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Directors' interests

The interests, all beneficial, of those who were directors at 31 December 2007 in shares in Lloyds TSB Group were:

Shares

       
  At 1 January 2007
(or later date of
appointment)		 At 31 December
2007		 At 21 February
2008*
Executive directors      
J E Daniels 165,174 166,023 166,099
M E Fairey 82,864 83,914 83,943
T A Dial 577 1,138  
A G Kane 136,078 137,000 137,076
G T Tate 4,139 8,112 8,187
H A Weir 6,255 10,511  
Non-executive directors      
Sir Victor Blank 100,000 200,000  
W C G Berndt 96,000 170,000  
Ewan Brown 4,469 4,677  
J P du Plessis 10,000 10,000  
P N Green – 5,000  
Sir Julian Horn-Smith 5,000 5,000  
Lord Leitch 10,000 10,000  

* The changes in beneficial interests between 31 December 2007 and 21 February 2008 related to ‘partnership’ and ‘matching’ shares acquired under the Lloyds TSB Group shareplan.

Interests in share options

            Exercise periods  
  At
1 January
2007		 Granted
during
the year		 Exercised
/lapsed
during
the year		 At
31 December
2007		 Exercise
price		 From To Notes
J E Daniels 599,239   599,239 – 394.25p 21/2/2006 20/2/2013 d, i
  305,232   305,232 – 430p 14/8/2006 13/8/2013 d, i
  939,177     939,177 419.25p 18/3/2007 17/3/2014 d, g
  521,876     521,876 474.25p 17/3/2008 16/3/2015 e, h
  2,236     2,236 418p 1/6/2009 30/11/2009 a, h
M E Fairey 48,000     48,000 859.5p 15/5/2001 14/5/2008 b, f
  57,000     57,000 817p 2/8/2002 1/8/2009 b, g
  85,896     85,896 549.5p 6/3/2003 5/3/2010 c, g
  10,931     10,931 615.5p 8/8/2003 7/8/2010 c, g
  42,884     42,884 655p 6/3/2004 5/3/2011 c, g
  663,157   663,157 – 394.25p 21/2/2006 20/2/2013 d, i
  555,992     555,992 419.25p 18/3/2007 17/3/2014 d, g
  344,754     344,754 474.25p 17/3/2008 16/3/2015 e, h
  1,789     1,789 418p 1/6/2009 30/11/2009 a, h
T A Dial 464,134     464,134 474p 11/8/2008 10/8/2015 e, h
A G Kane 50,000     50,000 880p 4/3/2001 3/3/2008 b, f
  27,000     27,000 887.5p 4/3/2002 3/3/2009 b, g
  64,786     64,786 549.5p 6/3/2003 5/3/2010 c, g
  11,841     11,841 615.5p 8/8/2003 7/8/2010 c, g
  34,759     34,759 655p 6/3/2004 5/3/2011 c, g
  5,783     5,783 284p 1/6/2008 30/11/2008 a, h
  529,105   529,105 – 394.25p 21/2/2006 20/2/2013 d, i
  523,255     523,255 419.25p 18/3/2007 17/3/2014 d, g
  300,474     300,474 474.25p 17/3/2008 16/3/2015 e, h
G T Tate 348,837   348,837 – 430p 14/8/2006 13/8/2013 d, i
  268,336     268,336 419.25p 18/3/2007 17/3/2014 d, g
  195,409     195,409 403p 12/8/2007 11/8/2014 d, g
  300,474     300,474 474.25p 17/3/2008 16/3/2015 e, h
  3,851     3,851 418p 1/6/2011 30/11/2011 a, h
H A Weir 556,208     556,208 424.75p 29/4/2007 28/4/2014 d, g
  5,093     5,093 321p 1/11/2009 30/4/2010 a, h
  300,474     300,474 474.25p 17/3/2008 16/3/2015 e, h
Other share plan                
T A Dial 242,825     242,825 (see page 75) 1/6/2008 30/11/2008 h

a) Sharesave.

b) Executive option granted between March 1997 and August 1999.

c) Executive option granted between March 2000 and March 2001.

d) Executive option granted between February 2003 and August 2004.

e) Executive options granted from March 2005.

f) Exercisable.

g) Not exercisable as the performance conditions had not been met.

h) Not exercisable as the option has not been held for the period required by the relevant scheme.

i) These share options lapsed as the performance condition had not been met.

