Shareholdings and Benefits

Share Ownership Guidelines

In order to further align the interests of the executive directors and the shareholders, the executive directors are required to build a significant personal shareholding in the business. The Group Chief Executive is expected to build a holding of shares valued at twice salary while the other executive directors are expected to build towards a holding valued at one times their salary.

Given the fall in share price, several of the executive directors no longer comply with the guidelines as at the date of this report. They are not required to purchase shares through their own funds but will be required to retain vested shares under the Company’s share incentive plans until their shareholding is met.

Although not contractually binding, the Committee retains the discretion to withhold future grants under the PSP if executives do not comply with the Guidelines.

Five-Year Total Shareholder Return

The chart above shows the value, as at 31 December 2008, of a £100 investment in Legal & General shares on 31 December 2003, compared with £100 invested in the FTSE 100 on the same date. The other points plotted are the values at intervening financial year-ends. The FTSE 100 Index was chosen as the Company is a member of this Index.

Benefits

Other benefits for executive directors provided by the Group are:

• pension scheme
• car allowance
• medical insurance and
• staff discounts. Legal & General products can be acquired by executive directors on the terms available to other members of staff.

Pensions

Each of the executive directors is a member of the Group UK Senior Pension Scheme (‘the Plan’), details of which are given in the Pension Entitlements section.

Executives who elected solely for primary protection in response to the lifetime allowance introduced as part of the reforms to pensions legislation in 2006, remain in the Company pension scheme. For those executives who elected for enhanced protection, they have opted out of the Plan for future service accrual. Consistent with the legislation, affected executives will be entitled to a pension determined by reference to pensionable earnings at retirement, provided this does not breach the enhanced protection requirements.

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). For Tim Breedon and John Pollock, both of whom opted for enhanced protection and no longer accrue pension within the Defined Benefit Plan, their non-bonusable salary supplement will be reduced from 28% of salary for Tim Breedon and 27% of salary for John Pollock to 22% of the equivalent of the ‘capped pensionable salary’ had they remained members of the Defined Benefit Plan from 1 January 2009, reflecting a broadly equivalent benefit to the application of a 2.5% per annum pensionable salary increase cap. In addition, their basic salary at retirement will no longer be used to determine their ultimate pension entitlement.