Annual Bonus

Maximum bonus levels and the proportion payable for on-target performance are considered in the light of market bonus levels for the job in other [FTSE] 100 financial services sector companies and the FTSE 100 as a whole. The maximum bonus payment for the executive directors remains at 125% of salary.

The proportion of bonus payable for on-target performance is 60% of the maximum for all the executive directors (ie 75% of salary).

62.5% of any bonus earned will normally be paid in cash, with the balance being paid in shares under the Share Bonus Plan (SBP) described below.

In setting bonus targets, the Committee seeks to link targets to areas of the business in which the executive has particular influence and responsibility, while also seeking to maintain a keen team ethos. The executive directors’ bonuses are based on a variety of targets, including Group [KPIs] (which for 2008 comprised 40% of the total bonus and were common to all executive directors), performance of the business unit for which the individual is responsible (where applicable), and strategic targets. The bonus which results from the delivery of these objectives was reviewed by the Committee based on its view of the executive’s overall performance and regulatory compliance.

Although the executive directors met some of the targets making them eligible for a bonus, in the current environment, the Committee determined not to award a bonus in relation to 2008.

Kate Avery ceased to be an executive director on 28 January 2009. She was considered for a bonus in relation to 2008 and the Remuneration Committee determined that in line with other executive directors, no bonus would be paid.

Summary of Executive Directors’ Bonus Targets for 2009