The Board

The Board is collectively responsible for determining the strategic direction of the Group and for ensuring that the Company meets its obligations to shareholders. During 2008, the Board met nine times and also held a strategy event at an off-site location. The number of Board and Committee meetings attended by each director during the year was as follows:

Non-attendance at Board and Committee meetings is rare and it is usually due to the occurrence of unexpected commitments or for newly appointed directors, when there is a clash with a previous commitment that cannot be re-arranged. The Board has a formal schedule of matters specifically reserved to it, including decisions on strategic issues, capital expenditure, dividend policy and material contracts. In addition, the Board regularly reviews major projects, considers operating and financial issues and monitors performance against plan. As well as dealing with the formal business of the Board, at each meeting, directors receive a detailed review from a senior manager of a key strategic or operational issue. This is designed not only to help non-executive directors develop a thorough understanding of key issues facing the Group but also to help them build working relationships with senior managers.

The Chairman and non-executives meet formally at least twice a year without executive directors being present.

The Chairman, in conjunction with the Company Secretary, ensures that the Board receives the information it needs to discharge its duties.

At the 2008 AGM, shareholders passed a resolution to change the Articles of Association primarily to take into account the changes in English Company Law brought about by the Companies Act 2006 and to bring the Articles into line with best practice. As permitted under the Companies Act 2006, the new Articles include a provision for dealing with directors’ conflicts of interests to avoid a breach of duty, giving the directors authority to approve such situations. The Board has approved a policy and procedure whereby conflicts of interests are disclosed and authorised as appropriate. The procedure was implemented in the last quarter of 2008. It is the Board’s intention to review annually authorisations of conflicts.

Board Composition and Structure

As at 31 December 2008, the Board comprised 11 directors. Biographies of all directors currently holding office appear in the Board of Directors section.

The Board consists of a part-time non-executive Chairman, four executive directors and six non-executive directors. Throughout 2008, the majority of directors were non-executive, all of whom (with the exception of the Chairman) the Board has determined to be independent in both character and judgement. Their diverse business experience and wide range of skills enable the non-executive directors to make a significant contribution at meetings of the Board and its Committees.

Although Sir Rob Margetts first joined the Board in June 1996, the Board believes that his knowledge and experience are of great value to the Board and the Committees which he chairs.

The terms and conditions of appointment of the non-executive directors are available for inspection at the Company’s registered office and at the AGM. Attendance records for all directors who have held office during the year appear in Fig. 4.

2008 Board Changes

There were no changes to the composition of the Board during 2008.

Responsibilities

The Board has agreed a clear division of responsibilities between the Chairman and the Group Chief Executive. The roles of the Chairman, Group Chief Executive and directors are clearly defined so that no single individual has unrestricted powers of decision.

The Chairman is responsible for leadership of the Board and for ensuring effective communication with shareholders. As part of its regular evaluation, the Board considers the Chairman’s availability and his capacity to undertake his role, against the background of his other commitments. The Board remains satisfied that the Chairman continues to be able to fulfil the normal time commitments required of his role and has the personal commitment and capacity to make himself available when unforeseen circumstances arise.

The Group Chief Executive is responsible for the day to day management of the Group and implementation of the strategy approved by the Board. The Board delegates responsibility to the Group Chief Executive, who is supported by the executive directors and heads of business operating units. The Group Chief Executive chairs the Executive Committee of which all executive directors are members. The International & Strategy Director, the Chief Executive Officer (Investments), the Strategy Director and the Company Secretary are all in regular attendance.

Sir David Walker is the Vice Chairman and senior independent director. He also chairs the Remuneration Committee. As senior independent director, Sir David Walker is available to shareholders if they have concerns which cannot be resolved through the usual channels.

The Company Secretary, through the Chairman, is responsible for advising the Board on all governance matters and for ensuring good information flows within the Board. All directors have access to the advice and services of the Company Secretary, as well as to external advice, as required, at the expense of the Group.

Board Evaluation

The Board and its directors participate in an evaluation process, the aim of which is to assess the effectiveness of the Board’s collective performance as well as the contributions of individual directors.

The Board is currently undertaking an evaluation for the current year which will be completed by April 2009. Following the previous evaluation the Board agreed an action plan. As part of the action plan, consideration was given to the balance and composition of the Board with a view to ensure an appropriate balance and a good mix of skills and experience that would facilitate the achievement of the Company’s strategy. A separate evaluation is carried out to assess the effectiveness of the Audit Committee. This was concluded in May 2008 and feedback provided by the Chairman of the Audit Committee to the members of the Committee. Executive directors are subject to an annual appraisal and to regular review of their performance by the Group Chief Executive. The Chairman conducts the annual appraisal, and regularly reviews the performance of the Group Chief Executive. In the case of the Chairman, feedback was delivered by the senior independent director.

Appointments to the Board

Appointments to the Board are the responsibility of the Board as a whole on the recommendation of the Nominations Committee. All directors are subject to election by shareholders at the first AGM after their appointment and, thereafter, are subject to re-election once every three years. The removal and appointment of the Company Secretary is a matter reserved for the Board.

Induction and Training

New directors participate in a formal induction programme tailored to their individual needs. The induction programme is designed to give directors an understanding of the Group, its business and the markets in which it operates. Introductory visits are arranged to Group’s sites and with key suppliers and stakeholders. All directors are required to maintain and develop their knowledge throughout their period of office. As part of its continuing training programme, the Group runs occasional training events solely for directors. Sessions run during 2008 included market consistent and embedded value reporting (MCEV).

In addition, all directors are invited to participate in Legal & General’s educational and business awareness seminars for senior management. 2008 sessions included: the economy and the economy outlook for 2008, Takaful insurance, capital and cash flow, MCEV and Annuities.

Shareholder Relations

The Board places considerable importance on maintaining good relationships with shareholders. There is regular dialogue with institutional shareholders through meetings held on a regular basis. The Chairman, senior management or the senior independent director are available to meet institutional shareholders when required. No shareholders asked to meet with Sir David Walker during the reporting period. During 2008, a number of events have been held by Investor Relations to broaden shareholders’ understanding of the Group’s activities and strategy; some of such presentations are available on the Company’s website. Shareholders can receive updates throughout the year on the Company’s website which provides share price information and historical results.

The Corporate Communications and Investor Relations teams have day-to-day responsibility for managing shareholder communications through analysts and institutional investor meetings and presentations. Corporate Communications and Investor Relations ensure that the views of investors are addressed.

The Board regards the AGM as an important opportunity to communicate directly with private investors. Board members, including the Chairmen of the Remuneration, Nominations and Audit Committees, attend the meeting and are available to answer questions. To encourage shareholders’ engagement, the Company provides both electronic as well as written proxy appointment facilities for all shareholders. In line with the Code, details of voting by shareholders, including votes withheld, are made available on the Company’s website following the meeting. The AGM Notice is sent to shareholders at least 20 working days before the meeting and sets out a separate resolution on each substantive issue. The resolutions to be proposed at the 2009 AGM together with the explanatory notes are available on the Company’s website.

The Company has taken advantage of the new electronic shareholder communications provisions in the Companies Act 2006; those shareholders who have elected to receive the Annual Report and Accounts electronically have been able to access such information on the day they were published.