UPM Annual Report 2021
ACCOUNTS FOR 2021
3. Employee rewards 3.1 Employee costs
Salaries and benefits paid to the President and CEO and the Group Executive Team President and CEO Jussi Pesonen
Other members of Group Executive Team 1)
2021 3,958 2,054 5,979
2020 4,132 1,530 8,231
Salaries and fees
Pension and other post-employment benefits, defined benefit plans Pension costs, defined contribution plans
16 95 93
13 89 94
1) 11 members in 2021 and 2020.
Other indirect employee costs 1)
In 2021, costs under the Finnish statutory pension scheme for the President and CEO amounted to EUR 329,000 (349,000) and payments under the voluntary pension plan amounted to EUR 1,200,000 (1,421,000). In 2021, costs under the Finnish and German statutory pension schemes for Group Executive Team (GET) members (excluding the President and CEO) amounted to EUR 860,000 (785,000) and payments under the voluntary pension plan amounted to EUR 1,035,000 (964,000). The remuneration of the President and CEO and other members of the Group Executive Team consists of the base salary and benefits, short-term incentives and long-term share-based incentives. In 2021 and 2020, the short-term incentives are based on the company's Short-Term Incentive Plan and they are paid annually in cash. The amount of the incentive is linked to the executive's position and achievement of annually set targets. The maximum incentives amount to a total of 100% of the annual base salary to the Business Area Executives and to a total of 70% of annual base salary to the other members of the Group Executive Team. For the President and CEO, the maximum annual incentive amounts to 150% of the annual base salary. The expenses recognised in income statement in respect of share based payments for the Group Executive Team were EUR 3.8 million (3.4 million). According to the service agreement, the President and CEO would have been entitled to retire in November 2020 at the age of 60 but at the request of the company's Board of Directors, the President and CEO has decided to continue in his position. The President and CEO has a voluntary pension benefit in addition to the Finnish statutory pension scheme. The President and CEO's
voluntary pension benefit was arranged through a defined benefit plan until the end of November 2020. The last contribution to the defined benefit plan was made in 2020. Under the defined benefit plan, the target pension was 60% of the average indexed earnings from the last ten full calendar years of employment calculated according to the Finnish statutory pension scheme. The income of the President and CEO’s defined benefit pension plan in 2021 was EUR 1.3 million (1.6 million in 2020). The plan assets amounted to EUR 15.0 million (17.3 million) and the obligation amounted to EUR 12.8 million (14.9 million). As of December 2020, the voluntary pension benefit is arranged through a defined contribution plan. First contribution to the defined contribution plan took place in 2021. The retirement age of other members of the Group Executive Team is 63. Other Group Executive Team members are under defined contribution plans. Should the company or the President and CEO give notice of termination of the service agreement, no severance pay will be paid in addition to the salary for the 12-month notice period. For GET members, the period for severance pay is 12 months, in addition to the six months’ salary for the notice period, unless notice is given for reasons that are solely attributable to the executive. Should a GET member give notice of termination to the company, no severance pay will be paid in addition to the salary for the notice period. If there is a change of control in the company, the President and CEO may terminate his service agreement within three months and each GET member within one month from closing the takeover and shall receive compensation equivalent to 24 months' base salary.
1) Other indirect employee expenses primarily include other statutory social expenses, excluding pension expenses.
3.2 Key management personnel The remuneration of the members of the Board of Directors was resolved to 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 Board EUR 115,000. The annual base fee was paid in company shares and cash so that approximately 40% of the fee was paid in the company shares to be purchased on the Board members’ behalf, and the rest in cash. The company paid any costs and transfer tax related to the purchase of the company shares.
The Chair of Audit Committee received annual committee fee of EUR 35,000 and Chair of Remuneration Committee as well as Chair of Nomination and Governance Committee EUR 20,000. The members of Audit Committee received annual committee fee of EUR 15,000 and members of other committees EUR 10,000. The annual committee fees were paid in cash. In 2021, 2,383 (3,123) company shares were purchased to the Chair, 1,710 (2,219) to the Deputy Chair and 1,405 (1,808) to other members of the Board.
Shareholdings (no. of shares) and fees of the Board of Directors
Annual committee fee (EUR 1,000)
Shareholdings 31 December
Annual base fee (EUR 1,000)
Board members Björn Wahlroos, Chair
270,700 316,462 12,719
268,317 314,752 11,314
195 140 115 115 115 115 115 115
190 135 110 110 110 110 110 110 110 110 —
20 10 20 25 10 15 15 10
20 10 10 15 35 15 10 10 20 15 —
Berndt Brunow, Deputy Chair
Henrik Ehrnrooth Emma FitzGerald Piia-Noora Kauppi Marjan Oudeman Jari Gustafsson 2) Martin à Porta Ari Puheloinen 1) Veli-Matti Reinikkala 1)
3.3 Share-based payments UPM offers rewards and recognition with an emphasis on high performance. All UPM’s employees belong to a unified annual Short Term Incentive (STI) scheme. In addition, UPM has two long-term incentive schemes: the Performance Share Plan (PSP) for senior executives and the Deferred Bonus Plan (DBP) for other key employees.
Performance Share Plan The Performance Share Plan (PSP) is targeted at the President and CEO and other Group Executive Team (GET) members as well as other selected members of the management. Under the ongoing plans UPM shares are awarded based on total shareholder return during a three year earning period. The earned shares are delivered after the earning period has ended. Total shareholder return takes into account share price appreciation and paid dividends.
13,339 46,135 23,113 716,348
1) Ari Puheloinen and Veli-Matti Reinikkala stepped down from the Board in 2021 2) Jari Gustafsson was elected as new director to the Board in 2021
UPM FINANCIAL REPORT 2021 169 UPM ANNUAL REPORT 2021 169
UPM ANNUAL REPORT 2021
UPM FINANCIAL REPORT 2021 168
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