Directors' Remuneration Report

Introduction

The Board entrusts the Remuneration Committee with the responsibility for the policy in respect of the executive directors and senior executives.

In respect of other employees the executive directors have been delegated responsibility to operate within the remuneration strategy and policies framework established by the Board.

Remuneration committee composition

The Remuneration Committee comprises of independent non-executive directors and the non-executive Chairman of the Board, namely:

	Appointment date	Committee Role
Mr C J Rodrigues (appointed Chairman of the committee 18 May 2007)	29 October 2003	Chairman
Mr H E Staunton	18 May 2007	Member
Mr J F Jarvis	19 July 2006	Member
Sir Ian Robinson	19 July 2006	Member
Mr P Erskine	18 February 2009	Member

Appointments to the committee are made by the Board at the recommendation of the Nomination Committee, which consults with the Chairman of the Remuneration Committee.

The Committee normally invites the Chief Executive and the HR director to attend committee meetings concerning proposals relating to the remuneration of the executive directors, other than when their personal remuneration is discussed. The Company Secretary acts as secretary to the Committee.

The Committee met three times in 2008. There was full attendance in the year. The Committee retained independent remuneration consultants (Deloitte LLP) and has taken advice during the year from them in relation to executive remuneration matters. Deloitte LLP also provide the Company with outsourced internal audit and miscellaneous tax services. SJ Berwin LLP, one of the Company's corporate lawyers, has also provided material assistance. In forming the remuneration policy, the best practice provisions set out in The 2006 Combined Code have been followed and the Guidelines issued by the Association of British Insurers (ABI) and the National Association of Pension Funds (NAPF) have been noted.

Remuneration policy

The remuneration policy, strategy and structure remain unchanged in 2008, following the review in 2006 and approval at the 2007 Annual General Meeting.

Key policy elements are to:

• ensure Ladbrokes' remuneration strategy is appropriate for a betting and gaming business;
• provide a remuneration framework that enables the Company to retain and motivate key individuals in order to drive the business forward; and
• ensure the remuneration arrangements remain strongly aligned with shareholder value creation.

Those elements are underpinned by the key principles of the remuneration strategy for executive directors, which should:

• support the business strategy;
• be aligned with the creation of shareholder value;
• be clear and simple;
• reward good performance;
• accord with best practice; and
• encourage and require employee share ownership.

The Committee and Board consider that it is in the interests of shareholders to secure some of the betting and gaming industry's most talented and marketable individuals by providing fully competitive remuneration.

The Committee has discretion to consider corporate performance on environmental, social and governance (ESG) issues when setting the remuneration of executive directors. The committee has ensured that ESG risks are not being raised by the incentive structure for senior management inadvertently motivating irresponsible behaviour.

Remuneration mix

All elements of the remuneration package have been, and will continue to be regularly reviewed to ensure that the total provision remains appropriate and competitive.

The mixture of fixed and variable remuneration remains unchanged for 2008 for both target and maximum performance.

The total package for executives is driven by performance. At the target level 40% is fixed while the remaining 60% is variable. This changes so at the maximum performance around 20% is fixed and 80% is variable remuneration.

The Company offers benefits including pension, company cars and fuel, private healthcare and life assurance. Incentives and benefits are non-pensionable.

Base salary

The aim of the Company policy is to set base salaries at a competitive level. The Committee annually reviews the base salaries of the senior executive group, including executive directors, taking into account business and personal performance. Data is also provided by independent remuneration consultants with regard to market practice of companies of similar size and complexity.

Christopher Bell, who holds the position of Chief Executive, was awarded a 3% salary increase in the January 2007 and January 2008 annual salary reviews. In July 2008, the Remuneration Committee reviewed his package and concluded that it was appropriate to make an interim adjustment to his base pay to reflect competitive pay levels and the continuing high levels of leadership Mr Bell gives to the business. His base pay was increased by 11.4%.

The executive directors unanimously recommended that basic annual salaries would not be increased in respect of the annual salary review at 1 January 2009.

Annual bonus

Executive directors participate in the senior executive annual bonus plan and deferred share plan. These are focused upon the profit plan as agreed by the Board and the achievement of key personal objectives. Both the core businesses achieved plan in 2008 and the High Rollers business produced significant profits. These achievements were driven by a strong Retail team, the creative developments in eGaming and supported by the Corporate management team.

