Share-based payments – employee option programmes

No share-based payments were made during the year. The company earlier issued employee options for which the term has not yet expired. During 2001 and 2002, about 200 senior executives received stock options at no cost at a value (theoretically calculated) which on the date did not exceed about 20% of the executive’s base salary. The total number of stock options for both years allocated to these executives amounted to about 1,800,000. The maturity of the options is seven years and 1/3 of them may be exercised after one year, 1/3 after two years and the remaining 1/3 after three years. When exercising the options, the employee must make payments corresponding to the average latest paid price for Class B shares in SCA during a certain period prior the allocation date. For options allocated in 2001, the exercise price was set at the average share price during a ten-day period in May 2001, SEK 220.00 (following a 3:1 share split each employee option carries entitlement to acquire 3 B shares at a fixed exercise price). For the options allocated in 2002, the exercise price was set at the average share price during a ten-day period in May 2002, SEK 347.50 (following a 3:1 share split each employee option carries entitlement to acquire 3 B shares at a fixed exercise price). The options have so many entitlement restrictions that they are considered to lack market value. With the share price at year-end, SEK 114.50, the value of all outstanding options amounted to SEK 39.1m, of which SEK 21.7m for options allocated in 2001 and SEK 17.4m for options allocated in 2002. The expenses for social security costs at exercise of the stock options have been hedged with regard to increases in the SCA share price. The risk of a downturn in the share price is not hedged. Hedging is conducted in share swaps at a nominal SEK 100m. The market value at year-end was SEK 8m. The market value of the hedging transaction will be established and recognized in income as incurred.

During 2007, 61,000 options were exercised from the 2001/2008 or 2002/2009 programmes by senior executives.