UPM Annual Report 2016

Governance

In brief

Strategy

Businesses

Stakeholders

Accounts

UPM-Kymmene Corporation (UPM or the company) follows the Finnish Corporate Governance Code (Code) issued by the Securities Market Association. The Code is available on the Securities Market Association’s website at www.cgfinland.fi. UPM complies with all recommendations of the Code.

Read more: www.upm.com/governance

The primary source for UPM’s governance practices and policies is UPM’s corporate website, and especially the governance section, which can be found under www.upm.com/governance. This section is updated continuously during the year. The below description of the corporate governance focuses on the year 2016 and contains references to the governance section on the corporate website for additional information. UPM’s Corporate Governance Statement 2016 and the Remuneration Statement dated 28 February 2017 and corresponding statements for the previous years are also available in the governance section on the corporate website. UPM-Kymmene Corporation is a Finnish limited liability company with headquarters in Helsinki, Finland. The parent company UPM and its subsidiaries form the UPMGroup having approximately 19,300 employees in 45 countries. The group’s business operations are divided into six business areas supported by the global functions. UPM shares are listed on the Nasdaq Helsinki exchange. UPMuses a one-tier governance model, which, in addition to the general meeting of shareholders, comprises the Board of Directors and the President and CEO as presented in the illustration below. In the operative management of the company, the President and CEO is assisted by the Group Executive Team, the Business Area Boards and the Strategy Team. The general meeting elects the members of the Board of Directors annually, and the Board of Directors appoints the President and CEO, UPM’s governance structure

and the members of the Group Executive Team. The members of the Group Executive Team report directly to the President and CEO.

Governance guidelines and compliance programmes UPM’s decision making, management and operations are guided by UPM values and the UPMCode of Conduct. Legal compliance and responsible and ethical practices are the foundation of all of UPM’s businesses. The UPMCode of Conduct is available in 18 languages on the UPM intranet and on the corporate website. The UPMCode of Conduct has been revised to respond to the ever-faster-evolving business environment and regulatory framework. The Board of Directors approved the revised Code of Conduct in February 2016 and its implementation started immediately thereafter. By the end of 2016, 97% of active UPM employees had completed the Code of Conduct training. The UPMCode of Conduct is complemented by more detailed rules and guidelines approved by the Group Executive Team, business areas and global functions. These rules and guidelines cover, among others, such topics as anti-bribery, competition law, confidentiality, contract management, taxation, human resources, environment, information security, safety, and equality. UPM strives to ensure compliance with the UPMCode of Conduct and related rules and guidelines by training employees and by developing the company’s risk management, monitoring and reporting processes. In 2016,

Our governance

Governance structure of UPM-Kymmene Corporation

GENERAL MEETING OF SHAREHOLDERS

Elects

Elects

Issues Auditor’s Report

Reports

BOARD OF DIRECTORS

AUDITOR

Appoints, steers, monitors

Report

Remuneration Committee

Reports

Reports

Assist

Nomination and Governance Committee

PRESIDENT AND CEO

Audit Committee

Appoints

Chairs

Chairs

Chairs

Reports

Reports

Reports

Reports

BUSINESS AREA BOARDS

STRATEGY TEAM

GROUP EXECUTIVE TEAM

INTERNAL AUDIT

CONTENTS

UPM Annual Report 2016 72

UPM Annual Report 2016 73