UPM Annual Report 2021

GOVERNANCE

UPM

BEYOND FOSSILS

STRATEGY

BUSINESSES

RESPONSIBILITY

ACCOUNTS FOR 2021

Committee evaluated the qualifications and independence of the auditor, as well as the audit-related and non-audit-relat ed 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 co-operation with the auditor’s interna tional audit network. As a result of the evaluation, the Com mittee recommended to the Board the re-election of PricewaterhouseCoopers Oy as the Company’s auditor. The Board concurred with this proposal and has made a corresponding proposal to the AGM 2022. Following the stipulations of the Audit Regulation, the last financial 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 planning the remuneration and succession of the President and CEO as well as other senior executives. In 2021, the Committee held six meet ings. In addition to the Remuneration Com mittee’s assigned matters and regular re ports as listed above, in 2021 it also focused on the Remuneration Report presented to shareholders at the AGM 2021 for the first time. It also made recommendations to the Board concerning the terms of service agreements of the Executive Vice President, Technology; Executive Vice President, UPM Communication Papers and Executive Vice President, UPM Plywood appointed in 2021. The Nomination and Governance Com mittee is responsible for the composition, diversity and remuneration of the Board of Directors and corporate governance. If necessary, the committee also identifies individuals who are qualified to serve as the President and CEO. Nomination and Governance Committee

In 2021, the Committee held six meet ings. In addition to the Nomination and Governance Committee’s assigned matters and regular reports as listed above, in 2021 it also focused on the arrangements of the AGM under the Finnish temporary legislative act (677/2020) prevailing at that time. The Committee further reviewed and proposed certain rotation to the composi tion of the committees, as well as assisted the Board in the preparation of the Remu neration Report presented to the AGM for the first time. 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. This included whether the Board reflects an appropriate balance of sound judgement and a diverse range of business expertise, skills, experience, independence, availabil ity of service to the Company and other desired qualities. As a result of careful research and selec tion efforts, the Nomination and Gover nance Committee has proposed that Topi Manner be elected as a newmember of the Board at the AGM 2022. Of the incum bent directors, Berndt Brunow will not be available for re-election. The Nomination and Governance Committee’s proposal on the composition of the Board in 2022, along with the Board’s assessment of the inde pendence of potential Board members, is available on the corporate website at www. upm.com/agm2022. Executive management Jussi Pesonen has been the President and Chief Executive Officer of UPM-Kymmene Corporation since January 2004. According to his service agreement, Jussi Pesonen was entitled to retire at the age of 60. At the re quest of the Company’s Board of Directors, he continues as the President and CEO with no set retirement age. The President and CEO’s duty is to manage and oversee the Company’s day to-day business 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 leading the business areas or global functions, the

COMPOSITION OF MANAGEMENT BODIES

Read more on our management system in the CG Statement 2021 and at www.upm.com/ governance. Members of the Group Executive Team, includ ing information on the executives’ biographical details, professional and educational back grounds, other significant commitments and shareholdings in the Company, are presented on pages 114–115 of this report.

GROUP EXECUTIVE TEAM

BUSINESS AREA BOARDS

STRATEGY TEAM

President and CEO (Ch.)

President and CEO (Ch.)

President and CEO (Ch.)

CFO

CFO

CFO

General Counsel Business area EVPs

General Counsel Business area EVP

General Counsel

EVP Strategy

EVPs of global functions

EVPs of global functions

EVP Technology

RESPONSIBILITY AREAS OF THE MEMBERS OF THE GROUP EXECUTIVE TEAM

PRESIDENT AND CEO JUSSI PESONEN

CFO 1)

UPM Fibres 4)

Tapio Korpeinen

Bernd Eikens

CASE

General Counsel

UPM Energy

Juha Mäkelä

Tapio Korpeinen

A TEAM PLAYER

Strategy

UPM Raflatac

Kari Ståhlberg

Antti Jääskeläinen

Mika Kekki joined UPM Plywood as Executive Vice President and a member of the Group Executive Team in October 2021. Kekki's UPM career started in 1994 at the softwood plywood mills as an operating engineer and later as mill manager. During 10 years, the Pellos mill developed into the largest in Europe and one of the largest plywood mills in the world after several investment phases. Later, the road led to responsibility for the distribution business mill’s production, the production of spruce-based mills and the support functions for plywood production. Kekki has been working in the management team of the plywood business since 2011 and has since been responsible for all mills and support functions. "These years have been very rewarding, as together with the management team and the whole organisation we turned a weak, even loss-making business into a highly profitable one, with seven consecutive years of profit improvement." A passionate and active sports enthusi ast, Kekki describes himself as a team play er for whom leadership is all about trust, honesty and openness. "You win as a team and you lose as a team", he sums up. "I see the plywood business as having a very successful future. It is growing globally at 2-4% per year. My role is to ensure that UPM Plywood keeps pace with this growth. We have a good opportunity to take our share of the growth and we will continue to do so with higher value-added and more demanding quality products."

UPM Specialty Papers

Technology 2)

Jaakko Nikkilä

Winfried Schaur

Human Resources

UPM Communication Papers Massimo Reynaudo

Riitta Savonlahti

Stakeholder Relations 3)

UPM Plywood

Mika Kekki

Pirkko Harrela

1) Incl. Finance & Control, Treasury, IR, IT, Sourcing and Real Estate (incl. Finnish forest assets) 2) Incl. Investment Management, R&D and UPM Biorefining business unit (UPM Biofuels, UPM Biochemicals, UPM Biomedicals and UPM Biocomposites) 3) Incl. Communications & Brand, Responsibility, Public Affairs 4) Incl. UPM Pulp and UPM Timber

Board EUR 115,000. The annual committee fees remained unchanged. The approved annual fees and total re muneration of each Board member, as well as the number of shares purchased, are presented in the tables on the next page. 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 meetings held elsewhere than in a direc tor’s place of residence were paid against invoice. Shares purchased for the Board members in 2021 may not be transferred for two years from the purchase date (28 April 2021) or until the membership of the respective Board member has ended, whichever occurs first. It is a long-standing custom at UPM to remunerate Board members in both shares and cash. Board members are encouraged to own Company shares on a long-term basis and most of them have substantial holdings, indicating a close alignment of the interests of Board members with those of shareholders.

Directors’ Remuneration Committee and the Nomination and Governance Commit tee. The Remuneration Report 2021 for governing bodies will be presented at the AGM 2022. The Remuneration Policy sets out the framework for the remuneration of the Company’s governing bodies and 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 aforemen tioned executives’ service agreements, is available on 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 2021 it was decided that the remu neration of the members of the Board of Directors be raised so that the Chair of the Board will be paid an annual base fee of EUR 195,000, the Deputy Chair of the Board EUR 140,000 and other members of the

Business Area Boards and the Strategy Team. He makes decisions on matters that are relevant to the Company’s daily business operations. 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 In accordance with the CG Code, we have published our Remuneration Report for the financial year 2021. The Remuneration Report and information on the remunera tion of the Group Executive Teammembers is 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 the illustration above. Remuneration

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UPM ANNUAL REPORT 2021

UPM ANNUAL REPORT 2021