Note 23 • Equity compensation plans

On 19 May 2005 the Oriflame EGM approved a share incentive plan, according to which key Oriflame employees will be offered to subscribe to a certain number of “investment” shares per year. They are entitled to receive a certain number of “achievement” shares for free for every investment share to which they subscribed on the third anniversary of their subscription in the investment share. Achievement shares granted range from 0 to 4 shares per investment share depending on whether the Group achieves certain growth targets in operating profit over the following three year period. The EGM authorised the Board of Directors to offer up to 150,000 investment shares annually for the years 2005–2007.

On 19 May 2008 the Oriflame EGM approved a share incentive plan for the years 2008–2010, according to which participants will be offered to purchase at fair market terms shares up to €3.5 million per annum. On 19 May 2010 the Oriflame EGM resolved to increase the investment limit to €4 million per annum. The amount of investment shares offered will be determined by the Board of Directors so that the potential dilution under the lifetime of the plan shall amount to less than 3 percent of the share capital of the Group.

The fair value of services received in return for the achievement shares granted is measured by reference to the value of the investment shares, which is the market price at the time of investing, less forecasted dividends that are discounted at a rate of 5 percent per year. In 2010 the total equity compensation cost recorded in Administrative expenses was €1.1 million (nil).

The number of investment shares is as follows:

*The 2010 granted investment shares include 4,823 investment shares with a 2 year vesting period.