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## LONG-TERM INCENTIVE (LTI) 

The long-term incentive (LTI) Plan focuses on the company performance against a select peer group. The peer group comprises companies that are comparable in type of business, size and geographical presence. Additionally, those companies should be recognized as the most appropriate reference group by AEGON, as well as by analysts, shareholders and other stakeholders. 

## 2002, GRANTED IN 2003 

Under the 2002 LTI Plan the Executive Board members were eligible to receive a pre-determined number of stock options or stock appreciation rights (SARs), subject to three criteria: 

1. Comparison of the AEGON share price with the share prices of a peer group of nine financial companies (ABN AMRO, AIG, Allianz, AXA, Fortis, Generali, ING, Prudential PLC and Zurich). The comparison is based on the share price performance over the preceding three years. 

2. Should the AEGON share price performance achieve a top three position, each Executive Board member will receive 200,000 options. Should this share price performance finish in the middle group (of four companies) each Executive Board member will earn 100,000 options. Should the share price performance rank in the bottom group (three companies) 50,000 options will be granted. 

3. In case earnings per share did not increase, no options will be granted. 

Since earnings per share in the financial year 2002 did not increase, Executive Board members did not receive any stock options or SARs in 2003. 

## 2003, TO BE GRANTED IN 2004 

The 2003 LTI Plan was the same as that in 2002. The average AEGON share price performance compared with those of the peer group (based on the share price performance over 2001, 2002 and 2003) ranked in the bottom group as a result of which each Executive Board member will receive 50,000 SARs in March 2004, provided shareholders adopt the annual accounts for 2003, showing an increase of the earnings per share. 

## 2004, TO BE GRANTED IN 2005 

Reflecting recent trends and developments in reference markets and the desire to more distinctly link performance and compensation, the Remuneration Policy was revised to provide that as from January 2004, the total LTI value is a combination of performance options and performance shares, with a 50-50 split. Vesting of these rights will be based on the performance of AEGON, relative to a group of peer companies. 

This peer group consists of, reflective of the criteria of comparability, Allianz, Aviva, AXA, Fortis, Generali, ING, Jefferson-Pilot, John Hancock Life Insurance, Lincoln National, Nationwide FS Inc. and Prudential PLC. 

The LTI plan also defines a revised target performance zone. Performance relative to that zone will subsequently determine the LTI bonus for Executive Board members. The performance incentive zone starts at position eight. Once AEGON achieves this position, 50% of the grant will vest. At position six, 100% will vest. Should AEGON rank number one, 200% of the grant will vest. 

## TARGET LTI AWARD LEVELS AS FROM JANUARY 1, 2004 

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The Committee will monitor the peer group composition and the performance incentive zone to ensure that they continue to provide an appropriate reference. The first review will take place in 2006. Would those parameters no longer provide the appropriate reference, the Committee may decide to amend them. External experts will sign off all data used in the comparisons. 

