Corporate Management Board relinquishes part of stock-option payment

(Aug. 6, 2007) Hydro's Corporate Management Board has proposed to the Board of Directors to relinquish part of the agreed stock-option termination payment in an effort to resolve a difficult situation for the company following criticism of the board's handling of the termination of stock options awarded in previous years.

Hydro President and Chief Executive Officer, Eivind Reiten, has proposed to the board that he refrain from accepting 50 percent of the market value attached to stock options allocated in 2005 and 2006, amounting to a reduction of NOK 7.8 million. The proposal would result in a gross payment of NOK 19.9 million to Reiten in connection with the termination of Hydro's stock-option program.

"The situation is intolerable. Although the board maintains that the preparation and handling of the stock-option termination have been carried out responsibly, I have decided that it is appropriate for me to give up a portion of the amount that the board has concluded I am entitled to according to previously agreed contracts," Reiten says.

"We have important tasks at hand, completing the merger with Statoil and launching 'new' Hydro. I want to do my part to ensure working conditions that allow leaders and employees to concentrate on their important work. I strongly urge others outside the company to help create calm."

Other members of the Corporate Management Board have said that they are willing to relinquish 30 percent of the market value attached to stock options allocated in 2005 and 2006. The reductions will total, for each of the executive vice presidents:

• John Ove Ottestad (Finance):  NOK 3.1 million
• Tore Torvund (Oil & Energy): NOK 3.1 million
• Torstein Dale Sjøtveit (Aluminium Metal): NOK 2 million
• Svein Richard Brandtzæg (Aluminium Products): NOK 2 million
• Odd Ivar Biller (Legal): NOK 0.9 million
• Cecilie Ditlev-Simonsen (Communication): NOK 0.8 million
• Anne Harris (Human Resources): NOK 0.8 million

"Each member of the team has come to this conclusion on their own," says Reiten.

Regardless of the board's decision to terminate the program, stock options allocated in 2003 and 2004 could have been exercised in July this year. When the board decided to terminate the stock-option program, market value was attached to the options allocated in 2005 and 2006. These options could have been exercised at the earliest in 2008 and 2009, respectively. The market value reflects that the company buys back rights tied to future potential option gains.

Hydro's board decided in July to terminate all previously allocated stock options. From now on, the company’s top management compensation will consist of fixed salary and performance-based bonus payment, in line with the Norwegian state's guidelines for executive pay in companies with state ownership.