Note 23 - Employee and Equity Compensation Benefits

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Note 23 - Employee and Equity Compensation Benefits

Bonus Programmes from 1999 onwards

Option Programmes for Management (1999, 2000 and 2001)

Stora Enso North America Option Programme

Option Programme for Management (1997)

Director and Management Group Interests at 31 December 2001

The majority of production employees are members of labour unions with which either the Company or the forest industry customarily negotiate collective bargaining agreements in Europe. Salaries for senior management are negotiated individually. Stora Enso has incentive plans that take into account the performance, development and results of both business units and individual employees. This performance-based bonus system is based on profitability as well as attaining key business targets and the benefits are given either in the form of bonus payments or the granting of options / synthetic options.

Bonus Programmes from 1999 onwards

Division and Business Unit management have an annual bonus programme based on the corporate target return on capital employed of 13% and on the results of their respective areas of responsibility, together with the achievement of separately defined key personal targets; the bonus amounts to between 20-40% of salary depending on the person's position in the Company. Staff participate in another bonus programme in which the payment is calculated as a percentage of annual salary up to a maximum of 7%. All bonuses are discretionary and are triggered only when results exceed a predetermined minimum level.

In 1999 a profit-sharing plan was made available to nearly all permanent employees of the former Stora Group whereby 10% of Group profits exceeding a 12% return on capital employed was accrued for employees up to a maximum of one sixth of the dividend paid to shareholders.

The Group has decided to continue its performance-based bonus programmes for 2001 onwards, initially in Finland, Sweden and a few other countries, but later expanding these to cover other countries as allowed by local practice and regulations.

Option / Synthetic Option Programmes

Programme	Type		Year of Issue		No. of Staff		Strike Price		Number of options issued		Exercise Period

2001		Synthetic		2001		500		EUR 11.70		4 800 000		1 Apr 2004- 31 Mar 2008

2000		Synthetic		2000		200		EUR 12.25		2 800 000		1 Apr 2003- 31 Mar 2007

1999		Synthetic		1999		200		EUR 11.75		2 750 000		15 Jul 2002- 15 Jul 2005

1997		Bonds with warrants		1997		15		FIM 45.57 (EUR 7.66)		3 000 000		1 Dec 1998- 31 Mar 2004

North America		Stock options		2000		839		USD 6.9687 (EUR 7.91)		5 680 000		11 Sep 2000- 4 Feb 2010

Option Programmes for Management (1999, 2000 and 2001)

In 1999 the Board announced an annual share option programme for some 200 key staff as part of an integrated top management compensation structure intended to provide a programme contributing to the long-term commitment of managerial and specialist personnel; this Programme has since been extended into subsequent years and now covers some 500 staff. The seven year Programmes consist of financially hedged options and synthetic options, which avoid diluting the number of shares in issue, with strike prices set at levels representing then-current market prices plus 10% premiums. Depending on local circumstances, option holders will receive either a payment in cash, representing the difference between the strike price and the share price at the time of exercise, or an option to purchase existing R shares, though not new shares. Options are not transferable and expire if the employee leaves the Group.

The strike price for the 2001 Programme has been set at EUR 11.70 based on the average price for R shares from 8 to 14 February 2001, plus a 10% premium. The strike price for the 2000 Programme is EUR 12.25 based on the average share price for the period of three days before and after the Annual General Meeting on 21 March 2000, plus a 10% premium. The strike price for the 1999 Programme is EUR 11.75, based on the average share price from May to July 1999, plus a 10% premium.

Stora Enso North America Option Programme

On 18 August 2000 the Board decided to convert the Consolidated Papers, Inc. share option (1989 Stock Option Plan and 1998 Incentive Compensation Plan) into Stora Enso programmes entitling holders to purchase a maximum 5 680 000 R shares, in the form of ADRs, at a weighted average strike price of USD 6.9687. The exercise period is from 11 September 2000 to 4 February 2010, depending on the grant date.

On 16 October 2001 the Board decided to amend the Programme to simplify administration and speed up delivery of shares to option holders. Thus, as of 1 November 2001, no new R shares will be issued under the terms of the Programme, but instead, a maximum of 4 million repurchased R shares has been reserved for distribution. The decision concerning the disposal of repurchased shares complies with authorisation granted by the Annual General Meeting 2001. A total of 2 001 733 new R shares were issued before the terms were amended, thereby increasing the share capital by EUR 3.4 million; at 31 December 2001, 3 256 456 options were still outstanding.

