Employee stock option plan

Höganäs has a three-year performance-related employee stock option plan, comprising the years 2007-2009, intended for the Chief Executive Officer, members of the group management, as well as other key employees of the group. The purpose of the programme is to offer key employees of the group the opportunity of future stake holding in the company, thus enabling increased interest in, and commitment to, the company’s operations. The incentive scheme comprises in total approximately 45 key employees of the group.

The AGM (Annual General Meeting) 2007 resolved on the introduction of the first part of the three-year performance-related employee stock option plan. The employee stock option plan 2007 involved a maximum of 250,000 options, entailing the right to acquire the same number of class B shares, that could be allotted to key employees of the group, depending on the development of the group in 2007 against predetermined target figures for the value factors return on capital employed, volume growth and earnings per share, as determined by the Board of Directors. A total of 111,580 options were allotted to the participants in the employee stock option plan 2007. After a re-calculation in connection with the redemption procedure executed in 2008 and in accordance with the option terms, the exercise price for the options has been determined to an amount of SEK 221.50 per share, whereby each option entails the right to acquire 1.11 shares in the company. The minimum term of the options is two years, and the maximum term four years, from the allotment date. Alternatively, the options can be exercised for cash redemption if the holder demands it, whereby the holder receives an amount corresponding to the difference between the share price at exercise and the exercise price.

Resolution regarding the performance-related employee stock option plan 2007 in its entirety

The AGM 2008 resolved on the introduction of a performance-related employee stock option plan 2008 for key employees of the group. The programme was the second part of the three-year programme which was introduced in 2007. The employee stock option plan for 2008 involved a maximum of 250,000 options, entailing the right to acquire the same number of class B shares, that could be allotted to key employees of the group, depending on the development of the group in 2008 against predetermined target figures for the value factors return on capital employed, volume growth and earnings per share, as determined by the Board of Directors. As the predetermined target figures were not met, the Board of Directors has resolved that no allotment for 2008 will take place.

Resolution regarding the performance-related employee stock option plan 2008 in its entirety

The AGM 2009 resolved on the introduction of a performance-related employee stock option plan 2009 for key employees of the group. The programme constitutes the third and last part of the three-year programme which was introduced in 2007. The employee stock option plan 2009 involves a maximum of 250,000 options, entailing the right to acquire the same number of class B shares, that could be allotted to key employees of the group. The allotment of employee stock options for 2009 is depending on the development of the group in 2009 against predetermined target figures for the value factors operative cash flow, return on capital employed, volume growth and earnings per share, as determined by the Board of Directors. The exercise price for options allotted, if any, has been determined in accordance with the option terms to an amount of SEK 114.20 per share. The minimum term of the employee stock options is two years, and the maximum term four years, from the allotment date. Options allotted may alternatively, in accordance with the terms for the previous programmes, be exercised for cash redemption if the holder demands it, whereby the holder receives an amount corresponding to the difference between the share price at exercise and the exercise price.

Resolution regarding the performance-related employee stock option plan 2009 in its entirety

The employee stock options give the holder a right to acquire existing shares. In order to ensure the delivery of shares and as a hedge against potential cash flow effects of social security costs related to the employee stock option plan, the respective AGM’s have authorized the Board of Directors to resolve on the acquisition of the company’s own shares of class B, which can be transferred to the employees participating in the performance-related employee stock option plan.

The employee stock option plan will only imply a marginal dilution effect and influence on the group’s key indicators.