Annual General Meeting of Sandvik AB

Shareholders in Sandvik Aktiebolag are hereby called to the Annual General Meeting of the Company to be held on Tuesday, 2 May 2006, at 5: 00 p.m. at the Ice Stadium, Jernvallen, Sandviken, Sweden. RIGHT TO PARTICIPATE AND Notification To be eligible to participate in the Meeting, shareholders must be recorded in the share register maintained by VPC AB (Swedish Securities Register Center) as of Tuesday 25 April 2006 and notify Sandvik AB of their intention to participate not later than 3:00 p.m. 25 April 2006. Notification to participate in the Meeting shall be made to Sandvik AB, Legal Affairs, SE-811 81, Sandviken, Sweden, or by telephone, +46 (0)26- 26 09 40 weekdays between 9 a.m.-12:00 noon and 1:00 p.m.- 4:00 p.m., by telefax, +46 (0)26-26 10 86, or via the Internet on the Group’s website (www.sandvik.com). Shareholders whose shares are registered in the name of a trustee must have temporarily re-registered the shares in their own name not later than 25 April 2006 to be entitled to participate in the Meeting. Note that this procedure also applies to shareholders who utilize bank shareholder deposit accounts and/or trade via the Internet. Please provide name, personal registration or corporate registration number, address. telephone number and information regarding any assistants when providing notification. The information provided in notification will be data processed and used solely for the 2006 Annual General Meeting. If participation is by proxy, the proxy must be forwarded prior to the Annual General Meeting. Agenda 1. Meeting is opened 2. Election of Chairman of the Meeting. 3. Preparation and approval of the voting list 4. Election of minutes-checkers 5. Approval of the agenda. 6. Determination of whether the Meeting has been duly convened 7a) Presentation of the annual report and auditors’ report and the consolidated financial statements and consolidated auditors’ report b) Report on the work of the Board, the remuneration committee’s and the audit committee’s work c) Presentation by the President 8. Decision on adoption of the income statement and balance sheet and the consolidated income statement and balance sheet. 9. Decision on the discharge of the members of the Board of Directors and of the President from liability for the fiscal year. 10. Decision on the disposition of the profits shown in the balance sheet adopted by the Meeting and decision on the record date. 11. Determination of the number of Board Members and deputies. In conjunction with this, the work of the Nomination Committee will be presented. 12. Determination of the fees to be paid to Board members and auditors. 13. Election of the members of the Board and the Chairman. 14. Proposal for the Nomination Committee, etc. for the 2007 Annual General Meeting 15. Board’s proposal on changes in the Articles of Association and 5:1 split 16. Board’s proposal for principles for remuneration and other employment terms for Group Executive Management 17. Board’s proposal for decision on deletion of the limiting transfer conditions in the Articles of Association of AB Sandvik Bruket and Sandvik Invest AB, etc. 18. Closing of the Meeting DECISION PROPOSALS Point 10 - Dividend The Board of Directors proposes a dividend for fiscal 2005 of SEK 13.50 per share, with 5 May 2006 proposed as the record date for payment of the dividend. If the Meeting approves this proposal, it is estimated that the dividend payments will be distributed by the VPC on 10 May 2006. Points 2, 11-14 – Nomination Committee's proposal for Meeting Chairman, number of Board members, fees to the Board and auditors, election of the Board and Board Chairman and the Nomination Committee for the 2007 Annual General Meeting. The Nominating Committee has comprised representatives of the four largest shareholders, namely Carl-Olof By, Industrivärden, Curt Källströmer, Handelsbanken Pension Foundation and Pension Funds, Sarah McPhee, AMF Pension, Marianne Nilsson, Robur and Sandvik’s Board Chairman Clas Åke Hedström. The Nominating Committee proposes the following: Point 2 - Attorney Sven Unger as Meeting Chairman Point 11 - Eight Board members and no deputies Point 12 - Fees to Board and auditors • Board Chairman SEK 1,200,000 • Board member not employed by the company SEK 400,000 • Board member in Audit Committee SEK 100,000 • Board member in Remuneration Committee SK 50,000 • Fees to auditors as invoiced Point 13 Re-election of Board members Georg Ehnrooth, Clas Åke Hedström, Sigrun Hjelmquist, Egil Myklebust, Anders Nyrén and Lars Pettersson and new election of Fredrik Lundberg and Hanne de Mora. Arne Mårtensson and Lars Nyberg declined re-election. Election of