Adopted at the Annual General Meeting on 5 May 2008.

Background
The proposed principles have mainly been used since 1998. The motive for their introduction was to be able to offer employees a market-related remuneration package that will enable the company to recruit and retain executive officers.

The proposal of the Board of Directors to the Annual General Meeting stated below is, in all essential respects, consistent with the principles for the remuneration that executive officers have received in prior years and is based on existing employment agreements between Scania and each respective executive officer.

Preparation of remuneration issues is handled as follows. With regard to the President and CEO, the Remuneration Committee of the Board of Directors proposes a fixed salary, criteria for variable remuneration and other employment conditions, which are then adopted by the Board of Directors. For other Executive Board members, the President and CEO proposes the equivalent employment conditions, which are then adopted by the Remuneration Committee of the Board of Directors and reported to the Board - all in compliance with the remuneration principles approved by the Annual General Meeting (AGM).

Share-related incentive programmes for executive officers are decided by the AGM.

Proposal
Scania shall endeavour to offer competitive overall remuneration that will enable the company to recruit and retain executive officers. Remuneration to executive officers shall consist of fixed salary, variable remuneration in the form of the Scania Incentive Programme, pension and other remuneration.

Total remuneration shall take into account the individual’s performance, areas of responsibility and experience.

The fixed salary of Executive Board officers shall be re-assessed every second year, except for the President and CEO. The fixed salary of the President and CEO has been set by an agreement for the period 31 March 2006 to 31 March 2009 and amounts to SEK 7,500,000 per year. Otherwise fixed salary shall be reviewed annually.

Variable salary shall be dependent on Scania’s earnings and consist of an incentive programme that is divided into two parts. The outcome shall be calculated on the basis of operating return, defined as Scania Group net income after subtracting the cost of equity, residual net income (RNI) and be adopted by the Board’s Remuneration Committee. Part one of the incentive programme shall be related to actual ability to generate a return during the year in question, all provided that RNI is positive, and shall be determined as a cash amount that may vary between 0 – 150 percent of fixed salary. Part two of the incentive programme shall be related to Scania’s ability to increase RNI from one year to another, and the outcome shall be determined as a cash amount that may vary between 0 – 80 percent of fixed salary.

The Board shall also be 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.

The Board’s proposal for the incentive programme will be stated in its entirety in a complete proposal to the AGM for the 2008 incentive programme.

Executive officers may be covered by a defined contribution pension system in addition to the public pension and the ITP occupational pension. In addition to the above-mentioned pension principle, through a special agreement with the company, during the period 31 March 2006 to 31 March 2009 the President and CEO has an extra annual pension provision of SEK 4,410,000. The retirement age of the President and CEO as well as other executive officers shall be no lower than 60. 

Other remuneration and benefits shall be competitive and help facilitate the executive officer’s ability to fulfil his or her duties.

If the President and CEO resigns of his own volition, he is entitled to his salary for a six-month period. The applicable outcome of variable remuneration shall be proportional to the length of his period of employment during the year in question. In case of termination by the company before the end of March 2009, during the remaining time until said date the President and CEO shall be entitled to his fixed salary in an unchanged amount per year, plus annual compensation equivalent to the average of variable remuneration for the previous three years.

If the company terminates their employment, the other members of the Executive Board are entitled to severance pay equal to a maximum of two years’ salary, in addition to their salary during the six-month notice period. If they obtain new employment within 18 months, counting from their termination date, the severance pay ceases. In case of a substantial change in the ownership structure of Scania, two members of the Executive Board are entitled to resign of their own volition with severance pay amounting to two years’ salary. Otherwise there shall be no notice period longer than six months.

If it finds that there are special reasons in an individual case, the Board of Directors shall be able to diverge from these guidelines.

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.