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Misleading view of share program and profit sharing within Volvo Group

Unfortunately, the overall impression of an article published in Dagens Nyheter today provides a misleading view of the total outcome of various profit-sharing and incentive programs within the Volvo Group. The article presents a theoretical total sum of the programs that is not based on actual circumstances. Moreover, there is a misleading comparison between various programs in which the comparative figures are not based on the same time periods, or comparable circumstances.
According to DN, since 2005 the Volvo Group’s senior executives have received shares and options for a total value of SEK 750 M. This figure includes options allotted in 2003 and shares distributed in 2005 and 2006 as well as the shares decided in 2006 that will be allotted in spring 2007. To reach the total of SEK 750 M, the newspaper has assumed that all options and shares received, and this includes shares that as yet have not been distributed, have the same value as the price of a Volvo B share on February 7, 2007. Since June 2006, the price of the Volvo B share has rise by slightly more than 50% and since the first allotment of shares occurred already in the spring of 2005 and the options could be exercised since June 2006, in reality many shares and options have been sold at totally other levels.

Furthermore, the article places the figure SEK 750 M in a directly misleading comparison with Volvo’s profit-sharing system for the employees in which the theoretical outcome for the options and share program during three years is compared with the outcome in the Group’s global profit-sharing system for a single year, 2006 (SEK 450 M). The newspaper did not include the outcomes for 2004 and 2005, which were SEK 200 M and SEK 450 M, respectively. Accordingly, the outcome for the same time period as the options and share program is SEK 1.1 billion. However, not even this figure provides the entire picture because it does not take into account that the increase in the price of the Volvo share did not solely increase the value of the options and shares received but also increased the value of the funds paid out in the profit-sharing program. According to the program rules, these funds are invested in shares, of which half in Volvo shares, for a four-year period before they are paid out to the employees in the form of Volvo shares or extra pension savings.

February 8, 2007

For further information, please contact Mårten Wikforss, +46 31 66 11 27 or
+46 705 59 11 49.