KONE Oyj - Company Announcement

KONE's Board of Directors Decides on New Stock Option Plan

KONE Corporation, Stock Exchange Release, December 5, 2007

KONE Corporation's Board of Directors decided at its 5 December 2007
meeting to grant stock option rights to approximately 350 employees
of its global organization based on the authorization received from
the shareholders meeting at  February 26, 2007. The stock options are
granted for encouraging key personnel for long-term efforts to grow
shareholder value and to increase their commitment to the company by
offering them an internationally competitive incentive program. The
company's Board Members, CEO and Executive Committee Members are not
included in the option plan.

The stock options are to be marked with the symbol 2007 and a maximum
total of 2,000,000 options will be offered. Each stock option
entitles its holder to subscribe for one (1) new class B KONE share.
The class B shares for which these stock options can be exchanged
constitute no more than 1.6 % of the company's total number of
shares.

The share subscription period for stock option 2007 will be April 1,
2010 -  April 30, 2012. The share subscription period begins only if
the average turnover growth of the KONE Group for financial years
2008 and 2009 exceeds market growth and if the earnings before
interest and taxes (EBIT) of the KONE Group for the financial year
2008 exceeds the EBIT for the financial year 2007, and the EBIT for
the financial year 2009 exceeds the EBIT for the financial year 2008.
If the above-mentioned criteria have not been attained, stock options
expire based on the consideration and in the manner and extent
decided by the Board of Directors and the terms of the stock options.
The share subscription price for the stock option is 50.89 euros per
share representing the trade volume weighted average quotation of the
company class B share on the OMX Nordic Exchange Helsinki Ltd between
November 7, 2007 - December 4, 2007 and further reduced in situations
mentioned in the terms, for example with dividends distributed before
the subscription of the shares.

This release includes the detailed stock option 2007 terms.

Additional information on KONE's compensation systems is available in
the Corporate Governance section of the KONE website at www.kone.com.

About KONE

KONE is one of the world's leading elevator and escalator companies.
It provides its customers with industry-leading elevators and
escalators, with innovative solutions for their maintenance and
modernization. KONE also provides maintenance of automatic building
doors. In 2006, KONE had annual net sales of EUR 3.6 billion and
approximately 29,000 employees. Its class B shares are listed on the
OMX Nordic Exchange in Helsinki, Finland.

www.kone.com

For further information, please contact:
Jukka Ala-Mello, Secretary to the Board, tel. +358 204 75 4226

Sender:

KONE Corporation

Jukka Ala-Mello
Secretary to the Board

Minna Mars
Senior Vice President, Corporate Communications & IR


KONE CORPORATION STOCK OPTION 2007 TERMS

The Board of Directors of KONE Corporation (Board of Directors) has
on December 5, 2007 resolved to issue stock options to the key
personnel of KONE Corporation (Company) and its subsidiaries (KONE
Group) and to a wholly owned subsidiary KONE Capital Corporation
(Subsidiary) on the following terms and conditions.

I STOCK OPTION TERMS AND CONDITIONS

1. Number of Stock Options

The maximum total number of stock options issued shall be 2,000,000,
and they entitle their holders to subscribe for a maximum total of
2,000,000 new class B shares in the Company.

2. Stock Options

1. The stock options shall be marked with the symbol "2007".

2. The key personnel to whom stock options are issued shall be
notified their entitlement to subscribe options in writing by the
Board of Directors about the offer of stock options. The subscription
period of stock options shall end on  February 25, 2008 or on any
earlier date determined by the Board of Directors. The Board of
Directors shall decide on the approval of the subscriptions of stock
options. Stock option certificates shall, upon request, be delivered
to a stock option holder at the start of the relevant share
subscription period, unless the stock options have been transferred
to the book-entry account.

3. Right to Stock Options

The stock options shall, in deviation from the shareholders'
pre-emptive subscription rights, be gratuitously issued to the key
personnel of the KONE Group (stock option recipients) and to the
Subsidiary wholly owned by the Company. The shareholders' pre-emptive
subscription rights are deviated from since the stock options are
intended to form part of the Group's incentive and commitment program
for the key personnel. There is a weighty financial reason for the
Company for granting options.

4. Granting of Stock Options

1. The Board of Directors shall decide upon the granting of the stock
options. The Subsidiary shall be granted stock options to the extent
that the stock options are not granted to the key personnel of the
KONE Group.

