Incentive schemes

Employees

Accrual rules for the share option bonus for employees of the Ekornes Group 2005 -2007.

• The long-term share option bonus is additional to the established annual result bonus (share bonus).
• The share option bonus shall be calculated each year using a specified scale based on the operating margin and % of monthly wage. See enclosure.
• The operating margin is defined as the result before the deduction of the share bonus, share option bonus and tax as a % of the Ekornes Group’s turnover.
• Monthly wage is defined as the individual’s payroll reported annual wage (including holiday money) less paid leave and overtime pay, divided by 12.
• Personal bonuses shall be included when calculating the monthly wage of those people with such agreements (part of annual wages).
• The company’s annual share bonus shall not be included.
• The share option bonus can only be accrued by being present at work.
• Annual allocations will be made in the accounts for 2005, 2006 and 2007 to cover the share option bonus.
• People who leave during the period, for whatever reason, lose their bonus/share option entitlement. Those who start during the period are entitled to a share option bonus corresponding to their length of employment during the period.
• People who retire accrue the share option bonus up to and including the month of their retirement. The next of kin (heirs) of people who die during the period will similarly be entitled to the share option bonus up to and including the
• month of the person’s death. Payments from the scheme will not be made until after the end of 2007.
• Payment/exercising assumes that the Ekornes share price in the period preceding 31.12.2008 exceeds the share price below by NOK 30 and remains at this level for a period of at least 20consecutive stock exchange trading days before payment of the share option bonus can occur.
• Individuals themselves can decide whether they want the share option bonus paid in cash or they want to purchase shares in Ekornes ASA at a share price of NOK 140. The issuing of shares will take place as a collective transaction for all participants.
• Should Ekornes ASA be bought up and gain a dominant owner or the company be taken off the stock exchange the share price achieved requirement is cancelled and the accrued share option bonus is triggered immediately.
• The number of shares that can be purchased at the aforementioned share price amounts to 0.044 shares per accrued bonus NOK 1.
• The paying out of the bonus or the purchase of shares cannot take place until the annual accounts for 2007 have been approved and must be completed no later than 31.12.08.
• Should Ekornes ASA’s general meeting not approve the purchase/issuing of the shares needed for the share options, the Board of Directors undertakes to pay out the accrued bonus plus any profit from the share option scheme in cash.

Management

Share option bonus for market directors and corporate management team 2005-2007

• The share option bonus shall be calculated each year using a specified scale based on the operating margin and % of annual salary. See enclosure.
• The operating margin is defined as the result before the deduction of the share bonus, share option bonus and tax as a % of the Ekornes Group’s turnover.
• Annual salary is defined as the fixed salary per annum + the average personal bonus for the 3 years. Tax related extras for, for example, cars, newspapers, housing allowances and the like are not included.
• The bonus is allocated annually every year for 3 years for 2005, 2006 and 2007.
• The bonus can only be paid out after the accounts for 2007 have been approved, but no later than 31.12.2008, assuming that the Ekornes share price in the period preceding 31.12.2008 has been NOK 30 higher than the share price below, and that this has been the case for at least 20 consecutive stock exchange trading days.
• Each individual can choose between either being paid their accrued bonus or buying shares instead.
• Members of the corporate management team and market directors can, instead of receiving the bonus, purchase 0.044 shares per accrued bonus NOK 1. The purchase share price is NOK 140.
• This share option must be exercised no later than 31.12.2008 and can be exercised on an individual basis.
• People who leave of their own volition during the period lose their share option bonus entitlement. Any person who is given his or her notice during the period shall be paid their accrued bonus, if and when the conditions have otherwise been fulfilled.
• People who retire during the period will be paid the bonus they have accrued up to and including the month of their retirement, or be given an opportunity to purchase shares based on their accrued bonus, assuming that the conditions have otherwise been fulfilled. Similarly the next of kin will been titled to a corresponding payment or opportunity to purchase shares should anyone participating in the scheme die during the period. Payment/exercising assumes that the conditions are fulfilled and that the accounts for 2007 have been approved by the Board of Directors of Ekornes ASA.
• Should Ekornes ASA be bought up and gain a dominant owner or the company be taken off the stock exchange the scheme will be triggered regardless of the share price achieved in the market.
• The scheme assumes that the company’s general meeting approves the issuing or purchase of the necessary number of shares. Should this not occur, the Board of Directors undertakes to pay out the accrued bonus + any profit from the  share option scheme.

Share option bonus scheme