Employee program

BASF incentive share program

In 1999, BASF started an incentive share program called “plus” for all eligible employees except the senior executives entitled to participate in the BOP. Currently, employees of German and of various European and Mexican subsidiaries are entitled to participate in the program. Each participant must make an individual investment in BASF shares from his or her variable compensation. For every 10 BASF shares purchased in the program, a participant receives one BASF share at no cost after one, three, five, seven and 10 years of holding the BASF shares. The first 10 shares entitle the participant to receive one BASF share at no extra cost for each year for the next ten years.

The right to receive free BASF shares lapses if a participant sells the individual investment in BASF shares, if the participant stops working for the Company or one year after retirement.

The number of free shares to be granted developed as follows:

Number of free shares to be granted

	2007	2006
As of January 1	1,423,282	1,310,401
Newly acquired entitlements	303,650	365,840
Bonus shares issued	(201,980)	(187,421)
Lapsed entitlements	(75,040)	(65,538)
As of December 31	1,449,912	1,423,282

The free shares to be provided by the company are valued at the fair value on the grant date. Fair value is determined on the basis of the stock price of BASF shares, taking into account the present value of dividends, which are not paid during the term of the program. The weighted-average fair value at grant date amounted to €73.14 for the program in 2007 and €58.06 for the program in 2006.

The fair value of the free shares to be granted is booked through the income statement against capital surplus over the period until the shares are issued.

Provisions for the costs for the 1999 – 2002 programs continue to be accrued proportionally on the basis of the BASF closing stock price.

Compensation cost of €18.8 million was recorded in 2007 and €13.4 million in 2006 for the employee stock program.