The market price for a share in the Company at 1 January 2007 and 31 December 2007 was 577.5p and 472p, respectively. The range of prices between 1 January 2007 and 31 December 2007 was 451.25p to 614p.

None of the other directors at 31 December 2007 had options to acquire shares in Lloyds TSB Group plc or its subsidiaries.

The following table contains information on the performance conditions for executive options granted since 1997. The remuneration committee chose the relevant performance condition because it was felt to be challenging, aligned to shareholders’ interests and appropriate at the time.

  
Options granted Performance conditions
March 1997 – August 1999 Growth in earnings per share which is equal to the aggregate percentage change in the retail price index plus two percentage points for each complete year of the relevant period plus a further condition that the Company’s ranking based on TSR over the relevant period should be in the top fifty companies of the FTSE 100.
March 2000 – March 2001 As for March 1997 – August 1999 except that there must have been growth in the earnings per share equal to the change in the retail price index plus three percentage points for each complete year of the relevant period.
February 2003 – August 2004 That the Company’s ranking based on TSR over the relevant period against a comparator group (17 UK and international financial services companies including Lloyds TSB) must be at least ninth, when 14 per cent of the option will be exercisable. If the Company is ranked first in the group, then 100 per cent of the option will be exercisable and if ranked tenth or below the performance condition is not met. At the end of 2007 Lloyds TSB Group was ranked 9th after four years of the performance period for options granted in 2004. Options granted in 2003 lapsed as the performance condition had not been met.
March 2005 – August 2005 That the Company’s ranking based on TSR over the relevant period against a comparator group (15 companies including Lloyds TSB) must be at least eighth, when 30 per cent of the option will be exercisable. If the Company is ranked first to fourth position in the group, then 100 per cent of the option will be exercisable and if ranked ninth or below the performance condition is not met. At the end of 2007 Lloyds TSB Group was ranked 5th after the three year performance period for options granted in 2005.

Lloyds TSB performance share plan

Under the plan, executive directors were required to defer 50 per cent of their bonus awards in 2005 and 2006 into shares in the Company, known as bonus shares. The number of bonus shares awarded was calculated after the deduction of income tax and national insurance from the deferred element of the bonus. The bonus shares are held on behalf of the executive for a period of three years before release.

Executives received a further award of ‘performance shares’ on the basis of two performance shares for each bonus share. The receipt of the performance shares is dependent on the satisfaction of a TSR performance condition measured over three financial years of the Company.

The following bonus and performance shares relating to the bonus awards for 2004 and 2005 are available under the plan.

  Bonus shares Performance shares    
  At
1 January
2007		 At
31 December
2007		 At
1 January
2007		 At
31 December
2007		 Award
price		 Bonus shares
release and
performance
shares award
date
J E Daniels 57,737 57,737 195,720 195,720 479p 18/3/2008
  50,944 50,944 172,694 172,694 566.10p 20/3/2009
M E Fairey 31,901 31,901 108,140 108,140 479p 18/3/2008
  22,459 22,459 76,134 76,134 566.10p 20/3/2009
T A Dial 16,909 16,909 57,322 57,322 566.10p 20/3/2009
A G Kane 22,171 22,171 75,156 75,156 479p 18/3/2008
  20,531 20,531 69,598 69,598 566.10p 20/3/2009
G T Tate 22,710 22,710 76,982 76,982 479p 18/3/2008
  27,358 27,358 92,738 92,738 566.10p 20/3/2009
H A Weir 16,628 16,628 56,366 56,366 479p 18/3/2008
  20,062 20,062 68,008 68,008 566.10p 20/3/2009

The following table contains information on the performance conditions for performance shares. The remuneration committee chose the relevant performance condition because it was felt to be challenging, aligned to shareholders’ interests and appropriate at the time.

