UPM Annual Report 2023

GOVERNANCE

UPM

BEYOND FOSSILS

BUSINESSES

RESPONSIBILITY

ACCOUNTS FOR 2023

if the Company’s Articles of Association are amended to include this possibility and all participating shareholders are able to exer cise their full shareholder rights, including the right to vote and to ask questions in real time during the general meeting, irrespec tive of the chosen general meeting format. The proposed amendment to the Articles of Association would have been passed with the support of two-thirds of all shares and votes participating in the AGM 2023. Based on the voting instructions received in ad vance and the number of shares represent ed at the AGM 2023, the conclusion was that the proposal to amend the Articles of Association did not have sufficient support. Consequently, the Articles of Association were not amended as proposed at the AGM 2023 and the Company may not currently arrange virtual general meetings. The prevailing market practice in Finland is for the full vote count not to be executed at the general meeting unless it is specifically required by a shareholder at tending the meeting. For this reason, a full vote count was not executed on any agenda topic at the AGM 2023. Shareholders were also able to follow the AGM 2023 through a webcast that allowed them to watch the meeting but not exercise shareholder rights such as asking questions, making counterproposals or voting. The AGM adopted the Company’s Finan cial Statements and decided to distribute an aggregate dividend of EUR 1.50 per share (EUR 1.30) to be paid in two instalments. Both dividend instalments were EUR 0.75 per share. The first dividend instalment was paid on 21 April 2023 to the shareholders registered in the Company’s register of shareholders on 14 April 2023. The second dividend instalment was paid on 2 Novem ber 2023 to the shareholders registered in the Company’s register of shareholders on 26 October 2023. Both dividend instal ments totalled EUR 400 million and togeth er they totalled EUR 800 million. The AGM released the members of the Board of Directors and the President and CEO from liability for the financial year 2022. UPM’s Remuneration Report 2022 for governing bodies was presented to and adopted by the AGM. Information on other decisions made at the AGM can be found later in this section and on the corporate website at www.upm.com/agm2023.

sition was presented to the AGM as single slate. This is standard market practice in Finland, unlike in many other countries. The Nomination and Governance Com mittee believes that this practice helps to ensure that the Board works effectively as a whole, whilst comprising sufficiently di verse members with varied experience and versatile areas of expertise that mutually compliment each other. The composition of the Board is present ed in the table on the following page. The new director, Pia Aaltonen-Forsell (born 1974), is a Finnish citizen. She holds a Mas ter’s degree in Social Sciences (Economics) from the University of Helsinki and a Mas ter’s degree in Business and Administration (MBA) from the University of Reading, Henley Business School. Aaltonen-Forsell has been the Chief Financial Officer of Ou tokumpu Oyj and a member of Outokumpu Leadership team since 2019. Her previous work experience and other biographical details can be found on page 114 and she is presented in the spotlight text on page 110. Following the announcements of the Company’s long-standing Board Chair, Björn Wahlroos, that he would not be stand ing for re-election at the AGM 2023, and of the Company’s long-standing President and CEO, Jussi Pesonen, that he will exercise his right to retire from UPM during 2024, the Board carefully assessed the need to ensure continuity. Among other things, the Board considered the status of the ongoing strategic projects at the time of the AGM 2023, growth opportunities and the positive development of the Company. The Board deemed it essential that the new Board Chair be a long-standing member of UPM’s Board of Directors, with extensive and versatile experience from the Company’s businesses. It considered that Deputy Chair of the Board Henrik Ehrnrooth has such abilities and professional experience and that, together with his knowledge of UPM and its businesses, this provides a solid ba sis for him to lead the Company’s Board and act as the Chair of the Board. Mr Ehrnrooth was appointed Chair of the Board in the Board’s constitutive meeting following the AGM 2023. Board diversity The overall aim of diversity is for the Board as a whole to have a broad range of skills,

The AGM 2024 will be held at the Messu keskus Expo and Convention Centre in Helsinki on 4 April. Detailed instructions for shareholders wishing to attend the meeting are available on the corporate website at www.upm.com/agm2024. For the year 2023, the Board of Directors proposed a dividend of EUR 1.50 per share to be paid in two instalments. Board of Directors • Sets the Company’s strategic objectives • Reviews and approves financial and other plans relevant to the achievement of these objectives • Reviews the management team’s performance in terms of meeting these objectives The Board’s other primary responsibilities relate to the integrity of the Company’s financial reporting, the effectiveness of internal control and risk management sys tems, and the appointment, remuneration and succession planning of the Company’s senior management. Board composition The composition of the Board changed in the AGM 2023 when Björn Wahlroos, UPM’s Chair of the Board since 2008, announced that he would not be standing for re-election. The Nomination and Gov ernance Committee conducted its annual review of the structure, size, composition, diversity and succession needs of the Board as a whole. This includes whether the Board reflects an appropriate balance of sound judgement and a diverse range of business expertise, skills, experience, independence, availability of service to the Company and other desired qualities. After a careful selection process, the Nomination and Governance Committee proposed that nine members be elected to UPM’s Board of Directors for a one-year term. As proposed by the Nomination and Governance Committee, Henrik Ehrn rooth, Emma FitzGerald, Jari Gustafsson, Piia-Noora Kauppi, Topi Manner, Marjan Oudeman, Martin à Porta and Kim Wahl were re-elected, whilst Pia Aaltonen-Forsell was elected as a new director. All directors are non-executive and their term of office will end upon the closure of the AGM 2024. The proposal concerning the Board compo

GROWTH STRATEGY CONTINUED Our governance structure supports the management of strategic growth and aims to ensure transparent and responsible business operations while safeguarding compliance and risk management.

UPM complies with all recommendations of the Finnish Corporate Governance Code (CG Code), which is issued by the Finnish Securities Market Association. In accord ance with the CG Code, we have published our Corporate Governance Statement (CG Statement) for the financial year 2023. It is available on the corporate website at www.upm.com/governance. We refer to the CG Statement for information on: • Our governance structure and manage ment system • The duties and responsibilities of the

Board of Directors and its Committees • The duties and responsibilities of our management bodies • Our management and control procedures related to internal control, risk manage ment, internal audit, insider administra tion and related party transactions General Meeting of shareholders Our Annual General Meeting (AGM) 2023 was held in Helsinki on 12 April 2023. A total of 3,476 (2,737) shareholders attended the meeting either in person or through a legal

or proxy representative, representing 60% (58%) of the Company’s shares and voting rights at the time of the AGM. The AGM supported all other proposals by the Board of Directors and its Nomina tion and Governance Committee except the proposal to amend the Articles of Associ ation, which would allow the Company to arrange general meetings virtually. The proposal was based on the legislative changes to the Finnish Limited Liability Companies Act. According to the said legis lation, virtual general meetings can be held

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UPM ANNUAL REPORT 2023

UPM ANNUAL REPORT 2023