The Board's proposal on remuneration

The Board of Sandvik AB ("the company") proposes that the Annual General Meeting on 29 April 2008 decide on the adoption of the following guidelines for remuneration of senior executives.

The Board's proposal for a decision on guidelines for remuneration of senior executives is being formulated to ensure that the Sandvik Group, from a global perspective, can offer a market, competitive remuneration for attracting and retaining qualified executives within Sandvik's Group Management.

Group management's remuneration consists of fixed salary, annual variable salary and long-term variable salary. These components are intended to create a well-balanced remuneration and benefit program reflecting the individual's performance, responsibility and the Group's earnings trend.

The fixed salary, which is individual and differentiated based on the individual's responsibility and performance, is determined based on market principles and is revised annually.

Qualifying for annual variable salary is based on fulfillment of goals set annually. The goals are related to the company's earnings and to measurable goals within the individual's area of responsibility. For Group Management, the annual variable portion can amount to a maximum of 50-75% of the fixed salary.

The long-term variable salary is based on fulfillment of measurable goals, set by the Board, with respect to certain key ratios which create shareholder value linked to the company's growth, profitability and capital efficiency during a three-year period. For Group Management, maximum long-term salary is 45-50% of annual fixed salary.

Formerly, the long-term variable salary consisted of employee stock options. Employee stock options from the year 2004 alone are exercisable. The program was based on an annual allotment of employee stock options on Sandvik shares. The number of options outstanding at 29 February 2008 was 20,000 options. The cost to the company for these options amounted to about SEK 2.5 million.

Group Management's other benefits shall correspond to what is considered comparable in the market. The benefits consist of pension, company car, residence, healthcare insurance and severance pay.

Pension benefits for Group management are based entirely on fixed salary and shall be defined benefit or defined contribution. Normally, pension age is 62. For the President, pension age is 60 years.

Normally, severance pay is paid when Sandvik initiates the termination. Any other income from service is deducted from the severance pay, which is between 12 and 18 monthly salaries for persons under 55 years of age, and between 18 and 24 monthly salaries for persons over 55 years of age. No severance pay is made when termination is initiated by the employee.

The Board shall have the right to deviate from the guidelines adopted by the Annual General Meeting if, in a particular instance, there is justification for it.

Senior executives covered by the proposal are the president and other members of Group Management.

Sandviken, March 2008

Sandvik Aktiebolag (publ)
Board