Does this amendment include Prudential's 2005 financial statements or operating results?

No. The amendment is filed solely to provide Part III information. All other Items of the original Form 10-K filed February 28, 2006 are unaffected and are not included in this amendment.

How is executive annual incentive compensation determined?

Annual incentives are paid from an incentive pool funded using four measures: pre-tax adjusted operating income growth (30% weighting), operating return on average equity (30%), operating revenues (15%) and after-tax AOI earnings per share (25%). The Committee may modify the pool using additional factors such as total shareholder return.

What changed in the board structure?

Shareholders approved an amendment to the Certificate of Incorporation in 2005 to phase out the classified Board over three years starting in 2005. Commencing in 2007, all directors will be elected annually. Seven directors are standing for one-year terms at the May 9, 2006 meeting.

How much did the auditor charge for services?

PricewaterhouseCoopers LLP's total worldwide fees were $33,607,000 in 2005 and $44,432,000 in 2004. Audit fees were $28,134,000 in 2005 and $37,194,000 in 2004, and tax fees were $1,761,000 in 2005 and $2,622,000 in 2004.

PRU 10-K FY2005 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K/A filed March 16, 2006. Cited figures are marked; the original filing is the authoritative source.

This filing is Amendment No. 1 on Form 10-K/A from Prudential Financial, Inc., filed March 16, 2006, to amend its Annual Report for the year ended December 31, 2005.

Under General Instruction G to Form 10-K, the company had incorporated Part III information by reference to its definitive proxy statement. This amendment supplies that Part III information in advance of the proxy statement for the May 9, 2006 Annual Meeting of Shareholders. All other Items of the original filing are unaffected and are not included in this amendment, so the filing contains no financial statements or operating results.

The content covers governance and compensation. It discloses equity compensation plan data as of December 31, 2005, showing 25,186,944 securities to be issued under the Omnibus Plan and a grand total of 25,370,079 securities to be issued with 51,787,534 remaining available for future issuance. It also sets out the election of seven directors, the ratification of PricewaterhouseCoopers LLP as independent auditor for 2006, and total PwC fees of $33,607,000^a for 2005 versus $44,432,000 for 2004.

The Summary Compensation Table shows Chairman and CEO Arthur F. Ryan with a 2005 salary of $1,000,000^b and a bonus of $5,650,000. The filing also reports that the Financial Services Businesses' pre-tax adjusted operating income increased 41% in 2005, and that total shareholder return was 34.51%.

For investors, the most useful points are the compensation structure tied to ROE and EPS performance metrics, the leadership and independence of the board committees, and the auditor fee trend. Ownership concentration is also noted: AIG subsidiaries hold 90%^c of the Class B Stock, and no person owns more than 5% of the Common Stock.

02—Key points

Key Highlights

Amendment No. 1 on Form 10-K/A supplies Part III information (directors, executive compensation, ownership, related transactions, auditor fees) incorporated by reference from the 2005 Form 10-K, ahead of the May 9, 2006 proxy statement
Equity compensation plans approved by shareholders covered 25,186,944 securities to be issued upon exercise or award; 51,290,260 remained available under approved plans and 51,787,534 in total
Arthur F. Ryan, Chairman and CEO, had a 2005 base salary of $1,000,000 and a bonus of $5,650,000, with 223,589 stock options granted February 8, 2005
Annual incentive pool is funded by pre-tax AOI growth (30%), operating ROE (30%), operating revenues (15%) and after-tax AOI EPS (25%); pre-tax AOI for the Financial Services Businesses rose 41% in 2005
Total shareholder return was 34.51% in 2005, compared with 4.91% for the S&P 500 Index and 16.16% for the Financial Services Composite Index
PricewaterhouseCoopers LLP fees totaled $33,607,000 in 2005, down from $44,432,000 in 2004, with audit fees of $28,134,000 in 2005 versus $37,194,000 in 2004
AIG subsidiaries beneficially own 90% of the Class B Stock; no person beneficially owns more than 5% of the Common Stock

03—Questions

Frequently Asked Questions

Does this amendment include Prudential's 2005 financial statements or operating results?
No. The amendment is filed solely to provide Part III information. All other Items of the original Form 10-K filed February 28, 2006 are unaffected and are not included in this amendment.
How is executive annual incentive compensation determined?
Annual incentives are paid from an incentive pool funded using four measures: pre-tax adjusted operating income growth (30% weighting), operating return on average equity (30%), operating revenues (15%) and after-tax AOI earnings per share (25%). The Committee may modify the pool using additional factors such as total shareholder return.
What changed in the board structure?
Shareholders approved an amendment to the Certificate of Incorporation in 2005 to phase out the classified Board over three years starting in 2005. Commencing in 2007, all directors will be elected annually. Seven directors are standing for one-year terms at the May 9, 2006 meeting.
How much did the auditor charge for services?
PricewaterhouseCoopers LLP's total worldwide fees were $33,607,000 in 2005 and $44,432,000 in 2004. Audit fees were $28,134,000 in 2005 and $37,194,000 in 2004, and tax fees were $1,761,000 in 2005 and $2,622,000 in 2004.

04—Continue

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