News Release

BAXTER'S SENIOR MANAGEMENT TEAM VOLUNTARILY CONVERTS RESTRICTED STOCK TO OPTIONS TO BETTER ALIGN INCENTIVES DIRECTLY WITH SHAREHOLDER INTERESTS

DEERFIELD, Ill., January 31, 2001 - Baxter International Inc. (NYSE:BAX) today announced changes to the company's long-term incentive compensation program for its senior executives, which will further align management's incentives with those of Baxter's shareholders. Under the new long-term incentive compensation program, Baxter's senior managers will no longer receive shares of restricted stock and will only receive stock options priced at fair market value on the day of grant.

In the transition to this new long-term incentive compensation program, Baxter's senior managers were offered the opportunity to convert voluntarily the restricted shares they received under the old plan. Ninety-four percent of Baxter's senior managers eligible under the long-term incentive compensation program voluntarily converted their shares of restricted stock.

For officers of the company, the conversion of these restricted shares to options will be reported as a forfeiture or disposition of 177,200 shares in a filing with the Securities and Exchange Commission.

"This serves as a strong statement about the level of excitement that our senior management team has about Baxter's growth prospects, and the commitment we all have toward our shareholders," said Harry M. Jansen Kraemer, Jr., chairman and chief executive officer. "Unlike restricted shares which have very little risk, stock options only have value if the stock price increases over time."

Baxter has been recognized over the last several years for its innovative executive compensation programs that incent senior management to drive shareholder value. For example, in 1999 Baxter launched a shared investment plan for its senior managers, under which 142 of the company's senior managers borrowed a total of $200 million in personal loans to purchase 3.1 million shares of Baxter stock. This was the second time that Baxter's senior management team launched such a shared investment plan, and it followed the successful conclusion of the first plan Baxter launched in 1994.

Baxter International Inc. is a global medical products and services company that provides critical therapies for people with life-threatening conditions. Baxter's products and services in bioscience (biopharmaceuticals and blood collection, separation and storage devices), medication delivery and renal therapy are used by health-care providers and their patients in more than 100 countries.

FOR ADDITIONAL INFORMATION:

	Media Contacts: Deborah Spak, (847) 948-2349   Investor Contacts: Neville Jeharajah, (847) 948-2875 Mary Kay Ladone, (847) 948-3371