DIRECTORS’ LOANS

At 31 December 2010 there were no outstanding loans made to directors.

SERVICE CONTRACTS

Tim Breedon and John Pollock have a notice period of six months on either side and on termination they would be entitled to an additional six months’ salary, pension and car allowance entitlement.

Mark Gregory and Nigel Wilson have notice periods of 12 months. However, they have 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.

Copies of the executive directors’ service contracts are available for inspection at the Company’s registered office.

EXTERNAL APPOINTMENTS

The Company considers that certain external appointments can help to broaden the experience and contribution to the Board of the executive directors. Any such appointments are subject to annual agreement by the Company and must not be with competing companies. Subject to the Company’s agreement, any fees may be retained by the individual. Tim Breedon is chairman and an unpaid Board member of the ABI. He is also an ex officio (ABI) member of the Takeover Panel. Nigel Wilson is a non-executive director of Halfords Group Plc and receives a fee of £66,000 p.a. He will step down in March 2011. He is also a non-executive director of Capita and received a fee of £44,722 for 2010. Mark Gregory is an unpaid Director of Westdown Park Management Company Ltd.

The Directors’ Report on Remuneration was approved by the directors on 16 March 2011.

SIR DAVID WALKER
CHAIRMAN OF THE REMUNERATION COMMITTEE

INDEPENDENT VERIFICATION REVIEW

Hewitt New Bridge Street (HNBS) (part of Hewitt Associates) act as advisers to the Remuneration Committee. In October 2010, Hewitt Associates was acquired by Aon Corporation. Hewitt Associates was merged with Aon Consulting to form Aon Hewitt. Aon Hewitt is one of three distinct business divisions under Aon Corporation, the others being Aon Risk Solutions and Aon Benfield. These latter divisions provide corporate insurance broking services to Legal & General. The Remuneration Committee therefore reviewed HNBS’s continuing independence to ensure there was no conflict of interest. The Committee was satisfied that no conflict arose out of the new structure and received assurance from Aon Corporation that the governance structures within the organisation were in place to preserve the provision of objective and independent advice.

HNBS therefore continue to be the independent advisers to the Remuneration Committee and were asked to verify that the 2010 remuneration practice for executive directors followed the Remuneration Policy put to the 2010 AGM. In conducting this work, HNBS reviewed the elements of executive director remuneration during 2010, as detailed in the policy statements of the Directors’ Report on Remuneration 2009 (DRR 2009). They confirmed that they were satisfied that the remuneration practice during 2010 had been in line with the stated policy set out in the DRR 2009.