Short-term incentive (STI) bonuses aim to reward Executive Board members for achieving pre-set targets. Those targets will reflect their responsibilities and will be set annually to ensure that business priorities are followed and the targets remain ambitious, dynamic and realistic. Under the 2002 STI Plan, all Executive Board members were eligible to a bonus for 2002 up to a maximum of 150% of their base salary in that year, to be paid in 2003.  Through this plan Mr. Shepard could earn USD 50,000 per percent point increase in 2002’s earnings per share. The other members could earn EUR 31,765 per percent point increase in the preceding year earnings per share over the rate of euro inflation. At the choice of the Executive Board members concerned, half of the bonus may be paid in AEGON shares with a three-years holding period. After this three-year period the Executive Board members will be entitled to bonus shares, provided that they are still employed by AEGON. The number of bonus shares to which the members are entitled at that time will be based on performance, on the basis of EPS growth above inflation in the preceding three years, according to the following table. The STI Plan, comprised in the Remuneration Policy, determines that a short-term bonus will be paid only if value is created for shareholders, i.e. only after a positive value of new business (VNB), as defined in AEGON's Embedded Value Report, is realized. For Messrs. Shepard and Streppel group VNB will apply; for Messrs. Van der Werf and Wynaendts, the VNB for their specific business area will be taken into account. Provided the relevant VNB is positive, then the actual level of income before tax adjusted for capital gains and losses on equities and real estate will determine the level of the bonus payout. The income before tax adjusted for capital gains and losses on equities and real estate target will be calculated based on a rolling, three-year average, increased by 2.5% to reflect an estimated rate of inflation. Bonus payout for Messrs. Shepard and Streppel solely depend on AEGON’s income before tax adjusted for capital gains and losses on equities and real estate. For Messrs. Van der Werf and Wynaendts the bonus is based on the income before tax adjusted for capital gains and losses on equities and real estate of the country unit(s) under their responsibility (60%), and on AEGON’s income before tax adjusted for capital gains and losses on equities and real estate (40%). The target levels vary due to differences in responsibilities and base salary. Whilst Mr. Streppel’s base salary is higher than Messrs. Van der Werf’s and Wynaendts’, their achievable bonuses are higher, reflecting their role value drivers for AEGON. Annually the Committee will review the agreed parameters to ensure that they continue to provide the best reference. External experts will sign off all relevant VNB and income before tax adjusted for capital gains and losses on equities and real estate. However, since the earnings per share in the financial year 2002 did not increase, no bonuses over 2002 were paid in 2003 under this STI Plan. The 2003 STI Plan was the same as that in 2002. Through this plan Mr. Shepard could earn USD 50,000 per percent point increase in the preceding year earnings per share and the other members EUR 32,432 per percent point increase in the preceding year earnings per share over the rate of euro inflation. The amounts for STI 2003 will be determined after the annual General Meeting of Shareholders has adopted the annual accounts 2003. All the members of the Executive Board have opted for payment of half of the STI bonus amount in AEGON shares. 2003, TO BE GRANTED IN 2004 TARGET STI BONUS LEVELS AS FROM JANUARY 1, 2004  Target (last 3-years’ average) Maximum (% of base salary) (% of base salary) Shepard 118% 189% Streppel 50% 80% Van der Werf 80% 125% Wynaendts 80% 125% 3-year average EPS growth (over inflation) Share matching % < 5% 0 5 – 10% 25% 10 – 12% 50% 12 – 14% 75% > 14% 100% AEGON GROUP ANNUAL REPORT 2003 72 2002, PAYABLE IN 2003 2004, TO BE GRANTED IN 2005 POLICY SHORT-TERM INCENTIVE (STI) REMUNERATION POLICY