Clas Åke Hedström as Board Chairman Fredrik Lundberg is CEO and Board member of LE Lundbergföretagen AB, Board Chairman of Cardo AB, Holmen AB and Hufvudstaden AB and member of the Boards of Svenska Handelsbanken AB, AB Industrivärden and NCC AB. Hanne de Mora is one of the founders and owners, as well as Board Chairman, in the management company a-connect (group) ag and is a member of the Board of Telenor ASA, Tomra Systems ASA and Valora Holding AG. Point 14 A representative of the known four largest shareholders shall each appoint a representative and these and the Board Chairman, who is also the convening authority, shall comprise the Nomination Committee. The composition of the Nomination Committee shall be announced as soon as it is appointed, however, not later than six months prior to the 2007 Annual General Meeting. The chairman of the Nomination Committee shall be the member representing the largest shareholder. The mandate period for the Nomination Committee is until the composition of the next Nomination Committee is announced. The Nomination Committee shall prepare proposals regarding the Chairman of the Meeting, number of Board members, fees to the Board members and auditors, proposals for Board members and the Board Chairman and proposal concerning how a Nomination Committee shall be appointed prior to the 2008 Annual General Meeting and its assignment. In the event that members leave the Nomination Committee prior to completion of its work, if the Nomination Committee deems it necessary, a replacement can be included from the same shareholder. In the even that a shareholder who nominated a member of the Nomination Committee no longer owns shares in the company, such a member can resign and a representative for the shareholder that in size is next in line can be provided an opportunity to appoint a member. Point 15 – Board’s proposal on decision to change the Articles of Association, including change of the share’s par value through a 5: 1 split. A) The Board proposes that the Meeting decides on changes to the Article of Association for the purpose, among others, of aligning the Articles of Association to the new Swedish Companies Act that became effective on January 1, 2006. In all significant respects, the changes mean the following: • The reference in the object of the company’s operations to the Banking Business Act and the Act of Financing Operations is deleted (§2) • The provision regarding the par value of the share is deleted and replaced with a provision in which the number of shares shall be not less than 1,000 million and not more than 4,000 million (§5) • Provision on redeemable C shares is deleted (§6) • The specification of the Board member’s one-year mandate period is deleted (§7, new §6) • The specification of the auditor’s four-year mandate period is deleted (§8, new §7) • The provision on notification of general meetings is revised so that notification of the general meetings is always through advertisement in the Swedish Official Gazette and Svenska Dagbladet as well as a daily newspaper published in Sandviken or Gävle (§10, new §9) • The provision that shareholders who wish to participate in the Meeting shall be listed in the printout of the share register ten days prior to the General Meeting is changed to five days prior to the Meeting (§11, new §10) • The provision that the Board Chairman or the person appointed by the Board opens the Meeting and leads proceedings until a chairman is elected is deleted (§12) • The record date provision is revised so that it complies with the definition of a VPC company in accordance with Chapter 1, Section 10 in the new Swedish Companies Act (§15, new §13) B) In addition, the Board proposes that the share’s par value (share capital divided by the number of shares) is changed through a 5:1 split, whereby the number of shares in Sandvik increases from 237,257,435 to 1,186,287,175. –––––––––––––––––––––– In the above matters, a decision by the Meeting supported by shareholders with at least two thirds of the votes cast and two thirds of the shares represented at the Meeting is required. Point 16 – The Board’s proposal of principles for remuneration and other employment terms for the Group Executive Management. The Board’s proposal of principles for remuneration and other employment terms for the Group Executive Management is formulated to ensure that the Sandvik Group from a global perspective can offer market level and competitive remuneration that attracts and retains qualified employees in Sandvik’s Group Executive Management. The remuneration to Group Executive Management comprises fixed salary, annual variable salary and long-term variable salary. The parts