UPM Annual Report 2020

The most recent tendering process for auditing services was carried out in 2013. Following the stipulations of the Auditor Regulation, the last year that Pricewater houseCoopers Oy can act as the Company’s auditor is 2023.

meetings held elsewhere than in a direc tor’s place of residence were paid against invoice. Shares purchased for the Board members in 2020 may not be transferred

for two years from the purchase date (24 April 2020) or until the membership of the respective Board member ends, whichever occurs first.

The AGM further resolved that the audit fee would be paid against invoices, approved by the Board of Directors’ Audit Com mittee. The amounts paid to the auditor, as approved by the Audit Committee, are shown in the table below.

It is a long-standing customat UPMto remunerate Boardmembers in both shares and cash. Boardmembers are encouraged to ownCompany shares on a long-termbasis andmost of themhave substantial holdings, indicating a close alignment of the interests of Boardmembers with those of shareholders. Remuneration of executive management Remuneration at UPM is designed to encourage our value-based behaviour, encourage the achievement of ambitious strategic targets and compensate perfor mance accordingly. The aim of the remuneration process for the Company’s management team is to promote the Company’s long term financial success, competitiveness and favourable development of shareholder value. Remu neration comprises fixed and variable components. These components are shown in the table on the right. The variable components are linked to pre-determined and measurable perfor mance criteria, and thresholds have been

set for the payable amount. The payable amounts of incentives are linked to the management teammember’s position, as well as their achievement of performance measures and targets set on an annual basis. The Company has the right to reclaimany paid or due variable remuneration under cer tain circumstances, such as violation of law or other legal obligation or violation of the UPM Code of Conduct or other Company policies. Overall circumstances will be considered before exercising this right. The Company also has the right to cancel, recover or restate any paid or due variable remuneration in the event that financial or other calculations are found to be incorrect. Salaries, benefits and incentives earned by the President and CEO and members of the Group Executive Team are shown in the tables on the right. In 2020, costs under the Finnish statu tory pension scheme for the President and CEO amounted to EUR 349,000 (2019: EUR 465,000). Payments under the voluntary pension plan amounted to EUR 1,421,000 (2019: EUR 1,459,000). The President and CEO’s voluntary pension benefit was arranged through a defined benefit plan until the end of November 2020. The last contribution into the defined benefit plan was made in 2020. As of December 2020, the voluntary pension benefit is arranged through a defined contribution plan. First contribution to the defined contribution plan will take place in 2021. In 2020, costs under the Finnish and German statutory pension schemes for GET members (excluding the President and CEO) amounted to EUR 785,000 (2019: EUR 924,000). Payments under the voluntary pension plan amounted to EUR 964 000 (2019: EUR 947,000). Please see also Remuneration Report 2020 (subject to adoption in the AGM 2021) and Note 3.2 of the consolidated Financial Statements. Auditor and audit fees At the AGM 2020, PricewaterhouseCoopers Oy, a firm of Authorised Public Accountants, was re-elected as the Company’s statutory auditor for a one-year term, with Authorised Public Accountant Mikko Nieminen as the lead audit partner. Mr Nieminen has held this position since 4 April 2019. Mr Niemi nen is the CEO of PwC Finland.

BOARD REMUNERATION AND PAYMENT MECHANISM

COMPONENTS OF MANAGEMENT REMUNERATION

ANNUAL BASE FEE (EUR)

2020 2019

PAYMENT MECHANISM

COMPONENT

PAYABLE IN

BASIS OF PAYMENT TIME OF PAYMENT

Chair

190,000 190,000 •Approx. 40% in company shares, rest in cash to cover taxes. The Company paid costs and transfer tax related to the purchase of the Company shares. 135,000 135,000

Base salary

Cash

Service agreement/ Executive contract Service agreement/ Executive contract

Monthly

Deputy Chair

Fringe benefits

For example, company car and phone

Monthly

•Shares may not be transferred within two years from the purchase date or until the Director’s membership in the Board has ended, whichever occurs first.

Member

110,000 110,000

Short-term incentives Long-term incentives

Cash

Short-Term Incentive Plan Annually

Shares

Performance Share Plan (PSP)

Annually following a three-year earning period

COMMITTEE FEES AND PAYMENT MECHANISM

ANNUAL COMMITTEE FEES 2019-2020 (EUR)

CHAIR MEMBERS

PAYMENT MECHANISM

REMUNERATION OF THE PRESIDENT AND CEO

Audit Committee

35,000 20,000

15,000 10,000

Remuneration Committee Nomination and Governance Committee

SALARIES AND BENEFITS (EUR 1,000) Salary, paid during the financial year

2020

2019

cash

20,000

10,000

1,093

1,096

Short-term incentives, earned during the financial year

888 **)

708 *)

Share rewards, earned

1,902 ***)

2,734 ****)

BOARD REMUNERATION IN 2020

Benefits, paid during the financial year

31

29

ANNUAL BASE FEE (EUR) OF WHICH

ANNUAL COMMITTEE FEE (EUR)

TOTAL REMUNERATION (EUR)

NUMBER OF SHARES PURCHASED AS PART OF ANNUAL BASE FEE 2)

*) Paid in February 2021 **) Paid in February 2020

40% FOR SHARES (EUR)

60% IN CASH (EUR)

***) PSP 2018-2020 (shares delivered in February 2021) ****) PSP 2017-2019 (shares delivered in February 2020)

DIRECTOR 1)

190,000

Björn Wahlroos

20,000

210,000

3,123

76,000 114,000

135,000

REMUNERATION OF THE GROUP EXECUTIVE TEAM (EXCLUDING THE PRESIDENT AND CEO)

Berndt Brunow

10,000

145,000

2,219

54,000 81,000

110,000

Henrik Ehrnrooth

10,000

120,000

1,808

44,000 66,000

SALARIES AND BENEFITS (EUR 1,000) Salaries, paid during the financial year Short-term incentives, earned during the financial year

2020

2019

110,000

4,132

4,242

Emma FitzGerald

15,000

125,000

1,808

44,000 66,000

1,530 **)

2,054 *)

110,000

Piia-Noora Kauppi

Share rewards, earned

35,000

145,000

1,808

5,979 ***)

8,231 ****)

44,000 66,000

Benefits, paid during the financial year

134

123

110,000

Marjan Oudeman

15,000

125,000

1,808

44,000 66,000

*) Paid in February 2021 **) Paid in February 2020

110,000

Martin á Porta

10,000

120,000

1,808

44,000 66,000

***) PSP 2018-2020 (shares delivered in February 2021) ****) PSP 2017-2019 (shares delivered in February 2020)

110,000

Ari Puheloinen

10,000

120,000

1,808

44,000 66,000

110,000

AUDITOR’S FEES

Veli-Matti Reinikkala

20,000

130,000

1,808

44,000 66,000

110,000

Kim Wahl

EUR MILLION

2020

2019

2018

15,000

125,000

1,808

44,000 66,000

3.8 0.1 0.4 0.2 4.5

Audit fee

3.1 0.2 0.5 0.2 4.0

2.4 0.0 0.3 0.5 3.2

1,205,000

Total

160,000

1,365,000

19,806

Audit-related services

482,000 723,000

Tax services Other services

1) In AGM 2020 Jussi Pesonen and Suzanne Thoma’s terms ended due to their announcement that they were not available for re-election. No Board fees were payable to them during financial year 2020. 2) Purchase date 24 April 2020.

Total

108

109

UPM ANNUAL REPORT 2020

UPM ANNUAL REPORT 2020

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