Arrangements in 2008 and 2009

The maximum bonus opportunity under the annual and deferred bonus plans is 150% for executive directors and 170% for the Chief Executive.

Of the total bonus opportunity, approximately 75% is based on financial performance and the balance is based on personal performance objectives.

The personal performance objectives are agreed and approved by the Remuneration Committee at the beginning of each financial year.

The minimum threshold (below which no payments are made) remained at 95% of profit plan and the maximum threshold remains at 105% of profit plan. Provided the threshold is achieved for the core business then 25% of gains or losses from High Rollers business will be counted towards the achievement of targets and the determination of the overall bonus award.

One third of any annual bonus earned will be delivered in shares allocated conditionally upon continued employment (subject to certain exceptions) until the third anniversary of the award. Shares awarded under the plans will be purchased in the market.

Longer term incentives

The strategy in 2009 remains unchanged in relation to the Performance Share Plan being the only long-term incentive arrangement being used for executive directors.

Below Board level the Company continues to utilise share option plans within a flexible incentive and retention framework.

Performance Share Plan (PSP) – the arrangements for 2008 and 2009

The awards under the PSP are limited to a specific number of participants (currently nine individuals) including the executive directors and a number of key senior executives, as determined by the Committee from time to time. Annual awards will normally be made up to a maximum of 175% of base salary for executive directors. In exceptional circumstances (e.g. recruitment or retention) an award of up to 250% of base salary may be made at the Committee’s discretion.

At the end of the performance period, participants will normally be entitled to receive the value of the reinvested dividends that would be accrued on the number of shares that ultimately vest.

Vesting of awards is subject to the achievement of performance targets over a three-year performance period. Awards lapse on a participant ceasing to be employed, unless the Committee determines otherwise.

50% of the award will be based on the Total Shareholder Return (TSR) performance of the Company relative to a select comparator group of industry peers. The comparator group remains unchanged from the 2008 PSP award with the exception of Harrahs Entertainment, which delisted during 2008 and therefore has been removed from the comparator group for 2009 awards. The proposed group for 2009 awards is as follows:

888 Holdings; Bwin; Boyd Gaming; Enterprise Inns; Lottomatica; Mitchells and Butlers; OPAP; Paddy Power; PartyGaming; Punch Taverns; Rank Group; Sportingbet; Whitbread and William Hill.

The remaining 50% of the award will be subject to the achievement of an absolute EPS growth target.

The use of TSR and EPS performance conditions are consistent with market practice and despite more difficult trading conditions no variation to the performance targets is proposed.

Performance criteria for 2008 PSP award

Performance level	TSR % vesting levels
Below median	0
Median	25
Upper quartile	100

Vesting will be on a straight-line basis between the median and upper quartile positioning.

The amount of the award vesting at median performance level for the TSR performance conditions has been reduced to 25% from 2008, compared to 40% at minimum vesting levels previously. This reflects best practice guidelines and market norms.

Performance level	EPS growth % vesting levels
Below 6% per annum	0
6% per annum	25
10% per annum	100

From 2008 the EPS growth will not include gains or losses from the High Rollers business.

Share option plans

Executive directors no longer participate in share option plans. However, the schemes remain in place for eligible employees below executive director level and remain unchanged from 2008. The plans are as follows:

• a UK scheme approved by Her Majesty’s Revenue & Customs (HMRC) (“the 1978 scheme”); and
• an international share option scheme (“international scheme”).

The options are subject to an EPS performance condition under which EPS growth in a three-year period must exceed the increase in RPI by the following tiered targets:

EPS growth	Proportion of annual grant vesting
RPI + 9%	2/3rds
RPI + 12%	5/6ths
RPI + 15%	Full vesting

Awards made from 2008 do not include gains or losses from the High Rollers business in the performance of EPS growth.

All-employee incentive arrangements

There are two share plans currently in operation in which all UK employees, subject to minimum service requirements, are eligible to participate. The share plans are operated to strengthen and widen employee share ownership. These are summarised below.