are intended to create a well-balanced remuneration and benefits program that reflects the individual’s performance, responsibility and the Group s’ earnings trend. The fixed salary, which is individual and differentiated based on the individual’s responsibility and performance, is determined based on market principles and is revised annually. Receipt of annual variable salary is conditional upon fulfillment of measurable goals. The goals are related to the company’s earnings and to measurable goals within the individual’s area of responsibility. The maximum payment of annual variable salary for Group Executive Management is 50-75% of the annual fixed salary. The long-term variable salary is conditional upon fulfillment of measurable goals, determined by the Board, pertaining to certain key figures that create shareholder value linked to the company’s growth, profitability and capital efficiency during a three-year period. The maximum payment of long-term variable salary for Group Executive Management is 45-50% of the annual fixed salary. Group Executive Management’s other benefits shall be comparable to what is considered reasonable in relation to generally accepted market practice. The benefits comprise pension, company car, housing, healthcare insurance and severance pay. The pension benefits for Group Executive Management are based solely on fixed salary and shall be defined-contribution or defined-benefit. Normally, the retirement age is 62. The President has a retirement age of 60. Severance payments are made, normally, on notice of termination by Sandvik. Any other earned income is deducted from severance pay, which is between 12 to 18 months’ salary for persons under age 55 and between 18 to 24 months for persons over 55. No severance payment is made when the employee gives notice of termination. The sphere of senior executives covered by the proposal is the President and other members of the Group Executive Management. The Remuneration Committee appointed by the Board reviews and prepares proposals to the Board for decision by the Board regarding remuneration to the President. Based on proposals from the President, the Remuneration Committee decides on remuneration to the other members of the Group Executive Management. The Board is informed of the Remuneration Committee’s decision. Point 17 - Board’s proposal for decision on deletion of the limiting transfer conditions in the Articles of Association of AB Sandvik Bruket and Sandvik Invest AB, etc. At the 2005 Annual General Meeting in Sandvik it was resolved that the provisions regarding compulsory bid in Sandvik’s Articles of Association, as well as the provision about a majority requirement on transfer of fixed assets, should be deleted. As a result of the aforementioned decision, the Board proposes that companies within the Group that have similar limiting transfer terms in their Articles of Association, Bruket (§8) and Invest (§8) be permitted to change their Articles of Association so that the provisions in question are deleted. The Board also proposes that the right of first refusal in the Articles of Association of Bruket (§13) and Invest (§12) be deleted, against the background that the companies are 100% owned by another company in the Sandvik Group, With regard to the Netherlands subsidiary Sandvik Finance B.V. ("Finance B.V.") and certain other companies in the Group, there are corresponding limitations included in an agreement between Sandvik and these companies. The Board proposes that these limitations cease. ____________ Changes in the named provisions require, in accordance with the Articles of Association for Bruket and Invest, the agreement between Sandvik and Finance B.V. and the agreements between Sandvik and certain other companies in the Group, a decision by the Annual General Meeting in Sandvik supported by shareholders with at least three fourths of the votes cast and three fourths of the shares represented at the Meeting. DOCUMENTATION The annual report and auditors’ report, the Board’s complete proposals for decision on changes in the Articles of Association, principles for remuneration and other employment terms for the company’s management, deletion of the limiting transfer conditions in the Articles of Association for AB Sandvik Bruket and Sandvik Invest AB etc., are available two weeks prior to the Meeting at Sandvik AB and on the company’s website, www.sandvik.com. The documentation will be forwarded without charge to the shareholders who so request. PROGRAM FOR SHAREHOLDERS Registration for the Annual General Meeting will commence at 12:30 p.m., with pre-program from 1:00 p.m. Sandviken, March 2006 SANDVIK AKTIEBOLAG (publ) Board of Directors