UPM Annual Report 2021

GOVERNANCE

UPM

BEYOND FOSSILS

STRATEGY

BUSINESSES

RESPONSIBILITY

ACCOUNTS FOR 2021

fee would be paid against invoices, approved by the Board of Directors’ Audit Commit tee. The amounts paid to the auditor, as ap

proved by the Audit Committee, are shown in the table below.

measures and targets set on an annual basis. The Company has the right to reclaim any paid or due variable remuneration un der certain circumstances, such as violation of law or other legal obligation, or violation of the UPMCode of Conduct or other Com pany 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 2021, costs under the Finnish stat utory pension scheme for the President and CEO amounted to EUR 329,000 (EUR 349,000). Payments under the voluntary pension plan amounted to EUR 1,200,000 (EUR 1,421,000). The President and CEO’s voluntary pension benefit was arranged through a defined contribution plan in 2021. In 2021, costs under the Finnish and German statutory pension schemes for GET members (excluding the President and CEO) amounted to EUR 860,000 (EUR 785,000). Payments under the voluntary pension plan amounted to EUR 1,035,000 (EUR 964,000). Please also see the Remu neration Report 2021 (subject to adoption in the AGM 2022) and Note 3.2 of the con solidated Financial Statements. Auditor and audit fees At the AGM 2021, PricewaterhouseCoopers Oy, a firm of Authorised Public Accoun tants, 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. He is the CEO of PwC Finland. The Company has started a tendering process for auditing services as the previous tendering process was carried out in 2013. Following the stipulations of the Auditor Regulation, the last financial year that PricewaterhouseCoopers Oy can act as the Company’s auditor is 2023. The AGM further resolved that the audit

BOARD REMUNERATION AND PAYMENT MECHANISM

Remuneration of executive management Remuneration at UPM is designed to encourage our value-based behaviour and the achievement of ambitious strategic targets, as well as compensate performance accordingly. The aim of the remuneration process for the Company’s management team is to promote the Company’s long term finan cial success, competitiveness and favour able development of shareholder value. Remuneration 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

ANNUAL BASE FEE (EUR)

2021 2020

PAYMENT MECHANISM

Chair

195,000 190,000 •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. 140,000 135,000

Deputy Chair

COMPONENTS OF MANAGEMENT REMUNERATION

•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

115,000 110,000

COMPONENT

PAYABLE IN

BASIS OF PAYMENT TIME OF PAYMENT

Base salary

Cash

Service agreement/ Executive contract Service agreement/ Executive contract

Monthly

Fringe benefits

For example, company car and phone

Monthly

Short-term incentives Long-term incentives

Cash

Short-Term Incentive Plan Annually

COMMITTEE FEES AND PAYMENT MECHANISM

Shares

Performance Share Plan (PSP)

Annually following a three year earning period

ANNUAL COMMITTEE FEES 2020-2021 (EUR)

CHAIR MEMBERS

PAYMENT MECHANISM

Audit Committee

35,000 20,000

15,000 10,000

REMUNERATION OF THE PRESIDENT AND CEO

Remuneration Committee Nomination and Governance Committee

cash

SALARIES AND BENEFITS (EUR 1,000)

2021 1,093

2020 1,093 708 2) 1,902 4)

20,000

10,000

Salary, paid during the financial year

Short-term incentives, earned during the financial year

1,309 1) 2,997 3)

Share rewards, earned

Benefits, paid during the financial year

31

31

BOARD REMUNERATION IN 2021

1) Paid in February 2022 2) Paid in February 2021

ANNUAL BASE FEE (EUR) OF WHICH

ANNUAL COMMITTEE FEE (EUR)

TOTAL REMUNERATION (EUR)

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

40% FOR SHARES (EUR)

60% IN CASH (EUR)

3) PSP2019-2021 (shares delivered in February 2022) 4) PSP 2018-2020 (shares delivered in February 2021)

DIRECTOR 1)

195,000

Björn Wahlroos

20,000

215,000

2,383

78,000 117,000

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

140,000

Berndt Brunow

10,000

150,000

1,710

56,000 84,000

115,000

Henrik Ehrnrooth

20,000

135,000

1,405

2021 3,958 2,739 1) 9,347 3)

2020 4,132

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

46,000 69,000

115,000

Emma FitzGerald

25,000

140,000

1,405

46,000 69,000

Short-term incentives, earned during the financial year

2,054 2) 5,979 4)

115,000

Share rewards, earned

Jari Gustafsson

15,000

130,000

1,405

46,000 69,000

Benefits, paid during the financial year

142

134

115,000

Piia-Noora Kauppi

10,000

125,000

1,405

46,000 69,000

1) Paid in February 2022 2) Paid in February 2021

115,000

Marjan Oudeman

15,000

130,000

1,405

3) PSP2019-2021 (shares delivered in February 2022) 4) PSP 2018-2020 (shares delivered in February 2021)

46,000 69,000

115,000

Martin à Porta

10,000

125,000

1,405

46,000 69,000

115,000

Kim Wahl

35,000

150,000

1,405

AUDITOR’S FEES

46,000 69,000

1,140,000

Total

160,000

1,300,000

13,928

EUR MILLION

2021

2020

2019

456,000 684,000

3.4 0.2 0.4 0.2 4.2

3.8 0.1 0.4 0.2 4.5

3.1 0.2 0.5 0.2 4.0

Audit fee

1) At AGM 2021 Ari Puheloinen and Veli-Matti Reinikkala's terms ended due to their announcement that they were not available for re-election. No Board fees were payable to them during the financial year 2021. 2) Transaction date 28 April 2021.

Audit-related services

Tax services Other services

Total

110

111

UPM ANNUAL REPORT 2021

UPM ANNUAL REPORT 2021