Savings related share option scheme

The Company offers a savings related share option scheme, which is approved by HMRC (“the 1983 scheme”), and is linked to a Save-As-You-Earn contract under which participants save a regular monthly sum by deduction from earnings up to £250 per month for either three or five years. Subject to common service criteria, the 1983 scheme is open to all UK employees (including executive directors).

Options are normally exercisable during a period of six months following the expiry of three and five years (as previously selected by the participant) from the dates of grant and there are no performance conditions. Option prices are calculated by reference to the average mid-market quotation of shares as shown by the Stock Exchange Daily Official List for the five business days immediately preceding the date of grant, discounted by up to 20% per share.

Share incentive plan

The Company offers a share incentive plan, approved by HMRC. The plan is open to all UK employees (including executive directors) who have completed at least 12 months service. To encourage employee participation, the Company provides a match of one bonus share for every two salary shares purchased by employees. The bonus shares are held conditionally upon satisfaction of a one-year service requirement. The maximum monthly contribution by employees has been set at £75 per month.

Performance graph

As the Company is a constituent company of the FTSE250, the FTSE250 index provides an appropriate indication of market movements against which to benchmark the Company's performance. The chart below summarises the Company's TSR performance against the FTSE250 index over the five-year period ended 31 December 2008.

Historical TSR performance against FTSE250
Growth in the value of a hypothetical £100 holding over five years

Retirement benefits

Following the A-Day pensions review, the pre-A-Day Revenue limits regime has been maintained as the framework for the Ladbrokes Pension Plan (LPP) (formerly the Hilton Group Pension Plan), including an LPP-specific Earnings Cap.

Executive directors and senior executives have a choice between:

(i)subject to the discretion of the Company, membership of the Executive Section of the LPP plus a cash supplement of up to 30% of base salary above the Earnings Cap; or

(ii)a cash supplement of up to 30% of base salary in lieu of membership of the LPP.

Further details of the retirement benefits of individual executive directors are set out in the Retirement provision section.

Executive directors' shareholding guidelines

Personal shareholding guidelines require executive directors to build up over time personal shareholdings equivalent in value to at least one year's base salary. It is intended that the specified ownership level will be achieved through the retention of shares earned under the Company' incentive plans.

Service contracts

In line with the Company's policy, all executive directors are employed on conventional one-year rolling contracts as follows:

Name	Date of contract	Company notice period	Director notice period
C Bell	20 December 2006	1 year	6 months
J P O'Reilly	1 January 2007	1 year	6 months
A S Ross	1 January 2007	1 year	6 months
B G Wallace	5 March 2007	1 year	6 months

New appointments to the Board will also normally be made on a one-year rolling contract.

The Company normally expects executive directors, in case of a breach of contract to mitigate their loss. In any specific case that may arise, the Committee will carefully consider any compensatory payments having regard to performance, age, service, health and other circumstances that are relevant.

Executive directors

Richard Ames' appointment to the Board on 1 January 2009 includes a service agreement requiring one year's notice period from the Company and six months notice period from the director.

After many years of significant contribution to both Ladbrokes and the betting industry, Mr A S Ross will not seek re-election on to the Board at the next AGM. He will continue to be employed on his current terms and conditions until 20 July 2009. Thereafter he will be employed as a consultant working three days a week for the Company for 12 months on a daily rate of £1,061. He will also receive a mobile phone, company car, private fuel and private medical cover.

Non-executive directors

The committee determines the fees of the Chairman of the Board and the Board as a whole determines the remuneration of each of the nonexecutive directors. Non-executive directors receive fees that are set relative to median market practice and are regularly reviewed.

Non-executive directors are not eligible for annual bonus, share incentives, pension or other benefits.

Non-executive directors are retained on the terms set out in their letter of appointment, they do not have with either the Company or any of its subsidiaries. The appointment of a non-executive director is terminable without notice.

The standard letter of appointment for non-executive directors is available for inspection upon request.

Directors’ remuneration and interests

Audited information

The following table shows the emoluments of the executive directors and non-executive directors in the year ended 31 December 2008 excluding gains from the exercise of share options and contributions to money purchase schemes.

