(b) On December 20, 2006, Anne M. Tatlock, a Vice Chairman, Member – Office of the Chairman of Franklin Resources, Inc. (the “Company”) determined that she will retire from her employment with the Company effective January 25, 2007. Ms. Tatlock has previously announced that she will retire as Chairman of the Board of Directors and Chief Executive Officer of Fiduciary Trust Company International, a subsidiary of the Company (“Fiduciary Trust”) effective January 1, 2007. Ms. Tatlock will continue as a member of the Board of Directors of the Company and of Fiduciary Trust.

(e) On December 20, 2006, the Compensation Committee of the Board of Directors of the Company, pursuant to its authority under the Franklin Resources, Inc. 2004 Key Executive Incentive Compensation Plan (the “KEIP”), established a maximum individual target award of $7,000,000 for the fiscal year ending September 30, 2007 (the “2007 fiscal year”) for Mr. Gregory E. Johnson, the Company’s President and Chief Executive Officer. This maximum individual target award can be achieved based on two components, operating profit margin (rounded to the nearest whole percent) and the average (rounded to the nearest whole percent) of the percentage growth of diluted earnings per share and pre-tax operating income. If the Company’s operating profit margin is 35% or greater for the 2007 fiscal year, then Mr. Johnson will be entitled to receive $2,100,000 of the aggregate maximum individual target award. If such operating profit margin is 32% to 34%, then Mr. Johnson will be entitled to receive $1,890,000 or, if such operating profit margin is 28% to 31%, then Mr. Johnson will be entitled to receive $1,680,000. If such operating profit margin is less than 28%, then Mr. Johnson will forfeit any right to receive this $2,100,000 portion of the target award. If the average of the percentage growth of diluted earnings per share and pre-tax operating income for the 2007 fiscal year is 23% or greater, then Mr. Johnson will be entitled to receive $4,900,000 of the target award. If such percentage is 15% to 22%, then he will be entitled to receive $3,920,000; if such percentage is 10% to 14%, then he will be entitled to receive $2,450,000; or if such percentage is 5% to 9%, then he will be entitled to receive $980,000. If such percentage is less than 5%, then Mr. Johnson will forfeit any right to receive this $4,900,000 portion of the target award. Pre-tax operating income is defined as total operating revenue less total operating expenses determined on a consolidated basis reported as operating income included in the Company’s earnings release issued after the fourth quarter of the 2007 fiscal year. Notwithstanding the potential amounts receivable pursuant to the target award, the actual award amounts payable to Mr. Johnson are subject to the Compensation Committee’s authority under the KEIP to reduce the award amounts otherwise payable to him. Additionally, in accordance with the KEIP, the award amounts are payable in cash or common stock at the discretion of the Compensation Committee.

On December 13, 2006, the Board of Directors (the “Board”) of the Company approved the amendment and, in certain cases, restatement of certain of the Company’s employee benefit plans, in particular the Franklin Resources, Inc. 1998 Employee Stock Investment Plan, as amended (the “ESIP”), the Franklin Resources, Inc. Amended and Restated Annual Incentive Compensation Plan (the “AIP”) and the KEIP. The amendment and, in certain cases, restatement of the plans had previously been approved by the Compensation Committee of the Company and recommended to the Board for approval.

With respect to the ESIP, the Board approved the amendment and restatement of the ESIP to, among other things, (i) increase the maximum number of shares which shall be made available for sale or as a matching grant under the ESIP to eight million (8,000,000) shares, (ii) extend the term of the ESIP to January 31, 2018, and (iii) remove, for Purchase Periods (as such term is defined in the ESIP) occurring on and after the date the Board approved such amendment and restatement, the provision of the ESIP that employees will not be eligible to participate in the ESIP for any relevant Purchase Period if such employee’s customary employment is less than 20 hours per week. Certain clarifying, technical and/or

1