Incentive program

Guidelines for executive compensation

As in the preceding year, compensation paid to the CEO and other members of the executive management shall consist of base salary, a variable salary component, other benefits and pension. The total compensation should be in line with the going rate in the market and competitive, and shall be commensurate with the executive’s responsibilities and authority.

The variable salary component consists of a short-term variable salary (yearly) and a long-term variable salary. The short-term variable salary component is based on outcome in relation to set targets and on individual performance, and shall have a cap and never exceed the base salary.

The long-term variable salary is based on incentive programs that are coupled to the long-term performance of the Company’s stock. None of the variable components shall be pensionable. Upon termination of an executive’s employment contract by the Company, a two-year notice period applies. There should not be any severance pay.

Pension benefits shall be either definedbenefit or defined-contribution, or a combination of both, and give the members of the executive management the right to retire from 60 or 65 years of age, depending on their position. The Board may depart from these guidelines if there are special reasons for doing so in individual cases.

Share-based incentive Program

The 2008 Annual General Meeting of AB Industrivärden resolved that all employees of the Group would be offered stock options in Industrivärden at market terms and in other respects in accordance with the Board’s complete proposal to the Annual General Meeting. The program involved the issuance of a maximum of 1,000,000 stock options for 1,000,000 Class C shares and has been secured through a total return swap.

The offer was fully subscribed. In accordance with the terms of the offer, the exercise price per share was set at SEK 106.80. The options can be exercised to purchase Class C shares in the Company during the period July 1, 2008, through May 31, 2013. Under the condition that the respective employees remain employed by Industrivärden three years after purchasing their options, the Company will pay a subsidy for their option purchase corresponding to 75% of the option premium paid (gross, before tax). The Company’s costs for the subsidy will be covered by revenue from the sale of the options. No options were exercised during the year.