UPM Annual Report 2020

exercising their shareholder rights by providing a proxy service for shareholders pre-registered for the AGM. The AGMadopted the Company’s Finan cial Statements and decided to distribute the same dividend of EUR 1.30 per share, as in the previous year, and released themembers of the Board of Directors and the President and CEO from liability for the financial year 2019. The dividends, totalling EUR 693million, were paid on 16 April 2020 to shareholders who were registered in our list of registered shareholders on 2 April 2020. For the year 2020, the Board of Directors has proposed a dividend of EUR 1.30 per share. UPM’s Remuneration Policy for govern ing bodies was presented to and adopted by the AGM for the first time. Information on other decisions made at the AGM can be found later on in this section and on the corporate website at www.upm.com/ agm2020. During the AGM, all Board proposals were approved and all decisions were made without voting. The AGM 2021 will be held on 30 March. Due to the continued COVID-19 pandemic, the meeting will be arranged under the Act on a temporary derogation from the Companies’ Act (677/2020). Sharehold ers can participate and exercise their shareholder rights in the Annual General Meeting only by voting in advance and by submitting counterproposals and asking questions in writing prior to the meeting via an electronic voting or proxy service provided by the Company. The AGM, as well as speeches by the Chair of the Board

The new director Emma FitzGerald (born 1967) is a UK citizen and holds a doc torate in surface chemistry and solid-state physics (D.Phil.) fromOxford University and a master’s degree in business admin istration (MBA) from the Manchester Business School. FitzGerald is the CEO of Puma Energy Ltd., a global energy company delivering energy services and associ ated infrastructure to business and retail

Board composition The composition of the Board changed in 2020 when Suzanne Thoma, UPM’s director since 2015, and Jussi Pesonen, UPM’s direc tor since 2007, announced that they would not be available for re-election. Nomination and Governance Committee conducted its annual review of the structure, size, com position, diversity and succession needs of the Board as a whole, including whether the Board reflects an appropriate balance of sound judgement and a diverse range of busi ness expertise, skills, experience, independ ence, availability of service to the Company and other desired qualities. As a result of a careful selection process, the Nomination and Governance Committee decided to pro pose Emma FitzGerald andMartin à Porta be elected to the Board at the AGM2020. As proposed by the Nomination and Governance Committee, ten directors were elected to UPM’s Board of Directors at the AGM for a one-year term. The sharehold ers were asked to vote on a single slate for the Board of Directors as this is, unlike in many other countries, amarket practice in Finland. The Nomination and Governance Committee also believes that this practice helps to ensure that the Board works effec tively as a whole and comprises sufficiently diversemembers with varied experience and versatile areas of expertise that mutually complement each other. The composition of the Board is presented in the table above. The termof the current Board of Directors will end upon closing of the AGM2021.

Percentage of represented shares and voting rights in the AGM %

Board diversity – gender

Number of shareholders represented in the AGM

30%

55

1,000 1,500 2,000 2,500 3,000 3,500 4,000

53

51

70%

49

47

0 500

Board diversity – age

Board diversity – nationality

45

2019

2020

2019

2020

Finnish, 60% Dutch, 10% Norwegian, 10%

50–59, 30% 40–49, 10% 60–70, 60%

RELEVANT PROFESSIONAL EXPERIENCE

and the President and CEO, can be followed via webcast. Detailed instructions for shareholders are available on the corporate website at www.upm.com/agm2021. Board of Directors • Sets the Company’s strategic objectives • Reviews and approves financial and other plans relevant to the achievement of these objectives and • Reviews the management team’s performance in terms of meeting these objectives The Board’s other primary responsibilities relate to the integrity of the Company’s financial reporting, the effectiveness of internal control and risk management sys tems and the appointment, remuneration and succession planning of the Company’s senior management.

British, 10% Swiss, 10%

Financial expertise

Relevant industry knowledge

Board diversity – education

Board diversity – tenure

International experience

< 5 years, 30% 5–10 years, 40% > 10 years, 30%

MBA or Executive MBA, 3 LL.M, 2 Ph.D. (Econ.), 1 B.Sc. (Econ.), 1 M.Sc. (Econ.), 1 M.Sc. (Eng.), 1 General Staff Officer, 1 Ph.D. (Chem. Eng.), 1 BA (Business Econ.), 1

Risk management experience

Governance and leadership experience

Experience in the planning and implementation of company strategies

ATTENDANCE AT BOARD AND COMMITTEE MEETINGS 2020

BOARD COMPOSITION IN 2020

ATTENDANCE / NO. OF BOARD MEETINGS

ATTENDANCE/NO. OF COMMITTEE MEETINGS

ATTENDANCE %

ATTENDANCE %

ATTENDANCE %

DIRECTOR SINCE

NO. OF TERMS

AGE (AT THE END OF 2020)

INDEPENDENCE OF THE COMPANY

NON-EXECUTIVE / EXECUTIVE DIRECTOR

DIRECTOR

DIRECTOR 1)

Björn Wahlroos (Board and NGC Chair) Berndt Brunow (Deputy Chair, NGC member)

12/12 12/12 12/12

100 100 100

6/6 6/6 3/3 4/4 5/5 5/5 2/2 6/6 3/3 0/1 5/5 -

100 100 100 100 100 100 100 100 100 -

100 100 100

Björn Wahlroos (Chair)

2008 2002 2015 2020 2013 2018 2020 2014 2007 2012

13 19

68 70 51 53 45 62 50 69 63 60

Independent Independent Independent Independent Independent Independent Independent Independent Independent Independent

NED NED NED NED NED NED NED NED NED NED

Berndt Brunow (Deputy Chair)

Henrik Ehrnrooth (RC member) Emma FitzGerald (AC member) Piia-Noora Kauppi (AC Chair) Marjan Oudeman (AC member) Martin à Porta (RC member) Ari Puheloinen (NGC member) Veli-Matti Reinikkala (RC Chair)

Henrik Ehrnrooth Emma FitzGerald Piia-Noora Kauppi Marjan Oudeman Martin à Porta Ari Puheloinen 2) Veli-Matti Reinikkala 2)

6 1 8 3 1 7

8/9

89

92

12/12 11/12

100

100

92

94

Jussi Pesonen (Board member until 31 March 2020)

3/3 9/9

100 100 100 100

100 100 100 100

12/12 12/12

14

Kim Wahl

9

Suzanne Thoma (Board and RC member until 31 March 2020)

2/3

67

0

50

Kim Wahl (AC member)

12/12

100

100

100

1) At the AGM 2020 Jussi Pesonen’a and Suzanne Thoma’s terms ended due to their announcement that they were not available for re-election. 2) Not available for re-election at the AGM 2021.

NGC – Nomination and Governance Committee, RC – Remuneration Committee, AC – Audit Committee

102

103

UPM ANNUAL REPORT 2020

UPM ANNUAL REPORT 2020