,669	115,669(i)	-	-	405.25	June 2003	-	-
	PSP	116,210	-	-	-	424.875	June 2004	116,210	June 2008
	PSP	99,615	-	-	-	527.03	June 2005	99,615	June 2009
	PSP	-	-	-	101,430	591.5382	June 2006	101,430	June 2010
	DSP	-	-	-	34,882	583.96	June 2006	34,882	June 2009
Total		331,494	115,669	-	136,312			352,137

Nick Winser	PSP	92,535	92,535(i)	-	-	405.25	June 2003	-	-
	PSP	98,558	-	-	-	424.875	June 2004	98,558	June 2008
	PSP	91,314	-	-	-	527.03	June 2005	91,314	June 2009
	PSP	-	-	-	88,751	591.5382	June 2006	88,751	June 2010
	DSP	-	-	-	31,316	583.96	June 2006	31,316	June 2009
Total		282,407	92,535	-	120,067			309,939

Mark Fairbairn	PSP	47,072*	-	-	-	424.875	June 2004	47,072	June 2008
	PSP	40,225*	-	-	-	527.03	June 2005	40,225	June 2009
	PSP	40,572*	-	-	40,572	591.5382	June 2006	40,572	June 2010
	DSP	10,800*	-	-	10,800	583.96	June 2006	10,800	June 2009
Total		138,669*	-	-	51,372			138,669

Edward Astle	PSP	107,958	107,958(i)	-	-	405.25	June 2003	-	-
	PSP	110,326	-	-	-	424.875	June 2004	110,326	June 2008
	PSP	94,872	-	-	-	527.03	June 2005	94,872	June 2009
	PSP	-	-	-	88,751	591.5382	June 2006	88,751	June 2010
	DSP	-	-	-	28,769	583.96	June 2006	28,769	June 2009
Total		313,156	107,958	-	117,520			322,718

Mike Jesanis	PSP	41,871	41,871(i)	-	-	405.25	June 2003	-†	-
	PSP	ADSs 19,987(iii,iv)	-	-	-	$39.4#	June 2004	ADSs 19,987†	June 2007
	PSP	ADSs 21,634(iii,iv)	-	-	-	$48.5#	June 2005	ADSs 21,634†	June 2007
	PSP	-	-	-	ADSs 20,435(iii,iv)	$53.8284#	June 2006	ADSs 20,435†	June 2007
	DSP	-	-	-	ADSs 6,203(iii)	$54.0483#	June 2006	ADSs 6,203†	June 2007
Total	Shares ADSs	41,871 41,621	41,871 -	- -	- 26,638			-† 68,259†

(i) For PSP awards granted in 2003, the performance condition was not satisfied at the end of the three year performance period. As a result, the award has lapsed in full.

(ii) For PSP awards granted in 2004 and 2005 to Roger Urwin, these awards will not vest until, subject to performance criteria being met, the original vesting date three years after the dates of grant. If the performance criteria is met, Roger Urwin will receive his awards pro-rated on the basis of the performance criteria having been achieved and time pro-rated from the date of grant to his retirement date.

(iii) Mike Jesanis received awards over ADSs for all awards from 2004 onwards. Each ADS represents five ordinary shares.

(iv) On ceasing employment, Mike Jesanis's June 2004 award lapsed. Partial vesting of the 2005 award occurred resulting in 3,261 ADSs vesting representing the TSR element of the award and 5,408 ADSs vesting with respect to the EPS element of the award. For the 2006 award 1,702 ADSs vested representing the TSR element of the award and all the ADSs lapsed with respect to EPS, as the performance criteria was not met.

5. Directors' beneficial interests

The Directors' beneficial interests (which include those of their families) in National Grid ordinary shares of 1117/43 pence each are shown below.

	Ordinary shares at 31 March 2007 or, if earlier, on retirement† (i)	Ordinary shares at 1 April 2006 or, if later, on appointment*	Options/awards over ordinary shares at 31 March 2007 or, if earlier, on retirement†	Options/awards over ordinary shares at 1 April 2006 or, if later, on appointment*
Sir John Parker	63,994	55,832	-	-
Steve Holliday (ii) (iii)	28,293	28,063	506,977	531,405
Roger Urwin (iv)	247,810†	247,630	987,367†	1,253,566
Steve Lucas (ii) (vi) (v)	69,412	159,379	439,921	417,585
Nick Winser (ii)	60,624	56,687	355,334	355,895
Mark Fairbairn (ii) (iii) (iv)	20,838	20,495*	224,625	224,625*
Edward Astle (ii)	28,428	28,428	572,019	756,409
Mike Jesanis	3,362†	3,281	485,255†	445,105
Ken Harvey (iv)	3,399	3,399	-	-
Linda Adamany	-	-*	-	-
John Allan	2,000	2,000	-	-
Paul Joskow	4,385	4,385	-	-
Stephen Pettit	2,632	2,632	-	-
Maria Richter	1,755	1,755	-	-
George Rose (iv)	4,409	4,409	-	-
John Grant	8,775†	8,775	-	-

(i) There has been no other change in the beneficial interests of the Directors in ordinary shares between 1 April 2007 and 16 May 2007, except in respect of routine monthly purchases under the SIP (see note (iii) below).

(ii) Each of the Executive Directors, with the exception of Roger Urwin and Mike Jesanis, was for Companies Act purposes deemed to be a potential beneficiary under the National Grid 1996 Employee Benefit Trust and the National Grid plc Employee Share Trust and thereby to have an interest in 54,695 ordinary shares and 24,409 B shares held by the National Grid 1996 Employee Benefit Trust and 293,838 ordinary shares and 14,855 B shares held by the National Grid Group Employee Share Trust as at 31 March 2007.

(iii) Beneficial interest includes shares purchased under the monthly operation of the SIP in the year to 31 March 2007. In April and May 2007 a further 31 shares were purchased on behalf of each of Steve Holliday and Mark Fairbairn.

(iv) Following the Return of Cash and the issue of B shares in 2005, the following Directors held B shares as at 31 March 2007: Roger Urwin 58,397; Steve Lucas 318; Mark Fairbairn 6,132; Ken Harvey 3,874 and George Rose 5,025.

(v) Steve Lucas was for Companies Act purposes deemed to be a potential beneficiary in 24,834 ordinary shares and 23,948 B shares held by Lattice Group Trustees Limited as trustee of the Lattice Group Employee Share Ownership Trust as at 31 March 2007.

6. National Grid share price range

The closing price of a National Grid ordinary share on 30 March 2007, being the last business day for the year ended 31 March 2007, was 797.5p. The range during the year was 797.5p (high) and 552p (low). Please note the Register of Directors' Interests contains full details of shareholdings and options/awards held by Directors as at 31 March 2007.

On behalf of the Board

Helen Mahy

Company Secretary and General Counsel

16 May 2007