Name	Base salary (i) £000	Annual bonus (ii) £000	Benefits in kind £000	Pension supplement £000	Performance share plan (iii) £000	2008 Total £000	2007 Total £000
Executive directors
C Bell	617	957	32	150	285	2,041	2,088
J P O’Reilly	500	710	23	115	155	1,503	1,109
A S Ross	276	358	26	–	135	795	780
B G Wallace	494	742	33	148	–	1,417	1,198
Total	1,887	2,767	114	413	575	5,756	5,175
Non-executive directors	Fees(iv)
Sir Ian Robinson	208	–	–	–	–	208	208
J F Jarvis	50	–	–	–	–	50	48
C Rodrigues	60	–	–	–	–	60	54
H E Staunton	50	–	–	–	–	50	48
C P Wicks	50	–	–	–	–	50	48
N M H Jones	60	–	–	–	–	60	58
Total	478	–	–	–	–	478	464

⁽ⁱ⁾Annual basic salaries on 1 January 2008 were Mr C Bell £583,500; Mr J P O’Reilly £500,000; Mr A S Ross £275,850 and Mr B G Wallace £494,400. In July 2008 Mr C Bell’s salary was increased to £650,000 to reflect competitive pay levels and his continuing high levels of leadership to the business. In addition, Mr R Ames was appointed to the Board with effect from 1 January 2009. His basic salary is £275,000 per annum. The Board unanimously agreed that basic salaries would not be increased in respect of the annual salary review as at 1 January 2009. The following executive directors serve elsewhere as non-executive directors and retained fees in 2008 as follows: Mr C Bell £63,900; Mr J P O’Reilly £40,000; Mr A S Ross £25,000 and Mr B G Wallace £19,264.

⁽ⁱⁱ⁾The annual bonus plan is focused on the annual profit plans as agreed by the Board and the achievement of key personal objectives. For 2008, the following total cash bonuses were achieved (expressed as a percentage of base salary):

⁽ⁱⁱⁱ⁾In respect of the awards made on 24 February 2006 under the PSP, the Company achieved 6th position against the selected comparator group and accordingly 65.7% of that portion of the award will vest. The Betting and Gaming Division achieved 93% of the operating profit target. See 2006 Performance Share Plan table for details. Accordingly, 79.35% of the awards have been earned as at 31 December 2008 for Messrs C Bell, J P O’Reilly and A S Ross. The number of shares that will vest on 20 February 2009 are: Mr C Bell 154,031, Mr J P O’Reilly 84,017 and Mr A S Ross 72,814. At the Company’s market share price of 185.00 pence at 31 December 2008, these had a value of £284,957, £155,431 and £134,706 respectively and these amounts are shown in the table above.

^(iv)The non-executive directors’ only remuneration from the Company is a fee: Sir Ian Robinson (Chairman): £208,425 per annum; each other nonexecutive director £43,000 per annum. The additional fee paid to the Chairman of the Audit and Remuneration Committees is £10,000 per annum and an additional fee of £7,000 per annum is available for membership of one or both of the Audit and Remuneration Committees (other than in respect of the Chairman of the Board’s membership of the Remuneration Committee). There was no increase in the remuneration of the Chairman or other non-executive directors as at 1 January 2009.

Mr P Erskine, who was appointed as a non-executive director on 1 January 2009, is paid a fee of £125,000 per annum, of which £82,000 is in respect of his duties as Chairman Designate and services prior to assuming the role of Chairman on 15 May 2009, when his fee will be increased to £250,000 per annum.

Share option schemes

The number of options outstanding as at 31 December 2008 are set out below:

