Notice of EGM

Spirent PLC
12 April 2002


01 Spirent plc Notice of Extraordinary General Meeting
 
Letter from the Chairman
10 April 2002

Dear Shareholder,

Extraordinary General Meeting (EGM)

You will find enclosed with this letter a Notice convening an EGM to be held at
12.15 pm on Thursday, 2 May 2002 at The Lincoln Centre, 18 Lincoln's Inn Fields,
London WC2A 3ED. The EGM will be held following the 2002 Annual General Meeting
(AGM) of the Company (which will be held earlier at 12.00 noon on the same day
at the same location). 

The Notice and resolution which shareholders will be asked to consider and
approve is set out on page 3.

The business being proposed at the EGM relates to long term incentives. This
Notice of EGM has been sent separately from the Notice of AGM that you received
last month as, in accordance with the Combined Code on Corporate Governance, the
Company has taken the time to discuss the proposed changes to its long term
incentive programme with the Association of British Insurers (ABI) and also with
other major institutional shareholders. Our understanding from these discussions
indicates that our proposals are likely to be supported. These proposals are
particularly important given the changing nature of the Company's core business
and the overriding need to attract, motivate and retain the very best people to
drive our business forward.

Modification to the Executive Share Option Scheme (ESOS)

The existing framework and operation of the Company's discretionary share plan
programme, as a long term incentive for key executives, has been to support the
transition to a communications and high technology focused business. Given that
the transition has now been largely achieved, and recognising that the business
is predominantly US-orientated, the Board considered it appropriate to review
its long term reward strategy for the executive management team against market
practice, specifically in the communications technology sector.

This team, which comprises the three executive directors and other senior
executives, currently some nine or so in total, is primarily responsible for
day-to-day operations and for developing and implementing strategy.

The review was conducted by the Remuneration Committee in consultation with
Watson Wyatt* the Committee's independent remuneration advisers who are a
leading firm of international remuneration, benefit, actuarial and HR
consultants. The review highlighted that:

- the current level of long term incentives remains broadly competitive against 
  international comparator companies. However, the Long Term Share Purchase Plan 
  (LTSPP) component is now inappropriate given the Company's transformation to a 
  largely communications focused business; and

- alignment with communications technology market practice implies a shift 
  towards share options, as an internationally recognised incentive, and away 
  from share awards.

Consequently the Remuneration Committee has recommended the closure of the
existing LTSPP and the substitution of its annual award with a supplemental
option grant of equivalent value under the ESOS.

The reasons for this change are:

- the LTSPP was approved by shareholders in 1999 for executive team
  participation only and it has played a key role in the transition thus far.
  However, by reference to communications sector practice, the LTSPP is now too
  complex and long term to act as an efficient incentive going forward; and

- as highlighted above, share options are the predominant long term incentive in
  the communications and technology sector. The ESOS therefore provides the most
  appropriate incentive for the executive team.


02 Spirent plc Notice of Extraordinary General Meeting
 
Under the LTSPP, the maximum annual individual award limit is 0.75 x base salary
(face value). In addressing the calculation of an equivalent, supplemental
option grant value, the Remuneration Committee adopted a present economic value
approach, using Watson Wyatt's PEV(TM) methodology. This model builds on the
mathematical and economic principles underlying the Black-Scholes option pricing
model and adapts these to the specifics of compensation. This methodology
enables the Remuneration Committee to value Spirent's LTSPP and ESOS
consistently, taking into account their differing structures, performance
conditions and exercise/vesting periods. Applying this methodology, an 'exchange
rate' of up to a maximum of 2.7 ESOS options for each LTSPP performance unit was
established.

Applied to the existing LTSPP maximum award of 0.75 x salary, the exchange rate
gives an equivalent ESOS grant of up to 0.75 x 2.7 = 2.025 x salary. Combined
with the existing maximum annual ESOS grant of 1.25 x salary, the resulting
total annual ESOS grant limit would therefore amount to 3.275 x salary.

In practice - and in line with competitive sector practice - the Remuneration
Committee is recommending a somewhat lower maximum annual grant limit of 3.0 x
salary.

Under the current arrangements for executive team members, ESOS option grants
are subject to enhanced Earnings per Share (EPS) performance conditions. These
provide for options to be exercisable in full only if the increase in the
Company's EPS over a consecutive three year period is at least 15 per cent more
than the increase in the Retail Price Index over the same period. Re-testing is
also limited to years four and five from a base point fixed at the date of grant
and with the performance hurdle increased in proportion to the extended period.
No changes to these elements (which have previously been approved by
shareholders) are proposed.

Outstanding interests under both the LTSPP and ESOS will remain unaffected by 
the proposals.
 
In line with US competitive practice, Communications group members of the
executive team (who do not include any UK-based executive directors) will also
remain eligible to receive an additional annual grant under the Spirent
Communications Stock Option Plan (SCSOP) approved by shareholders in 2000. Under
the SCSOP, discretionary grants are determined by reference to prevailing market
practice, the performance of the individual and the performance of the relevant
business. There are no performance conditions for vesting which normally occurs
at a rate of 25 per cent per annum.

