Volvo establishes personell options for senior executives

VOLVO ESTABLISHES PERSONNEL OPTIONS FOR SENIOR EXECUTIVES Volvo's Board today decided to establish a new incentive program for senior executives in the Volvo Group. The program involves so-called personnel options. The aim is to create a competitive, long-term compensation program that provides a strong link to the trend of the Volvo share price. Today's decision pertains to the allocation of options for the years 2000 and 2001. However, the intention is to establish a rolling program to be continued in subsequent years. The final conditions for the allocation of options in the year 2001 have not yet been fixed, and will be made known at a later date. The options program will only include currently existing shares and will therefore not lead to any dilution for today's shareholders. During 2000 a total of 600,000 options, of an estimated value of 21 M SEK, will be allocated to approximately 70 senior executives within the Volvo Group. 50,000 options will go to President and CEO Leif Johansson. In 2001, the program will include Scania executives, under the condition that the EU commission approves Volvo's acquisition of Scania. The final allocation in 2001 will depend on the extent to which the group's financial goals are met. During 2000, the allocated options will have an exercise price of 244 SEK, which corresponds to 110% of the rate fixed at the time of allocation. The options give the executives the right, from March 31, 2002 to March 31, 2003, to acquire one Volvo share for each option at a price of 244 SEK, alternatively to receive the shares at a price which is determined by the difference between the prevailing share price and the exercise price fixed on allocation. The executives will not make any payment for the options. These are not transferable and should the executive resign during the period, the options will cease to be valid. Volvo has secured the measures it is undertaking through the options program for the year 2000, including social security costs, against future share price increases. This security means that the total cost for the program is estimated at approximately 10-12 M SEK. January 12, 2000 ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/01/12/20000112BIT00070/bit0001.doc http://www.bit.se/bitonline/2000/01/12/20000112BIT00070/bit0002.pdf