2. The Board of Directors shall later decide upon the further
granting of the stock options subscribed by the Subsidiary, to the
key personnel employed by or to be recruited by the KONE Group.

5. Transfer of Stock Options and Obligation to Offer Stock Options

1. The stock options are freely transferable, when the relevant share
subscription period has begun. The Board of Directors may, however,
permit the transfer of a stock option also before such date. The
Company or the Subsidiary shall hold the stock options on behalf of
the stock option recipient until the beginning of the share
subscription period. The stock option recipient has the right to
acquire possession of the stock options when the relevant share
subscription period begins. Should the stock option recipient
transfer his/her stock options, such person is obliged to inform the
Company about the transfer in writing, without delay.

2. Should a stock option recipient cease to be employed by or in the
service of the KONE Group, for any reason than the death of a stock
option recipient, or the statutory retirement of a stock option
recipient, such person or his/her legal successor shall, without
delay, offer to the Company or its order, free of charge, the stock
options for which the share subscription period specified in Section
II.2 has not begun, on the last day of such person's employment or
service. The Board of Directors can, however, in the above-mentioned
cases, decide that the stock option recipient is entitled to keep
such stock options, or a part of them, which are under the offering
obligation.

3. Regardless of whether the stock option recipient or his/her legal
successor has offered the stock options to the Company or not, the
Company is entitled to inform the stock option recipient in writing
that the stock option recipient has lost his/her stock options on the
basis of the above-mentioned reasons. Should the stock options be
transferred to the book-entry account, the Company has the right,
whether or not the stock options have been offered to the Company, to
request and get transferred all the stock options under the offering
obligation from the stock option recipient's book-entry account to
the book-entry account appointed by the Company, without the consent
of the stock option recipient. In addition, the Company is entitled
to register transfer restrictions and other respective restrictions
concerning the stock options to the stock option recipient's
book-entry account, without the consent of the stock option
recipient.


II SHARE SUBSCRIPTION TERMS AND CONDITIONS

1. Right to Subscribe for New Shares

1. Each stock option entitles its holder to subscribe for one (1) new
class B share in the Company. The book equivalent value of each share
is EUR 0.50. As a result of the share subscriptions, the share
capital of the Company may be increased by a maximum total of EUR
1,000,000 and the number of class B shares by a maximum total of
2,000,000 new class B shares. The Board of Directors has right to
resolve to offer to the stock option holders' shares owned by the
Company instead of the new class B shares.

2. The Subsidiary shall not be entitled to subscribe for shares in
the Company on the basis of the stock options.

2. Share Subscription and Payment

1. The share subscription period for stock option shall be April 1,
2010 - April 30, 2012.

2. However, the share subscription period begins only if following
criteria have been attained:
- the average Turnover growth of the KONE Group for financial years
2008 and 2009 exceeds market growth and
- the Earnings before Interest and Taxes (EBIT) of the KONE Group for
the financial year 2008 exceeds the EBIT for the financial year 2007
and the EBIT for the financial year 2009 exceeds the EBIT for the
financial year 2008. If the above mentioned criteria have not been
attained, stock options expire based on the consideration and in the
manner and extent decided by the Board of Directors. As determination
of the Turnover and the Earnings before Interest and Taxes (EBIT) for
years 2007, 2008 and 2009 the Board of Directors has right to adjust
the Turnover and Earnings before Interest and Taxes (EBIT) in the
approved financial statements with possible one-time or exceptional
from the conventional business income and/or expenses.

3. Share subscriptions shall take place at the head office of the
Company or possibly at another location to be determined later. The
subscriber shall transfer the respective stock option certificates
with which he/she subscribes for shares, or, in the case of the stock
options having been transferred to the book-entry account, the stock
options with which shares have been subscribed for, shall be deleted
from the subscriber's book-entry account. Upon subscription, payment
for the shares subscribed for shall be made to the bank account
designated by the Company. From the subscription price 0,50 euros
representing the accounting par value will be entered to the share
capital and rest to the paid-up unrestricted equity fund.  The Board
of Directors shall decide on all measures concerning the share
subscription.

3. Share Subscription Price

1. The share subscription price for the stock option is 50.89 euros
per share representing the trade volume weighted average quotation of
the Company class B share on the OMX Nordic Exchange Helsinki Ltd
between November 7, 2007 - December 4, 2007.

