Adopted April 29, 2009

The Compensation and Management Development Committee (the “Committee”) of AGL Resources Inc., a Georgia corporation (the “Company”), is a committee of the Board of Directors of the Company, the composition and responsibilities of which are described in this Compensation and Management Development Committee Charter (“Charter”).

The Compensation and Management Development Committee shall assist the Board in overseeing the Company’s efforts to achieve its goal of maximizing the long-term total return to shareholders by establishing policies by which officers, directors and employees are to be compensated in accordance with the Company’s compensation philosophy, objectives and compensation policies and by overseeing management succession and executive development processes. In performing this function, it shall be the objective of the Committee to: (i) align management’s interest with those of our shareholders by creating a strong focus on stock ownership through long-term incentive awards, which may include awards of stock options and restricted stock, and basing pay on performance measures that drive shareholder value; (ii) promote a direct relationship between compensation and the Company’s performance by placing a significant portion of compensation “at risk” based on Company, business unit and individual performance; (iii) establish compensation policies and guidelines that are designed to attract and retain qualified personnel through an overall level of compensation opportunity, at a reasonable cost, that is competitive within the Company’s industry; (iv) encourage the achievement of the Company’s long-range objectives by providing compensation that appropriately rewards the performance of the individual and the achievement of internal strategic objectives; and (v) encourage and oversee the development by management of management succession and executive development plans. The Committee shall produce an annual committee report for inclusion in the Company’s proxy statement for the annual meeting of shareholders, in accordance with applicable rules and regulations. The Committee may be assisted with its functions from time to time by various members of the Company’s staff and shall consult with the Company’s Chief Executive Officer and other members of senior management as necessary. The Compensation and Management Development Committee may retain and have direct access to outside consultants to assist it in determining and establishing compensation policies and may authorize independent studies of corporate compensation and benefits of comparable companies.

I. Composition

In accordance with Article III of the Bylaws of the Company, the Board of Directors, by resolution adopted by a majority of the whole Board of Directors, may designate a Compensation and Management Development Committee.  The Committee shall consist of four (4) or more Directors. The Committee shall be composed entirely of independent directors, each of whom is determined by the Board of Directors to be independent under the rules of the New York Stock Exchange and under any applicable independence standards adopted by the Board of Directors.  In addition, at all times, at least two members of the Committee shall each be a “Non-employee Director” for purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and at least two members of the Committee shall each be an “Outside Director” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended.  Any member of the Committee who is not a Non-employee Director or an Outside Director shall not participate in proceedings or actions that must be conducted and/or approved by a committee composed solely of at least two members who meet the qualifications for Non-employee Directors and Outside Directors as set forth under Rule 16b-3 or Section 162(m), respectively.

The members of the Committee shall serve at the pleasure of the Board of Directors or until their successors shall be duly designated.  Vacancies in the Committee shall be filled by the Board of Directors.

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II. Responsibilities

The Compensation and Management Development Committee shall:

Evaluations, Succession Planning and Executive Development

• Perform an annual performance evaluation of the Committee.
  
  
• Oversee an annual evaluation of the Chief Executive Officer, which shall be communicated to the Chief Executive Officer by the Lead Director of the Board of Directors or, in the absence of a Lead Director, by the Chairman of the Executive Committee of the Board of Directors. Such evaluation should include objective criteria such as attainment of established goals and objectives, performance of the business, accomplishment of long-term strategic objectives and development of management. The Committee also may consider such other criteria, and solicit input from such other parties, as it deems relevant.
  
  
• Use such annual evaluation of the Chief Executive Officer in the course of the Committee’s deliberations when considering the compensation of the Chief Executive Officer.
  
  
• Provide developmental feedback, when appropriate, to the Chief Executive Officer of the Company.
  
  
• Review management succession and executive development plans.
  
  
• The Committee shall focus, in particular, on succession planning with respect to the position of Chief Executive Officer and shall keep available on a continuing basis, the Chief Executive Officer’s recommendation as to successor(s) should he or she become disabled.

Director Compensation

• With the assistance of outside consultants, annually review and recommend to the Board, as appropriate, changes to retainer fees, meeting fees or any other compensation (including stock based compensation) to be paid to non-employee directors.

Executive Compensation

• Annually review and approve a compensation philosophy/policy with respect to executive officer compensation.
  
  
• Annually review and approve goals with respect to compensation for the chief executive officer and the other executive officers.
  
  
• Annually review and recommend to the independent directors for their approval, the chief executive officer’s compensation, including salary and short- and long-term incentives.
  
  
• Annually review and approve for each of the Company’s executive officers, other than the chief executive officer, compensation, including salary and short- and long-term incentives.
  
  
• To the extent short- and/or long-term incentive compensation plans are used to compensate executives in a given year, establish short- and long-term performance objectives under the Company’s short- and long-term incentive compensation plans and certify the attainment of such performance objectives, including for purposes of Section 162(m) of the Internal Revenue Code.
  
  
• Determine, from time to time, the advisability of retaining a compensation consultant or consultants to assist in the evaluation of non-employee director, Chief Executive Officer or other executive officer compensation, with the authority to retain and terminate such compensation consultants, including sole authority to approve the consultants’ fees and other retention terms. Annually, review the performance of such outside consultants.
  
  
• Approve an annual committee report for the Company’s proxy statement, as required by the rules of the Securities and Exchange Commission (SEC) and relevant stock exchanges. Review and discuss management’s Compensation Discussion & Analysis (CD&A) for the Company’s proxy statement, as required by the rules of the SEC, and, based on that review and discussion, determine whether the Committee recommends to the Board of Directors that the CD&A be included in the Company’s proxy statement and annual report on Form 10-K.

Employee Benefit Plans

• Review proposed significant changes proposed by management to employee benefit plans, including the retirement plans of the Company, and recommend plan changes to the Board of Directors, as appropriate.
  
  
• Periodically review and provide oversight of those incentive and equity-based compensation and benefit plans that are applicable to Company management, including whether such plans are consistent with the Company’s compensation philosophy and policy.
  
  
• Administer the Company’s long-term incentive plans, including the consideration and determination of: (i) those executive officer employees to whom stock based awards are to be granted and the number of shares subject to and terms of each such grant; and, (ii) grants to be made to non-executive officer employees and other key employees.

General

• Review with management compliance of compensation programs and practices of the Company with tax, accounting, legal and regulatory requirements.
  
  
• Keep abreast of current developments in executive compensation and employee compensation practices outside the Company.
  
  
• Review with management management’s assessments, actions, processes and procedures with respect to certain risks, as identified from time to time by the Committee or by the Audit Committee.
  
  
• Coordinate between the Committee and other Board committees, as appropriate and necessary.

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III. Reporting

The Committee shall keep written minutes of each meeting, which shall set forth the Committee’s actions as required by the Committee Charter, and shall be duly filed in the Company’s records. Reports of meetings of the Committee, including a report of all actions taken, shall be made to the Board of Directors at its next regularly scheduled meeting, following the Committee meeting, accompanied by any recommendations to the Board of Directors approved by the Committee.

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