Perfomance share plan (PSP).

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Legal & General’s TSR relative to the comparator group at the end of the performance period	Percentage of award which vests
Below median	0%
Median	25%
Between median and 20th percentile	25%-100%
20th percentile or above	100%

Until 2007, the [FTSE] 100 was used to measure relative TSR performance. For the awards made in 2008 onwards, two distinct performance measures are used: half is measured relative to the FTSE 100 constituents (as at the grant date), with the balance being measured against the insurance constituents of the FTSEurofirst 300 plus any FTSE 350 Life Insurers not in the FTSEurofirst 300. Performance under the two elements is assessed independently.

The Committee considers that the measures and targets remain appropriate. They endorse consistency in the remuneration policy and provide a clear alignment of interests with shareholders. In addition they ensure a degree of risk management as TSR (through share price) reflects both underlying financial performance and the market’s assessment of the quality and sustainability of those earnings.

Additionally, the Committee assesses whether the underlying performance of the Company is reflective of the TSR out-turn. The Committee may exercise its discretion to scale back the vesting of awards if it was felt that the Company’s financial performance did not justify the level of vesting. The parameters which the Committee uses in making this assessment include market share, partnerships entered into and maintained, cost constraint, capital management, risk and shareholder perception.

Performance against TSR conditions is independently reviewed by Hewitt New Bridge Street.

Appointment of new Group Chief Financial Officer (CFO)

Nigel Wilson was appointed [CFO] on 1 September 2009. His ongoing remuneration package is consistent with the standard structure for executive directors as outlined above. He had a starting salary of £525,000. Additionally, in order to facilitate his recruitment, Nigel Wilson received the following share awards on 16 October 2009:

• an award of shares worth 200% of salary under the PSP; and
• a one-off award of shares to compensate for existing share awards that Nigel Wilson forfeited with his previous employer upon joining Legal & General. Most of the value in those awards was either subject to no pre-vest performance conditions or subject to conditions which were considered to be likely to vest. The terms of the one-off award were structured, therefore, mindful of the Committee’s duty to fairly compensate the executive without including any additional value which is not necessary to secure his recruitment.

Nigel Wilson purchased 760,948 Legal & General shares worth £675,000 on 16 October 2009 and in return he was granted an award of 760,948 shares. This award vests in three equal tranches on the second, third and fourth anniversary of grant subject normally to continued employment and continued holding of the purchased shares. Nigel Wilson will not receive the value of any dividends occurring on the awarded shares between grant and vesting. Details of the awards are shown on in the Share Bonus Plan section.

If, prior to the normal vesting date, Nigel Wilson ceases to be an employee then the share award will lapse unless his departure is by reason of death, retirement, redundancy, ill health, disability or in other circumstances at the Committee’s discretion, in which case the award shall vest. Awards will also vest early in the event of a change of control of the Company. This award, which is not pensionable, was granted under the terms of Listing Rule 9.4.2R(2) and the terms of the award will be available for inspection by shareholders at the Company’s registered office and at the Annual General Meeting.

The basis for determining Nigel Wilson’s entitlement to shares in the event of a capitalisation issue, rights issue or open offer, sub-division or consolidation of shares, reduction of capital or any other variation of capital cannot be altered to his advantage without the prior approval of shareholders at a general meeting (except for minor amendments to benefit the administration of the scheme, to take account of a change in legislation or to obtain or maintain favourable tax, exchange control or regulatory treatment for Nigel Wilson or Legal & General).

Five-year total shareholder return

The chart below shows the value, as at 31 December 2009, of a £100 investment in Legal & General shares on 31 December 2004, 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.

PERFORMANCE SHARE PLAN

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Name	Awards granted1	Maximum award receivable for stretch performance	Awards vesting2	Awards lapsing	Maximum outstanding awards as at 31 December 2009
The table shows the maximum number of shares that could be released if awards were to vest in full. Participants do not receive dividends on unvested awards.   1. The share price on the date of grant was 58.2p for the 6 May 2009 awards and 87.9p for 16 October 2009 award. These awards vest on the third anniversary of the award date subject to the satisfaction of performance conditions as described above. 2. Andrew Palmer’s 2007 and 2008 awards lapsed, having failed to meet their performance conditions when tested on his retirement date. His 2009 award met its performance condition in full and vested in accordance with the Plan rules. 259,613 shares vested and 925,954 lapsed as a result of the reduced performance period. The share price on 31 December 2009 was 80.6 pence. 3. Kate Avery’s outstanding awards lapsed in full on the cessation of her employment. Her unvested awards under the Share Bonus Plan also lapsed on cessation of employment. Awards that reached maturity before 31 August 2009 vested in accordance with the rules.   The information in this table has been audited by the independent auditors, PricewaterhouseCoopers LLP.
Tim Breedon	24 April 2006	960,304		(960,304)	0
	25 April 2007	950,544			950,544
	29 April 2008	1,210,688			1,210,688
	6 May 2009	1,984,536			1,984,536
Mark Gregory	24 April 2006	256,080		(256,080)	0
	25 April 2007	231,212			231,212
	29 April 2008	274,212			274,212
	6 May 2009	798,969			798,969
Andrew Palmer2	24 April 2006	569,068		(569,068)	0
	25 April 2007	565,188		(565,188)	0
	29 April 2008	723,268		(723,268)	0
	6 May 2009	1,185,567	259,613	(925,954)	0
John Pollock	24 April 2006	348,551		(348,551)	0
	25 April 2007	411,044			411,044
	29 April 2008	581,760			581,760
	6 May 2009	953,608			953,608
Nigel Wilson	16 October 2009	1,194,359			1,194,359

DETAILS OF HOW AWARDS VESTED AND LATEST POSITION FOR OUTSTANDING AWARDS

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Grant date	Performance period	TSR ranking versus FTSE 100	Percentage of award vesting
24 April 2006 – actual performance	24 April 2006 to 23 April 2009	68	zero
Grant date		31 December 2009 vesting projection (% of award)
25 April 2007 – performance to 31 December 2009			zero
29 April 2008 – performance to 31 December 2009			zero
6 May 2009 – performance to 31 December 2009			100%