Plan	Number of options at 31 Dec 07	Options lapsed during the year	Number of options at 31 Dec 08	Date of grant	Exercise price (pence)	Date from which exercisable	Expiry date
C Bell
1978 Share Option Scheme	10,080	–	10,080	08.04.05	297.60	08.04.08	08.04.15
Total	10,080	–	10,080	–	–	–	–
International Share Option Scheme	260,170	–	260,170	25.04.06	422.80	25.04.09	25.04.16
	90,726	–	90,726	08.04.05	297.60	08.04.08	08.04.15
	103,225	–	103,225	03.09.04	260.19	03.09.07	03.09.14
	122,696	–	122,696	25.03.04	218.90	25.03.07	25.03.14
	67,727	–	67,727	16.09.03	184.45	16.09.06	16.09.13
	264,664	–	264,664	04.04.03	141.60	04.04.06	04.04.13
	155,826	–	155,826	11.09.02	177.65	11.09.05	11.09.12
	85,190	–	85,190	17.04.02	247.30	17.04.05	17.04.12
	70,000	70,000	–	24.04.98	337.45	24.04.01	24.04.08
Total	1,220,224	70,000	1,150,224	–	–	–	–
1983 Savings related
Share Option Scheme	4,684	–	4,684	25.06.07	349.56	01.08.12	31.01.13
Total	4,684	–	4,684	–	–	–	–
J P O’Reilly
1978 Share Option Scheme	7,095	–	7,095	25.04.06	422.80	25.04.09	25.04.16
Total	7,095	–	7,095	–	–	–	–
International Share Option Scheme	52,369	–	52,369	01.09.06	381.90	01.09.09	01.09.16
	134,816	–	134,816	25.04.06	422.80	25.04.09	25.04.16
	40,000	–	40,000	08.04.05	297.60	08.04.08	08.04.15
	40,000	–	40,000	03.09.04	260.19	03.09.07	03.09.14
	40,000	–	40,000	25.03.04	218.90	25.03.07	25.03.14
	25,000	–	25,000	16.09.03	184.45	16.09.06	16.09.13
Total	332,185	–	332,185	–	–	–	–
1983 Savings related
Share Option Scheme	3,105	–	3,105	28.06.06	311.08	01.08.11	31.01.12
	1,873	–	1,873	25.06.07	349.56	01.08.12	31.01.13
Total	4,978	–	4,978	–	–	–	–
A S Ross
1978 Share Option Scheme	3,041	–	3,041	01.04.99	290.70	01.04.02	01.04.09
	6,270	6,270	–	24.04.98	337.45	24.04.01	24.04.08
Total	9,311	6,270	3,041	–	–	–	–
International Share Option Scheme	122,989	–	122,989	25.04.06	422.80	25.04.09	25.04.16
	74,000	–	74,000	08.04.05	297.60	08.04.08	08.04.15
	50,887	–	50,887	03.09.04	260.19	03.09.07	03.09.14
	62,500	–	62,500	25.03.04	218.90	25.03.07	25.03.14
	25,000	–	25,000	16.09.03	184.45	16.09.06	16.09.13
	75,000	–	75,000	04.04.03	141.60	04.04.06	04.04.13
	50,000	–	50,000	11.09.02	177.65	11.09.05	11.09.12
	50,000	–	50,000	17.04.02	247.30	17.04.05	17.04.12
	1,927	–	1,927	03.05.00	268.90	03.05.03	03.05.10
	69,016	–	69,016	01.04.99	290.70	01.04.02	01.04.09
	38,730	38,730	–	24.04.98	337.45	24.04.01	24.04.08
Total	620,049	38,730	581,319	–	–	–	–
1983 Savings related
Share Option Scheme	10,613	–	10,613	17.06.03	150.04	01.08.08	31.01.09
Total	10,613	–	10,613	–	–	–	–

• No share options were granted to or exercised by the executive directors during 2008.
• The performance conditions attached to the vesting of the share options are outlined in Share Option Plan. All options granted prior to April 2006 have either met the applicable performance conditions or have lapsed in accordance with the plan rules.
  For options granted in 2004 and in previous years, if the performance conditions are not met over the first three years, shareholders have approved limited retesting, measured from the original base and for a maximum of a further two years, subject to more demanding performance conditions. If these performance conditions are not met over the first five years, the grant lapses.
  The Company decided to withdraw retesting provisions from all options granted in 2005 and onwards to bring performance conditions in line with best practice.
• The mid-market price of the Company’s shares on 31 December 2008 was 185.00 pence (31 December 2007: 323.25 pence). The highest price of the shares during the financial year was 338.50 pence (2007: 459.75 pence). The lowest price of the Company’s shares during the financial year was 139.00 pence (2007: 294.50 pence).