The Board has endowed the Remuneration Committee's recommendations. It also
believes that the new, simplified structure and increased annual grant level
under the ESOS, together with the SCSOP, represent the most appropriate long
term incentive arrangements which will enable Spirent to compete for, motivate
and retain the highest calibre executives which it needs to drive the business
forward and increase shareholder value.

A full explanation of how the LTSPP, ESOS and SCSOP currently operate is
included in the 2001 Annual Report. Should the resolution not be approved by
shareholders, the LTSPP and ESOS will continue unchanged.

Stock Participation Plans: Update

When the SCSOP was introduced, we committed to revert to shareholders in May
2002 with an update on outstanding dilution levels. I am pleased to confirm that
dilution under the SCSOP and aggregated dilution under all the Company's share
plans (excluding rolled-over options in respect of closed share schemes of
acquired Companies) will be below the respective 9 per cent and 14.5 per cent
May 2002 forecasts. The current forecast is 8 per cent (SCSOP) and 11 per cent
(aggregated). Shareholders' re-approval to the SCSOP is required to be sought at
the 2003 AGM.

Action to be taken

Whether or not you are able to attend the EGM, the directors urge you to
complete the reply-paid Form of Proxy and return it to Lloyds TSB
Registrars as soon as possible and, in any event, so as to arrive no later than
12.15 pm on Tuesday, 30 April 2002. Completion and return of the Form of Proxy
will not preclude you from attending and voting in person (in substitution for
your proxy vote) should you subsequently decide to do so. If you have any issues
of concern arising from the business proposed to be conducted at the Meeting,
please do not hesitate to write to me at the address set out below or to e-mail
me at [e-mail].

A summary of the business transacted, including any questions raised and answers
given and a final proxy count statement, will be available on request from
Lloyds TSB Registrars after the Meeting.

Recommendation

The Board believes that the proposed resolution set out in the Notice of Meeting
is in the best interests of the Company and its shareholders as a whole.
Accordingly, your directors recommend you to vote in favour of the resolution,
as they intend to do in respect of their own beneficial holdings.


George W Sarney 
Chairman

Spirent plc 
Spirent House
Crawley Business Quarter 
Fleming Way, Crawley 
West Sussex RH10 9QL 
United Kingdom

Telephone [phone] 
Fax [phone]
www.spirent.com


*Watson Wyatt has consented to the inclusion of its name in the form and context 
in which it is used in this document.



03 Spirent plc Notice of Extraordinary General Meeting
 

Notice is hereby given that an Extraordinary General Meeting of Spirent plc will 
be held at 12.15 pm on Thursday, 2 May 2002 at The Lincoln Centre, 18 Lincoln's 
Inn Fields, London WC2A 3ED.

The following business will be transacted at the Meeting which will be proposed
as an Ordinary Resolution requiring no less than a simple majority of votes cast
in favour for the resolution to be passed. 

  1. That the individual annual grant award limit under the Executive Share 
     Option Scheme, for the executive management team be and is hereby modified 
     to up to 3.0 x base salary (face value). This is further described in the
     Letter from the Chairman on pages 1 and 2 of this circular.

By order of the Board

Paul Eardley 
Secretary

10 April 2002



04 Spirent plc Notice of Extraordinary General Meeting
 
Notes

A member entitled to attend and vote at the Extraordinary General Meeting is
entitled to appoint a proxy or proxies to attend and, on a poll, vote instead of
him/her.  A proxy need not be a member of the Company.

To be valid, a Form of Proxy must be completed and any power of
attorney or other authority under which it is executed (or a duly certified copy
thereof) must be lodged with the Company's registrar, (Lloyds TSB Registrars,
The Causeway, Worthing, West Sussex BN99 6ZL) not less than 48 hours before the
time appointed for the Meeting or adjourned Meeting at which it is to be used.
Completion and return of a Form of Proxy will not preclude a member from
personally attending and voting at the Meeting (in substitution for their proxy
vote) if they subsequently decide to do so.

Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, the
Company specifies that only those members registered in the Register of Members
of the Company as at 6.00 pm on 30 April 2002 or, if the Meeting is adjourned,
on the Company's Register of Members 48 hours before the time fixed for the
adjourned meeting, shall be entitled to attend or vote at the Meeting in respect
of the number of shares registered in their names at that time. Changes to
entries on the Register of Members after 6.00 pm on 30 April 2002 or, if the
Meeting is adjourned, 48 hours before the time fixed for the adjourned Meeting,
shall be disregarded in determining the rights of any person to attend or vote
at the Meeting, notwithstanding any provisions in any enactment, the Company's
Articles of Association or other instrument to the contrary.

The Rules of the Executive Share Option Scheme will be available for inspection
at the Company's Registered Office during normal business hours on any business
day and at the place of the Extraordinary General Meeting for at least 15
minutes before the Meeting is held until its conclusion. The Scheme Rules will
also be available for inspection during normal business hours on any business
day from the date of this Notice until the conclusion of the EGM at the offices
of Linklaters & Alliance, One Silk Street, London EC2Y 8HQ.
 


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