Option Programme for Management (1997)

On 7 April 1997 the Company issued 1 000 bonds with warrants with a maximum value of EUR 168 187 (FIM 1 million) to 15 members of senior management. Each bond accrues annual interest of 4.0%, has a maturity of five years and carries one warrant entitling the holder to subscribe for 3 000 new R shares at a subscription price of EUR 7.66 (FIM 45.57). The exercise period runs from 1 December 1998 to 31 March 2004 and the bond entitles the holder to receive a dividend for the year in which the warrants are exercised. By the end of 2001, 975 000 new R shares had been issued against the warrants, representing 0.1% of the share capital, and if the Programme is fully subscribed, the issue of new shares will raise share capital by a maximum of EUR 5.1 million.

Director and Management Group Interests at 31 December 2001

Board of Directors	Series A shares		Series R shares		Series R shares Granted by Warrants		Options / Syn. Options 1999/2000		Options / Synthetic Options 2001		Committee Memberships



Claes Dahlbäck, Chairman		2 541		19 529		-		-		-		Compensation

Krister Ahlström, Vice Chairman		1 500		-		-		-		-		Compensation

Josef Ackermann		-		1 300		-		-		-		Audit

Harald Einsmann (ADRs)		-		4 800		-		-		-		Compensation

Björn Hägglund, Deputy CEO		-		-		-		-		-		-

Jukka Härmälä, CEO		-		-		-		-		-		-

George W. Mead (ADRs)		-		2 685 492		-		-		-		-

Ilkka Niemi		-		-		-				-		-

Paavo Pitkänen		3 800		-		-		-		-		Audit

Jan Sjöqvist		508		943		-		-		-		-

Marcus Wallenberg		3 049		6 019		-		-		-		Audit

Total		11 398		2 718 083		-		-		-



Executive Management Group	Series A shares		Series R shares		Series R shares Granted by Warrants		Options / Syn. Options 1999/2000		Options / Synthetic Options 2001		Committee Membership



Jukka Härmälä, CEO		-		4 500		102 000		222 500		110 000		-

Björn Hägglund, Deputy CEO		7 877		14 618		-		183 750		90 000		R&D, Environmental

Lars Bengtsson		-		-		-		76 900		45 000		R&D

Jussi Huttunen		-		-		-		31 800		15 000		R&D

Kai Korhonen		-		-		-		91 900		45 000		R&D

Pekka Laaksonen		-		-		-		91 900		45 000		-

Esko Mäkeläinen		1 900		4 669		180 000		91 900		45 000		-

Arno Pelkonen		-		-		-		76 900		30 000		-

Bernd Rettig		-		-		-		91 900		45 000		R&D

Yngve Stade		-		725		-		91 900		45 000		R&D, Investment, Environmental

Total		9 777		24 512		282 000		1 051 350		515 000


Management Group Consisting of the Executive Management Group and:	Series A shares		Series R shares		Series R shares Granted by Warrants		Options / Syn. Options 1999/2000		Options / Synthetic Options 2001		Committee Membership

Magnus Diesen		-		-		30 000		55 400		22 500		R&D, Investment, Environmental

Nils Grafström		2 000		-		-		-		15 000		-

Walter Haberland		-		-		-		15 400		22 500		-

Seppo Hietanen		-		2 000		75 000		62 900		30 000		-

Sven von Holst		-		-		-		55 400		22 500		-

Jyrki Kurkinen		-		17 568		75 000		55 400		22 500		-

Eberhard Potempa		-		-		-		28 500		22 500		-

Sven Rosman		-		-		-		62 900		30 000		-

Ronald E. Swanson (ADRs)		-		15 706		56 708		-		22 500		-

Kari Vainio		-		3 800		45 000		62 900		30 000		Environmental

Christer Ågren		-		-		-		62 900		30 000		-

Total		2000		39 074		281 708		461 700		270 000



Total		23 175		2 781 669		563 708		1 513 050		785 000