Other share schemes

Awards made to executive directors in 2008 and outstanding at 31 December 2008 under the performance share plan, deferred bonus plan, matching share plan, and the share incentive plan are as follows:

	Plan	Outstanding awards at 31 Dec 07	Awards vested during the year	Awards lapsed during the year	Awards made during the year	Outstanding awards at 31 Dec 08	Date of award	Share price on date of award	Performance period end
C Bell	Performance Share Plan	–	–	–	282,476	282,476	29.02.08	304.25	31.12.10
		245,372	–	–	–	245,372	21.05.07	416.25	31.12.09
		194,117	–	–	–	194,117	24.02.06	370.00	31.12.08
		178,438	124,907	53,531	–	–	24.02.05	314.00	31.12.07
Total		617,927	124,907	53,531	282,476	721,965	–	–	–
	Deferred Bonus Plan	–	–	–	87,625	87,625	29.02.08	304.25	29.02.11
		34,712	–	–	–	34,712	26.03.07	403.50	26.03.09
		9,646	9,646	–	–	–	24.02.06	370.00	24.02.08
Total		44,358	9,646	–	87,625	122,337	–	–	–
	Matching Shares Plan	10,926	–	–	–	10,926	26.04.06	431.25	01.04.09
		11,035	11,035	–	–	–	08.04.05	299.00	01.04.08
Total		21,961	11,035	–	–	10,926	–	–	–
	Bonus and Free shares	512	–	–	182	694	note(iii)	–	–
Total		512	–	–	182	694	–	–	–
J P O’Reilly	Performance Share Plan	–	–	–	242,053	242,053	29.02.08	304.25	31.12.10
		178,452	–	–	–	178,452	21.05.07	416.25	31.12.09
		105,882	–	–	–	105,882	24.02.06	370.00	31.12.08
		89,219	62,453	26,766	–	–	24.02.05	314.00	31.12.07
Total		373,553	62,453	26,766	242,053	526,387	–	–	–
	Deferred Bonus Plan	–	–	–	35,332	35,332	29.02.08	304.25	29.02.11
		21,285	–	–	–	21,285	26.03.07	403.50	26.03.09
		7,389	7,389	–	–	–	24.02.06	370.00	24.02.08
Total		28,674	7,389	–	35,332	56,617	–	–	–
	Matching Shares Plan	8,369	–	–	–	8,369	26.04.06	431.25	01.04.09
		5,912	5,912	–	–	–	08.04.05	299.00	01.04.08
Total		14,281	5,912	–	–	8,369	–	–	–
	Bonus and Free shares	512	–	–	182	694	note(iii)	–	–
Total		512	–	–	182	694	–	–	–
A S Ross	Performance Share Plan	–	–	–	133,540	133,540	29.02.08	304.25	31.12.10
		115,994	–	–	–	115,994	21.05.07	416.25	31.12.09
		91,764	–	–	–	91,764	24.02.06	370.00	31.12.08
		82,466	57,726	24,740	–	–	24.02.05	314.00	31.12.07
Total		290,224	57,726	24,740	133,540	341,298	–	–	–
	Deferred Bonus Plan	–	–	–	27,780	27,780	29.02.08	304.25	29.02.11
		13,835	–	–	–	13,835	26.03.07	403.50	26.03.09
Total		13,835	–	–	27,780	41,615	–	–	–
	Matching Shares Plan	5,583	5,583	–	–	–	08.04.05	299.00	01.04.08
Total		5,583	5,583	–	–	–	–	–	–
B G Wallace	Performance Share Plan	–	–	–	239,342	239,342	29.02.08	304.25	31.12.10
		207,905	–	–	–	207,905	21.05.07	416.25	31.12.09
Total		207,905	–	–	239,342	447,247	–	–	–
	Deferred Bonus Plan	–	–	–	61,695	61,695	29.02.08	304.25	29.02.11
Total		–	–	–	61,695	61,695	–	–	–
	Bonus and Free shares	–	–	–	198	198	note(iii)	–	–
Total		–	–	–	198	198	–	–	–

⁽ⁱ⁾Conditional awards made at 24 February 2005 partially vested on 29 February 2008 as performance conditions had been met as follows: Mr C Bell 124,907 shares, Mr J P O’Reilly 62,453 shares, Mr A S Ross 57,726 shares. The remainder of the awards lapsed on 29 February 2008. The mid-market quotation for a share on 29 February 2008 was 304.25 pence.

