Adopted at the Annual General Meeting on 5 May 2008.

Background

Part 1
Since 1997, one component of Scania’s compensation to executive officers as well as to other key officials of the company has been variable remuneration in the form of a two-part incentive programme.

The outcome of the first part (Part 1) of the incentive programme has been calculated as a percentage of cash salary depending on Residual Net Income (RNI) and the level of the position. RNI has been defined as Scania’s net income according to the annual accounts minus a cost of equity. The maximum possible remuneration has bee set at between 45 and 150 percent of the participants’ annual fixed cash salary, depending on their position. In 2007, Part 1 of the incentive programme covered 129 individuals.

Part 2 
Since 1997, a second part (Part 2) of the incentive programme for executive officers has also existed at Scania. Part 2 also covers certain other key employees of the company. Until 2005, the outcome was paid in cash.

In 2005 the AGM decided that this remuneration would be determined as a cash amount, but that participants would receive Scania B shares in the amount of the outcome, after subtracting income tax, purchased in the market by a third party. The AGM also decided that participants would have no right of disposal over the shares thus received during a period of two years from the date received.

The outcomes of Part 2 were dependent on a positive change in RNI between the preceding year and the year in question. The possible maximum remuneration was set at between 30 and 75 percent of the participants’ annual fixed cash salary. In 2007, Part 2 of the incentive programme covered 129 individuals.

Proposal
The Board of Directors makes the assessment that it is advantageous for the company to continue applying a profitability-based, long-term two part incentive programme in 2008, so that executive officers and certain other key employees of the company can be retained and recruited under market-related conditions.

The Board of Directors therefore proposes an incentive programme in 2008 that encompasses a maximum of 150 officers, mainly in accordance with the following conditions and guidelines:

a)  The outcome of Part 1 of the incentive programme is determined as a cash amount calculated as a percentage of the annual fixed cash salary depending on position. The percentage shall depend on the RNI and be decided by the Board’s Remuneration Committee. RNI is calculated as Scania’s net income according to the annual accounts minus a cost of equity, as decided by the Board’s Remuneration Committee. The maximum outcome of Part 1 shall be determined at between 45 and 150 percent of the participants’ annual fixed cash salary, depending on their position.

b)  The outcome of Part 2 of the incentive programme is determined as a cash amount calculated as a percentage of annual fixed cash salary depending on position. The percentage shall depend on a positive change in RNI between the preceding year and the year in question and be set by the Board’s Remuneration Committee. RNI shall be calculated as set out in a) above. The highest possible cash amount for the outcome of Part 2 shall be determined at between 35 and 80 percent of participants’ annual fixed cash salary, depending on their position.

c)  Of the combined outcome of Part 1 and Part 2, 50 percent shall be paid in cash as salary the year after the year when earned.

d)  Of the combined outcome of Part 1 and Part 2, the remaining 50 percent shall be determined as a cash amount that, after subtracting income tax, shall be used for the purchase of Scania B shares through a third party designated by the company, on a day determined by the company. However, this cash amount shall be rounded off to an amount that, after subtracting for income tax, is equivalent to the next lower whole number of Scania B shares on the purchase date. If the cash amount, after subtracting for income tax, should mean that fewer than 10 Scania B shares can be obtained, the amount shall instead be disbursed in cash. Payment of the portion of the combined outcome of Part 1 and Part 2 that shall be used for the purchase of Scania B shares will be held and disbursed over a three-year period, with one third per year. These payments will be made on the condition that the participant is employed in the Scania Group at the close of the calendar year or that employment has ended through agreed retirement.

e)  The participants shall not have the right of disposal over the Scania B shares that have been purchased as set out in d) above during a period of one year from the date of purchase.

f)  Participants shall, however, have the right of disposal over the return on the Scania B shares purchased as set out in d) above.

g)  The Board is authorised to decide that the portion of the outcome which, as set out in d) above shall be used for the purchase of shares or, as set out in i) below, is utilised for a pension, shall instead be paid in cash to all or some participants, if on the payment date there is a risk that participants are regarded as possessing insider information or there is some other circumstance that makes payment as set out in d) above or i) below difficult or impossible. In addition, the Board is also authorised, in whole or part, to waive the requirement under e) above. The Board is also authorised to approve transitional compensation in individual cases due to negative changes in certain parameters of the incentive programme. Such compensation may not exceed 75 percent of the difference between the outcome according to these parameters for the preceding year and according to the parameters for the year in question and may apply only to one year.

h)  The outcomes of the President and CEO from Part 1 and Part 2 may, in whole or part, be used for a pension according to a pension obligation, secured by depositing a gross amount without deduction of tax in a special pension fund.

i)  As an alternative, participants shall be entitled to choose to instead utilise a portion of the combined outcome of Part 1 and Part 2 as set out in d) above that shall be used to purchase shares for a pension according to a pension obligation, secured through endowment insurance. The insurance company will initially invest the outcome in Scania B shares. Provided that the participants are employed by the Scania Group or their employment has ended through agreed retirement, this endowment insurance will be released to the participants, with one third being paid each year during a three-year period. After this, the participants may choose to change the investment profile of the endowment insurance. Except for changing the investment profile, participants shall not be entitled to transfer, pledge or otherwise divest the insurance. Participants shall, before the date when the outcome as set out in d) above shall be paid, decide whether they will choose the pension alternative, otherwise disbursement will occur as set out in d) above. 

Cost 
The cost of Part 1 and Part 2 of the incentive programme shall be recognised in the accounts in the year that funds are disbursed and may not exceed SEK 350,000,000, including mandatory payroll fees and transaction costs. 
 
Dilution and purchases of the company’s own shares
The proposal does not imply any dilution or any acquisition by Scania of its own shares.

This is a translation of the Swedish language original. In the event of any differences between this translation and the Swedish language original, the latter shall prevail.