Others

All-Employee Share Schemes

There are share schemes for all UK employees. Executive directors participate on the same terms as all UK employees in the Savings-Related Share Option Scheme (SAYE) and the Employee Share Plan, both of which are approved by HMRC.

As the SAYE Scheme will expire on 20 April 2009, and the Employee Share Plan will expire on 11 October 2010, shareholder approval will be sought to renew both plans at the 2009 AGM.

Pension Entitlements

On retirement from Legal & General at age 60 and subject to statutory limits, executive directors are entitled to pensions as follows:

• Andrew Palmer: two-thirds of his annual ‘capped’ pensionable salary at retirement. (From 1 January 2009 onwards, the increases in pensionable salary under the Defined Benefit Pension Plan are capped at a maximum of 2.5% each year for active members, including relevant executive directors)
• Tim Breedon and John Pollock: one-sixtieth of eligible salary for each year of service through to the date they opted for enhanced protection. Since opting for enhanced protection on 6 April 2006 they have received a cash supplement in lieu of pension accrual as shown in the Directors’ Remuneration table. Consistent with the legislation, their pension entitlement at retirement remained linked to their salary; however, this linkage ceased at 31 December 2008
• Kate Avery: one-sixtieth of her annual ‘capped’ pensionable salary at retirement. From 1 January 2009 onwards, the increases in pensionable salary under the Defined Benefit Pension Plan will be capped at a maximum of 2.5% each year for active members, including relevant executive directors.

On death in service, a capital sum equal to four times salary is payable, together with a spouse’s pension of four-ninths of the member’s annualised salary. Protection is also offered in the event of serious ill health. This latter benefit has no transfer value in the event of the insured leaving service.

Directors, like all managers, may elect, before its award, to sacrifice all or part of their cash bonus into pension. Bonus sacrifice is at the discretion of the Company each year.

Directors’ Loans

At 31 December 2008 and 31 December 2007 there were no loans outstanding made to directors.

Service Contracts

The notice entitlement of the executive directors with the exception of Mark Gregory is a six-month rolling notice period plus a six months’ salary, pension and car allowance entitlement on termination. These entitlements may be mitigated and/or spread over the period of notice. Copies of executive directors’ service contracts are available for inspection during normal working hours at the registered office. The date of the contract is the appointment date in the section on directors.

Mark Gregory was appointed as Group Executive Director (Savings) on 28 January 2009. Following a review of policy and practice in notice entitlement, his notice entitlement is 12 months. However, he has no entitlement to any additional contractual payment on termination of employment. Any payment in lieu of notice will consist solely of base salary and the cost of providing benefits for the outstanding notice period and will be subject to deductions for income tax and national insurance as appropriate. These entitlements may be mitigated and/or spread over the period of notice.

External Appointments

The Company considers that certain external appointments can help to broaden the experience and capability of the executive directors. Any such appointments are subject to annual agreement by the Remuneration Committee and must not be with competing companies. Subject to the Committee’s agreement, any fees may be retained by the individual. Tim Breedon is an unpaid Board member of the ABI, Andrew Palmer receives fees of £44,000 as a non-executive director of SEGRO plc and is also Chairman of their Audit Committee, is Chairman of the ABI Financial Regulation and Taxation Committee and Chairman of the ABI Financial Reporting Committee, Kate Avery was a non-executive director of Kelda Group Plc but resigned on 13 February 2008. She sat on the Life Insurance Committee of the ABI.

The Directors’ Report on Remuneration was approved by the directors on 24 March 2009.

Sir David Walker
Chairman of the Remuneration Committee

Independent Verification Review

Hewitt New Bridge Street (HNBS) act as advisers to the Remuneration Committee. In addition, they were asked to verify that the 2008 remuneration practice for executive directors followed the Remuneration Policy put to the 2008 AGM. In conducting this work, HNBS reviewed the elements of executive director remuneration during 2008, as detailed in the policy statements of the Directors’ Report on Remuneration 2007 (DRR 2007). They confirmed that they were satisfied that the remuneration practice during 2008 had been in line with the stated policy set out in the DRR 2007.