⁽ⁱⁱ⁾Awards were made under the deferred bonus plan on 24 February 2006 based on an award price of 340.24 pence. Awards vested on 29 February 2008.

⁽ⁱⁱⁱ⁾76 Free shares were awarded under the share incentive plan to Mr B G Wallace on 6 May 2008 at an award price of 328.00 pence. Bonus shares were awarded under the share incentive plan on a monthly basis on award dates between 7 January and 5 December 2008. Share prices on the award dates ranged from 176.00 pence to 329.25 pence.

^(iv)The performance criteria for the 2008 award is outlined here.

2006 Performance Share Plan

The 2006 Performance Share Plan awards were made to a maximum of 120% of base salary. 50% of the award was subject to a TSR performance condition, based on the Company’s performance against a peer group of companies. The remaining 50% was subject to operating profit growth.

The TSR element of the award vests in full if TSR performance is ranked first or second against the relevant selected comparator group and 40% for ninth position. If at least ninth position is not achieved that part of the award lapses. Vesting would be on a straight-line basis between ninth and second positioning.

Vesting for the remaining 50% of the award has been subject to achievement of an operating profit growth target. The operating growth targets are measured over a three-year performance period that started on 1 January 2006.

Performance Measures	2006 awards Operating profits (i) growth from £249m
Maximum Performance (i.e. 100% vesting)	RPI + 27%
Base Performance (i.e. 40% vesting)	RPI + 15%

⁽ⁱ⁾Profit before tax, finance costs and non-trading items. Note (iii) to the emoluments table provides details of the vesting levels for these awards.

2007 Performance Share Plan

The performance measures for the 2007 PSP are identical to the 2008 scheme, details of which can be found here.

Retirement provision

Messrs C Bell and J P O’Reilly are members of the Executive Section of the LPP, details of which are set out in note 33 of the consolidated financial statements of the Annual Report 2008. In respect of base salary above the LPP-specific Earnings Cap, Mr C Bell and Mr J P O’Reilly receive a 30% cash supplement.

Mr A S Ross is no longer accruing pension benefits or receiving any pension-related cash supplement as he has passed his nominal pension retirement date. He is a member of the Executive Section of the LPP, and his LPP benefits will be increased between his 60th birthday and the date he starts to receive the benefits to reflect the delay in payment, using late retirement factors which apply to all members of the LPP.

Mr B G Wallace is not a member of the LPP and has received a cash supplement of 30% of base salary in lieu of membership of the LPP since he re-joined the Group on 5 March 2007. The pension benefits he accrued during his previous employment with the Group were transferred to non-Group pension arrangements in 2006 and so are not included in these disclosures.

The transfer value figures below have been provided by the independent actuary appointed by the Trustees of the LPP, in accordance with previous Actuarial Guidance Note GN 11. The accrued pension benefit is an annual figure. The transfer value represents the amount that would be paid to another pension scheme if this accrued pension benefit were to be transferred away from the LPP.

Listing rules and Section 7A disclosures

Set out below are details of the pension benefits, payable on retirement at age 60, or immediately in the case of Mr A S Ross, to which each of the directors shown is entitled at 31 December 2008. Mr A S Ross received a tax-free retirement lump sum of £392,000 in 2006; the figures shown below relate to his residual pension after adjustment for this lump sum. The other figures shown below, including the accrued pensions, are the total pension entitlements in respect of all Pensionable Service with the Company including any service with the Company prior to becoming a director.

For executive directors other than Mr A S Ross, the transfer value increase over the year includes the effect of each executive director’s increase in Pensionable Salary, completing a further year of service and being a year closer to their nominal pension retirement date. For all executive directors, the change in transfer value over the year also reflects changes in market conditions and a change in the LPP’s standard transfer value terms. A transfer value represents a liability of the LPP but not a sum paid or due to the individual.

Mr Ross no longer earns additional pensionable service, or pays any contributions to the Plan, as he is over Normal Retirement Age. He opted to delay taking his pension rather than for this to start at age 60. In this circumstance the Rules of the Ladbrokes Pension Plan increase his pension to allow for the fact that it will now be paid for less time. These increases are set by the Trustees of the Plan (not by Ladbrokes) to be broadly financially neutral. For 2008, these increases added £8,000 above inflation to Mr Ross’ pension. This increase was larger than the 2007 increase as the Trustees updated the late retirement uplift factors to reflect changes in financial conditions. As above, the listing rules place a value on this increase in pension, which was £137,000.

