planning the remuneration and succession of the President and CEO, as well as other senior executives. In 2020, the Committee held three meetings. In addition to the Committee’s regular duties, it focused on the Remuneration Policy presented to the Annual General Meeting 2020, as well as the preparation of the Remuneration Report to be presented to shareholders at the AGM 2021 for the first time. Nomination and Governance Committee The Nomination and Governance Com- mittee is responsible for the composition, diversity and remuneration of the Board of Directors and Corporate Governance. In addition to the Committee’s assigned matters and reports, in 2020 it also focused on the new requirements for remuneration reporting as set out in the new CG Code, as well as considering the arrangements for the AGM in the exceptional circumstances caused by the COVID-19 pandemic. The Nomination and Governance Com- mittee conducted its annual review of the structure, size, composition, 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 business expertise, skills, experience, independence, availa- bility of service to the Company and other desired qualities. As a result of careful search and selection efforts, the Nomi- nation and Governance Committee has proposed that Jari Gustafsson be elected as a newmember of the Board at the AGM 2021. Of the incumbent directors Ari Puhe- loinen and Veli-Matti Reinikkala will not be available for re-election. The Nomination and Governance Committee’s proposal on the composition of the Board in 2021 and the Board’s assessment of the independence of potential Board members is available on the corporate website at www.upm.com/ agm2021. Executive management Jussi Pesonen has been the President and Chief Executive Officer of UPM-Kym- mene Corporation since January 2004. According to his service agreement, Jussi Pesonen would have been entitled to retire in November 2020 at the age of 60. At the request of the Company’s Board of Directors, he will continue as the President
Audit Committee The Audit Committee is responsible for overseeing the Company’s financial report- ing processes and internal control, internal audit and risk management and for moni- toring the Company’s audit and compliance procedures. In 2020, the Committee held five meetings. In addition to the Commit- tee’s assigned matters and reports, it also reviewed reports on non-financial matters, cyber security, UPM’s COVID-19 related response plans and climate-related finan- cial disclosures (TCFD). Furthermore, the Committee also reviewed the preparation of UPM’s Euro Medium TermNote (EMTN) programme. The lead audit partner attended all Committee meetings and reported to the Committee on the interim procedures and findings, as well as quarterly audit and non-audit fees and services. The Com- mittees’ standard procedures also include quarterly sessions with the internal audi- tor, with the lead audit partner, with man- agement and among Committee members. The Audit Committee has prepared the Board’s proposal for the election and remuneration of the auditor to be submit- ted at the AGM 2021. In this context, the Committee evaluated the qualifications and independence of the auditor, as well as the audit-related and non-audit-related services provided by the auditor. The evaluation included an assessment of the effectiveness of the audit process, the quality of the audit, the performance of the lead auditor and the audit team and the cooperation with the auditor’s international audit network. As a result of this evaluation, the Committee rec- ommended to the Board the re-election of PricewaterhouseCoopers Oy as the Compa- ny’s auditor, and the Board concurred with this proposal and has made a corresponding proposal to the AGM 2021. Following the stipulations of the Auditor Regulation, the last year that PricewaterhouseCoopers Oy can act as the Company’s auditor is 2023. According to PricewaterhouseCoopers Oy, Authorised Public Accountant Mikko Nieminen would continue as the lead audit partner. Remuneration Committee The Remuneration Committee is respon- sible for preparing the Company’s remu- neration principles and practices and for
COMPOSITION OF MANAGEMENT BODIES
Board committees The Board has three committees that assist it in preparing matters to be decided by the Board: • The Audit Committee • The Remuneration Committee and • The Nomination and Governance Committee The Committees also assist the Board in its oversight and monitoring responsibilities. The Board remains responsible for the performance of any duties assigned to the Committees. The Nomination and Governance Committee assisted the Board in reviewing the composition, qualification criteria and duties of the Board committees, and made a proposal to the Board for the appointment of committee members and Chairs. The members appointed to the Board commit- tees in the Board’s constitutive meeting on 31 March 2020 are shown in the table on the previous page. Neither the President and CEO nor other Company executives may be members of any Board committees. The written committee charters approved by the Board of Directors set forth the purpose, composition, operations and duties of each committee, as well as the pre- requisites of committee membership. Each committee is responsible for performing the duties assigned to it in its charter. The committees hold their meetings prior to Board meetings in order to prepare matters to be decided by the Board. In the Board meeting following the commit- tee meeting, the Chairs of the commit- tees report to the Board on the matters discussed and the actions taken by the committees. Furthermore, minutes and committee meeting materials are available to all directors. Committee-related work in 2020 The importance and extent of the work of the Committees has increased in recent years and will further increase following the continuous changes in the regulatory framework and the Company’s business environment. This is also reflected in the committee charters and in the topics and matters the committees were involved with in addition to their regular duties through- out the year.
