Base Salary

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Help recruit and retain key employees.

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To pay at around the mid-market range relative to the FTSE 100, with particular regard to other relevant financial institutions.

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Paid monthly in cash.

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Normally reviewed by the Committee annually and fixed for the 12 months commencing 1 January. From 2012 increases will be effective from 1 March.

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Reflect the individual’s experience and role within the Group.

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Regard given to individual skills and experience.

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Salary is supplemented with normal benefits available to senior managers including car allowance and medical insurance. Legal & General products can be acquired by executive directors on the terms available to other members of staff.

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In specific circumstances (for example, a new appointment) may set salaries below mid-market, with a view to reaching mid-market level within two to three years.

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Increases in salary for executive directors broadly follow the salary budgets for the rest of the organisation, unless, for example, salary progression to mid-market is agreed as referred to above or there is significant movement in the mid-market ranges.

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For 2011, increases for the executive directors are in line with the budget set for the general management pay review below Board level (2.9%) and our policy of salary progression towards mid-market.

Annual Bonus

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Incentivise executives to achieve specific, predetermined goals during a one-year period.

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Maximum bonus potential set by reference to market comparators (currently 125% of base salary).

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All executive directors have objectives related to Group [key performance indicators (KPIs)], plus individual (where relevant) divisional and strategic targets.

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Reward ongoing stewardship and contribution to core values.

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On-target bonus of 75% of base salary (60% of maximum) for all executive directors.

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Bonus result is determined by the Committee after year end, based on performance against targets.

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Deferred proportion of bonus, awarded in shares, provides a retention element.

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Percentage of bonus deferred and awarded in shares.

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Normally, 62.5% of the bonus paid in cash and 37.5% paid in deferred shares to be held for three years.

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The deferred element may be subject to forfeiture if the performance which led to a bonus being paid is found to be incorrect. During 2011 the plan rules will be amended to enable forfeiture to be considered in the event of personal misconduct.

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For 2010, bonuses of between 91.4% and 112.4% of base salary were awarded.

Performance Share Plan

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Incentivise executives to achieve superior returns to shareholders.

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Awards of conditional shares made annually, with vesting dependent on relative [total shareholder return (TSR)] measured over the three subsequent years.

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Vesting condition for half of the award measures the Group’s TSR versus the FTSE 100. Vesting condition for the other half measures TSR versus the insurance constituents in the FTSEurofirst 300 plus any FTSE 350 Life Insurance companies not in the FTSEurofirst 300.

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Align interests of executives and shareholders through building a shareholding.

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Retain key executives over a three-year performance period.

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Executive directors normally receive annual grants of 200% of salary.

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For 2011, awards to executive directors have been set at 200% of salary.

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The two conditions are measured independently.

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The awards will vest in full if Legal & General is ranked at or above the 20th percentile. One quarter of awards will vest if [TSR] is at median. No awards vest below median.

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The Remuneration Committee will also assess whether the TSR out-turn is reflective of the underlying financial performance of the Company and may scale back vesting. The Committee only has discretion to reduce the level of award and may not increase it.

Pension

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Reward sustained contribution.

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Provide competitive post-retirement benefits.

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Participation in a Group pension scheme.

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No compensation for public policy or tax changes.

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Accrue benefits according to length of service up to retirement.

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From 2009, pensionable salary for the defined benefit pension plan has been limited to a maximum increase of 2.5% each year.

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Cash alternative for executive directors opting for enhanced protection above the lifetime allowance.

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New executive directors receive 15% of base salary into the defined contribution pension plan (they contribute 5%).

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Please see section on Pensions where the impact of the new legislation on the Annual Allowance and Lifetime Allowance is discussed.

Share Ownership Guidelines

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To align the interests of executive directors and shareholders.

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The Group Chief Executive is required to build and maintain a shareholding of 200% of base salary and, for other executive directors, 100% of base salary.

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Executives are expected to build a shareholding through the vesting of shares under the Group’s share incentive plans. Existing shareholdings and shares acquired in the market are also taken into account.

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From 2011 it has been decided to extend shareholding requirements to members of the senior management team below Board level who form the ‘Leadership Team’. Members of the Leadership Team will be encouraged to hold 50% of their salary as shares
– please see the section on Share Ownership Guidelines for further details.

Tim Breedon

Nigel Wilson

John Pollock

Mark Gregory

Tim Breedon

Mark Gregory

Nigel Wilson

John Pollock