Listing rules and Schedule 7A

Name	Accrued pension at 31 Dec 07 £000	Accrued pension at 31 Dec 08 £000	Increase in accrued pension over 2008 £000	Increase, excluding inflation, in accrued pension over 2008 £000	Transfer value of increase, less directors’ contributions over 2008 £000	Transfer value at 31 Dec 07 £000	Transfer value at 31 Dec 08 £000	Increase in transfer value over 2008 £000	Increase in transfer value less directors’ contributions over 2008 £000
C Bell	47	52	5	3	34	604	791	187	176
J P O’Reilly	37	41	4	3	34	435	606	171	161
A S Ross (i)	119	131	12	8	137	2,100	2,364	264	264

⁽ⁱ⁾The accrued pension of Mr A S Ross shown above includes the late retirement factor which would have been applied to his pension had he retired at the relevant date.

Directors’ interests in shares

The interests of the directors in the Company’s shares, excluding interests under share options and the performance share plan, at the dates stated were as shown in the table below:

Name	Ordinary shares at 31 Dec 2008 (i)	Ordinary shares at 31 Dec 07
Sir Ian Robinson	50,000	34,463
C Bell	469,431	316,126 (ii)
J P O’Reilly	220,566	153,276 (ii)
A S Ross	183,415	123,958 (ii)
J F Jarvis	10,000	10,000
N M H Jones	55,000	17,647
C Rodrigues	1,764	1,764
H E Staunton	50,000	50,000
B G Wallace	100,714	38,302
C P Wicks	923	923

⁽ⁱ⁾All the share interests above were beneficial.

⁽ⁱⁱ⁾2,709 ordinary shares (2007: 2,034 ordinary shares) are held under the share incentive plan by Messrs C Bell and J P O’Reilly and 447 ordinary shares are held under the share incentive plan by Mr B G Wallace. In addition 139,709 shares and 69,924 shares are held by Messrs C Bell and J P O’Reilly respectively under the deferred bonus plan and matching shares plan of which 6,446 shares and 4,938 shares are held respectively as qualifying shares under the matching shares plan. Messrs A S Ross and B G Wallace hold 41,615 shares and 61,965 shares respectively under the deferred bonus plan.

⁽ⁱⁱⁱ⁾ The following changes have occurred to the directors’ share interests since the year end: (a) 113 shares were purchased by/awarded under the share incentive plan to each of Messrs C Bell, J P O’Reilly and R J Ames (56 on 5 January 2009 and 57 on 5 February 2009 ); (b) 112 shares were purchased by/awarded under the share incentive plan to Mr B G Wallace (55 on 5 January 2009 and 57 on 5 February 2009); and (c) on 23 January 2009 Mr A S Ross purchased 10,613 shares at 150.04 pence per share by exercise of an option held under the 1983 savings related share option scheme. The mid-market price on the date of exercise was 161.25 pence giving a gain on exercise of £1,190. No other changes to directors' share interests have taken place between 31 December 2008 and 18 February 2009. Except for service contracts, none of the directors were materially interested during the year in any contract of significance in relation to the Company’s business entered into by the Company or its subsidiaries or, other than is shown in this report, has any interest in the shares or debentures of the Company or its subsidiaries.

Emoluments

The emoluments of the directors in 2008 including pensions and benefits-in-kind were as follows:

	2008 £000	2007 £000
Executive directors
Annual emoluments
Basic salaries	1,887	1,770
Annual bonus	2,767	2,368
Benefits-in-kind	114	96
Pension supplements	413	381
Annual emoluments total	5,181	4,615
Longer term emoluments
Performance share plan awards (i)	575	793
Gains on exercise of share options	–	28
Longer term emoluments total	575	821
Executive directors total	5,756	5,436
Non-executive directors
Fees	478	485
All Directors total	6,234	5,921

⁽ⁱ⁾The awards made on 24 February 2006 were earned as at 31 December 2008 (see Director's Renumeration Report, note ii for details).

By order of the Board

C J Rodrigues
19 February 2009