2. The subscription price of the stock option shall be reduced in
special situations and at times specified hereinafter at Sections
II.7.1 - II.7.2. The share subscription price shall, nevertheless,
always amount to at least the book equivalent value of the share.

4. Registration of Shares

Shares subscribed for and fully paid shall be registered in the
book-entry account of the subscriber.

5. Shareholder Rights

The dividend rights of the shares and other shareholder rights shall
commence when the increase of the share capital has been entered into
the Trade Register.

6. Share Issues, Stock Options and Other Special Rights for Shares
before Share Subscription

If the Company, prior to share subscription, decides to issue shares
or new stock options or other special rights entitling to shares, a
stock option holder shall have the same right as, or an equal right
to, that of a shareholder. Equality is reached in the manner
determined by the Board of Directors by adjusting the number of
shares available for subscription, the share subscription price or
both of these.

7. Rights in Certain Cases

1. If the Company distributes dividends or funds from the reserve of
invested non-restricted equity, from the subscription price of a
stock option is deducted the amount of the dividend or distributable
invested non-restricted equity decided after the beginning of the
period for the determination of the subscription price but before the
subscription as at the record date for each dividend distribution or
other distribution of funds.

2. If the Company reduces its share capital by distributing share
capital to shareholders, from the subscription price of a stock
option is deducted the amount of distributable share capital decided
after the beginning of the period for the determination of the
subscription price but before the subscription, as at the record date
of repayment of share capital.

3. If the Company is placed in liquidation before the share
subscription, the stock option holder shall be given an opportunity
to exercise his/her subscription right before the liquidation begins,
within a period of time determined by the Board of Directors. If the
Company is removed from the register prior to the share subscription,
the option holder has the same or equal rights with a shareholder.

4. If the Company resolves to merge in another company as the company
being acquired or in a company to be formed in a combination merger
or if the Company resolves to be divided, the stock option owner
shall, before the merger or division, be given the right to subscribe
for the shares with his/her stock options, within a period of time
determined by the Board of Directors. After such date no subscription
right shall exist. The provisions of Chapter 16 Section 13 of the
Finnish Companies Act shall be applied to the redemption of the stock
options.

5. If the Company, after the beginning of the share subscription
period, resolves to acquire or to redeem its own shares by an offer
made to all shareholders, the stock option owners shall be made an
equivalent offer. In other cases, acquisition or the redemption of
the Company's own shares or stock options or other special rights
entitling to shares by the Company, shall not affect the position of
stock option holders.

6. If, before the end of the subscription period, a situation, as
referred to in Chapter 18 Section 1 of the Finnish Companies Act, in
which a shareholder possesses over 90% of the shares and the votes of
the shares of the Company, and therefore has the right and obligation
to redeem the shares of the remaining shareholders, the stock option
owners shall be entitled to use their right of subscription by virtue
of the stock option within a period of time determined by the Board
of Directors. A shareholder who possesses over 90% of the shares and
the votes of the shares of the Company has the right to buy the stock
option owner's stock options and when a shareholder exercises this
right the stock option owner is under obligation to sell them to the
shareholder for market value.

7. If the Company, prior to the share subscription, decides to
combine its share series, stock option holders have equal rights with
the owners of the Company's class B shares.

III OTHER MATTERS

1. The laws of Finland shall be applied to these terms and
conditions. Disputes arising in relation to the stock options shall
be settled by arbitration, in accordance with the Arbitration Rules
of the Central Chamber of Commerce by using one arbitrator.

2. The Board of Directors may decide on the transfer of the stock
options to the book-entry account at a later date compared earlier
mentioned and make also other such technical amendments and
specifications, which are not considered essential, to these terms
and conditions. Other matters related to the stock options shall be
decided on by the Board of Directors and it may impose binding rules
on stock option recipients. The stock option documentation shall be
kept available for inspection at the head office of the Company.

3. If the stock option owner acts against these terms and conditions,
or against any decisions, orders, or instructions given by the
Company or against applicable laws and regulations of the
authorities, the Company shall be entitled to withdraw the stock
options which have not been transferred, or with which shares have
not been subscribed for free of charge.

4. These terms and conditions have been made in Finnish and in
English. In the case of any discrepancy between the Finnish and
English terms and conditions, the Finnish terms and conditions shall
prevail.