So, your Bard wasted all of his PP, severely wounded and bleeding all over the place, cleric however is too busy healing other battle participants and has no time for the dying Bard. Well, you assume it's a good idea for your Bard to leave the battlefield and you make him to retreat. What will happen with XP distribution then? Well, retreated party members WILL get XP, but less than those who decided to stay.So, what did we learn? Leave your Bard in the middle of the frying pan, make him catch an axe with his head, he gets more experience when he is dead. :p

Everyone, who was present on battle start, will get share of EXP. If character retreated or died midway through fight, they will get less than fair share of EXP (tested it myself for solo-challenge).

However, in the world of finite resources I'd advice to finish each and every possible fight with all people alive, every bit of EXP counts. And in case with squishy classes, retreating only make them even more relatively squishy, because they will miss on EXP and will lag behind.

If character dies, it is worse than retreat. EXP share would be same, but resurrection price (which scales with level) is another concern (and later in game gold can be converted into more EXP).

Oh, thank you for this valuable input. It wasn't discussed in details (or maybe I've just failed to notice) but since we have retreat and death options, we should at least know what will they cost us. So you said death=retreat XPwise? And you know it by experience? Well, now someone who is actually reading this might reasonably ask: Why add retreat option to begin with, if it cuts away lion share of XP? Well If you didn't kill the entire unit (by which I mean you killed 4 guards out of 6 for example) and retreated your entire party, all killed guards will be immediately resurrected, so you would have to kill the entire unit(6 out of 6) to get their gold and XP. Why would you need to do that? Well perhaps they killed Golot before he finished pickpocketing them or you decided to kill (and pickpocket) them later :p So now you know, don't let your squishy party members die or retreat alone, they will be penalized.