Read more on our management system in the CG Statement 2020 and at www.upm.com/ governance. Members of the Group Executive Team, including information on the executives’ biographical details, professional and educational backgrounds, other significant commitments and shareholdings in the Company, are presented on pages 112–113 of this report.
GROUP EXECUTIVE TEAM BUSINESS AREA BOARDS
President and CEO (Ch.)
President and CEO (Ch.)
President and CEO (Ch.)
General Counsel Business area EVPs
General Counsel Business area EVP
EVPs of global functions
EVPs of global functions
RESPONSIBILITY AREAS OF THE MEMBERS OF THE GROUP EXECUTIVE TEAM
PRESIDENT AND CEO JUSSI PESONEN
UPM Specialty Papers
UPM Communication Papers Winfried Schaur
Stakeholder Relations 3)
1) Incl. Finance & Control, Treasury, IR, IT, Sourcing and Real Estate (incl. Finnish forest assets) 2) Incl. Investment Management, R&D, new business development (biochemicals, biocomposites) 3) Incl. Communications & Brand, Responsibility, Public Affairs
Remuneration In accordance with the CG Code, we have published our Remuneration Report for the financial year 2020. The Remuneration Report and information on the remunera- tion of the Group Executive Teammembers are available on the corporate website at www.upm.com/governance. The Remuneration Report for govern- ing bodies presents the remuneration of the directors and the President and CEO and has been prepared by the Board of Directors’ Remuneration Committee and Nomination and Governance Committee. The Remuneration Report 2020 will be presented at the AGM 2021. The Remuner- ation Policy sets out the framework for the remuneration of the Company’s governing bodies and it is available on the corporate website at www.upm.com/governance. Remuneration of the members of the Group Executive Team and information on the Company’s short- and long-term incentive schemes and plans, as well as on the terms and conditions of the aforementioned exec- utives’ service agreements, are available on
and CEO as disclosed by the Company in a stock exchange release on 24 October 2019. Jussi Pesonen has also been a member of the Company’s Board of Directors 2007- 2020. The President and CEO duty is to manage and oversee the Company’s day- to-day operations in accordance with the instructions and orders given by the Board of Directors. In the operative management of the Company, the President and CEO is assisted by the Group Executive Team consisting of the executives heading the business areas and global functions, the Business Area Boards and the Strategy Team. The President and CEO chairs the Group Executive Team. The compositions of these management bodies are presented in the table above. Management responsibilities Members of the Group Executive Team have primary responsibility for the business areas and global functions that they lead. These areas of responsibility are shown in the illustration above.
the corporate website at www.upm.com/ governance. Remuneration of the Board of Directors In accordance with the Nomination and Governance Committee’s proposal, at the AGM 2020 it was decided that the remu- neration of the members of the Board of Directors remain unchanged. No changes have been made to the remuneration of Board members since 2017. In terms of Board members’ remuneration in 2021, the Nomination and Governance Committee has proposed that the annual base fee of the Chair, Deputy Chair and each member of the Board be raised by EUR 5,000 and that the annual committee fees remain unchanged. The approved annual fees and total remuneration of each Board member, as well as the number of shares purchased, are presented in the tables below. Board members did not receive any other financial benefits for their Board or Committee membership in addition to the annual base and committee fees. Travel and lodging expenses incurred from