LETTER FROM THE CHAIRMAN.

John Stewart, Chairman (photo)

“In 2011 the Board was pleased to appoint Mike Fairey, Stuart Popham and Julia Wilson as non-executive directors bringing further diversity of skills and experience to the Board...Tim Breedon notified the Board of his intention to retire from the Company at the end of 2012. Tim has been a first class Group Chief Executive.”

JOHN STEWART
CHAIRMAN


This year was a year of progress and evolution for the Board of Legal & General, particularly in relation to the Board’s composition and diversity. The Board has dedicated time to considering emerging corporate governance practice in line with our belief that good corporate governance underpins the long-term success of the Company. Tim Breedon notified the Board of his intention to retire from the Company at the end of 2012. Tim has been a first class Group Chief Executive. The Company is in great shape and we are very appreciative of his excellent stewardship over the last six years. The process for identifying Tim’s successor is outlined below.

BOARD

The success of the Board depends on the right balance of skills and experience around the boardroom table. During 2011, the Board was pleased to appoint Mike Fairey, Stuart Popham and Julia Wilson as non-executive directors bringing a great diversity of skills and experience to the Board. Sir David Walker and James Strachan retired after the AGM in 2011 having served nine and eight years on the Board respectively and I thank them both for their wisdom and great contribution to the Board.

SUCCESSION

Following the Company’s announcement that Tim Breedon intends to retire from the Company at the end of 2012, the Nominations Committee has met regularly to put in place and oversee the process for identifying an appropriate successor. This process is ongoing.

BOARD DIVERSITY

The Board welcomes the recommendations made by Lord Davies, and believes that they mark a series of practical and achievable steps towards addressing the important issue of a stronger contribution by women in the UK’s boardrooms. It is our intention to incorporate the recommendations into our thinking on the composition of the Board. We will in addition be working at strengthening the representation of women among the non-Board senior management cadre – the Board directors of tomorrow.

We also welcome the Davies recommendations in our capacity as one of the UK’s largest institutional shareholders. Our fund management arm, Legal & General Investment Management (“LGIM”), engages actively with investee companies on a wide variety of environmental, social and governance issues, and the new recommendations concerning boardroom diversity, and greater associated disclosure, provide useful additional information for evaluation of the boards of investee companies.

REVIEW OF CORPORATE GOVERNANCE FRAMEWORK

Each year we review the Company’s corporate governance framework. This includes the annual review of a number of corporate governance policies such as the Matters Reserved for the Board and Terms of Reference for each of the Board’s committees. As well as assisting the Board in being able to confirm compliance with the principles and provisions of the UK Code of Corporate Governance for 2011, I believe this reflects the commitment of the Board to good corporate governance and to ensuring that good corporate governance practice underpins the day to day activities of the Board.

BOARD EVALUATION

The Board is committed to continually improving its effectiveness and each year the Board participates in a formal evaluation of its performance. An update on progress made against the observations from the Board evaluation undertaken in 2010 can be found in the Corporate Governance Report section. The Board has evaluated its performance during 2011 and I am satisfied that the Board is effective and operates well. As a result of this year’s evaluation, the Board intends to consider refreshing the format of reports to the Board and the Board agenda in order to facilitate further discussion; continue to focus on succession planning and talent management and further enhance the Board’s role in monitoring the Group’s strategic performance during 2012.

SHAREHOLDER ENGAGEMENT

It is of great importance to the Board that the direction of the Company is aligned with the interests of its shareholders. In order for engagement to be effective it is vital for the performance of the Company to be clearly understood by shareholders, as well as other stakeholders, and for the Board to be well informed of stakeholder opinion in response. We have continued our work in promoting greater and more effective engagement with both our retail and institutional shareholders. On behalf of the Board, the Group Chief Executive and Group Chief Financial Officer, supported by the Investor Relations department, regularly met with institutional investors and analysts throughout the year. The Board received regular reports from the Investor Relations department on its activities, and in particular feedback being received from investors, analysts and advisers. Separately, LGIM has made significant progress in engaging with investee companies and encouraging high standards of corporate governance from the companies that LGIM invests in.

ANNUAL GENERAL MEETING

I look forward to sharing with you in person the successes of the Company during 2011 at the Annual General Meeting on 16 May 2012. The AGM is an important forum for engagement with all shareholders and gives shareholders an opportunity to raise questions on this report and any other questions they may have on the resolutions to be put to the meeting. At the 2012 AGM all Board directors who are able to attend will be available, as usual, to meet with investors after the meeting to discuss issues on a face-to-face basis. We would like our investors to find attending our AGM an interesting and rewarding experience, to hear about the performance of the Company over the last year and have the opportunity to meet members of the Board and I would encourage as many shareholders as possible to attend on 16 May 2012.

JOHN STEWART
CHAIRMAN

For more information visit our website:
investor.legalandgeneral.com/corporate-governance.cfm

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