  
Performance shares awarded Performance conditions
March 2005 and March 2006 That the Company’s ranking based on TSR over the relevant period against a comparator group (15 companies including Lloyds TSB) must be at least eighth for any shares to be received. If ranked ninth or below no shares would be received. The maximum of two performance shares for each bonus share will be awarded only if the Company is first in the comparator group; one performance share will be awarded for each bonus share if the Company is placed fifth; and one performance share for every two bonus shares if the Company is placed eighth. Between first and fifth positions and fifth and eighth positions a sliding scale will apply. Whilst income tax was deducted from the deferred bonus before the conversion to bonus shares, where a match of performance shares is justified, these shares will be awarded as if income tax had not been deducted. This maintains the original design of the plan prior to the issue of guidance from HM Revenue & Customs in December 2004. At the end of 2007 Lloyds TSB Group was ranked 5th after the three year performance period for the performance shares awarded in 2005.

Lloyds TSB long-term incentive plan

The following are conditional share awards available under the plan. The share price for the 2007 award was 539p. Further information regarding this plan can be found in the Directors’ remuneration policy.

  At
1 January
2007		 Awarded
during the
year		 At
31 December
2007		 Year of
vesting
J E Daniels 507,692   507,692 2009
    534,322 534,322 2010
M E Fairey 328,846   328,846 2009
    333,951 333,951 2010
T A Dial 328,846   328,846 2009
    347,866 347,866 2010
A G Kane 288,460   288,460 2009
    306,122 306,122 2010
G T Tate 297,114   297,114 2009
    333,951 333,951 2010
H A Weir 288,460   288,460 2009
    320, 037 320,037 2010
 

The following table contains information on the performance conditions for awards made under the long-term incentive plan. The remuneration committee chose the relevant performance condition because it was felt to be challenging, aligned to shareholders’ interests and appropriate at the time.

LTIP award Performance conditions
May 2006 For 50 per cent of the award (the ‘EPS Award’) – the percentage increase in earnings per share of the Group (on a compound annualised basis) over the relevant period must be at least an average of 6 percentage points per annum greater than the percentage increase (if any) in the retail price index over the same period. If it is less than 3 per cent per annum the EPS Award will lapse. If the increase is more than 3 but less than 6 per cent per annum then the proportion of shares released will be on a straight line basis between 17.5 per cent and 100 per cent. The relevant period commenced on 1 January 2006 and ends on 31 December 2008. For the other 50 per cent of the award (the ‘TSR Award’) – it will be necessary for the Company’s TSR to exceed the median of a comparator group (14 companies) over the relevant period by an average of 7.5 per cent per annum for the TSR Award to vest in full. 17.5 per cent of the TSR Award will vest where the Company’s TSR is equal to median and vesting will occur on a straight line basis in between these points. Where the Company’s TSR is below the median of the comparator group, the TSR Award will lapse. The relevant period commenced on 1 January 2006 and ends on 31 December 2008.
March 2007 For 50 per cent of the award (the ‘EPS Award’) – the performance condition was as described for May 2006 with the relevant performance period commencing on 1 January 2007 and ending on 31 December 2009.
For the other 50 per cent of the award (the ‘TSR Award’) – the performance condition was as described for May 2006 with the relevant performance period commencing on 8 March 2007 (the date of Award) and ending on 7 March 2010.

Alithos Limited provided information for the testing of the TSR performance conditions for the Group’s long-term incentive schemes. EPS is the Group’s normalised earnings per share as shown in the Group’s report and accounts, subject to such adjustments as the remuneration committee regard as necessary for consistency.

Other share plan

Lloyds TSB Group executive share plan 2005

Ms Dial is the only participant in this plan and holds an option, granted to her in June 2005, to acquire 242,825 ordinary shares in Lloyds TSB Group plc for a total price of £1. The option was granted as part of the remuneration package considered necessary to attract her from the USA and is designed to encourage her to remain with Lloyds TSB Group plc. The option is not, therefore, subject to any performance condition but will normally become exercisable only if she remains an employee, and has not given notice of resignation, on 31 May 2008. Full details of the plan were set out in the 2005 annual report.

None of those who were directors at the end of the year had any other interest in the capital of Lloyds TSB Group plc or its subsidiaries.

On behalf of the board

A J Michie
Company Secretary
21 February 2008